Loss after Loss: Why smart investors are deserting Industry Super Funds

IFM hires banks for $2 billion Pacific Hydro sell-off
Privately held “dark pools” of capital finally exposed

16 April 2015  Australian Financial Review

It's understood IFM Investors, run by Brett Himbury, had already received some interest in the unit before deciding to sell the asset.

It’s understood IFM Investors, run by Brett Himbury, had already received some interest in the unit before deciding to sell the asset. Louie Douvis 

IFM Investors is seeking to sell renewable energy business Pacific Hydro less than a year after taking a $685 million write-down on the assets.

IFM, whose IFM Australia Infrastructure Fund owns 100 per cent of Pacific Hydro, is understood to have appointed Bank of America Merrill Lynch and Credit Suisse to run an auction after taking pitches from investment banks in recent weeks.

Sources said banks that missed the mandate were notified on Wednesday afternoon.

The sale, which could be worth as much as $2 billion, comes soon after IFM completed a strategic review, looking at reasons why Pacific Hydro took a $685 million write-down in 2013-14.

Pacific Hydro owns wind, solar, hydroelectric and geothermal projects in Australia, Brazil and Chile. Its Australian assets include the Cape Bridgewater and Cape Nelson wind farms in south-west Victoria, along with Western Australia’s Challicum Hills and Clements Gap wind farm in South Australia.
Offshore, it owns run-of-the-river hydro power plants in Chile and wind farms in Brazil.It’s understood IFM had already received some interest in the unit before deciding to sell the asset.

 

It will be interesting to see the numbers in Pacific Hydro’s sale documents, once they are released, and how potential buyers value the assets.

Last financial year’s massive write-down was attributed to the impact of the Abbott government’s review of renewable energy, as well as weaker electricity demand in Australia and tax charges in Chile.

More recently, IFM boss Brett Himbury and chairman Garry Weaven resigned from Pacific Hydro’s board.

IFM’s advisers are expected to market Pacific Hydro to private equity firms, Chinese renewable energy companies and the major infrastructure funds.

Potential buyers are expected to need some time to get their heads around the regulatory environment in Pacific Hydro’s three countries of operation.

The sale comes only weeks after IFM’s international fund agreed to pay $7.5 billion for the Indiana Toll Road and as its Australian infrastructure fund prepares for the Port of Melbourne and NSW electricity transmission and distribution auctions.

Original article here 

IFM is “owned” by a group of 30 “not for profit” Industry Super Funds.   If a member’s fund continues to invest in expensive assets, or makes hundreds of millions in losses, it will be interesting to know what their retirement profit will eventually be.   

 

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