Significant week looms for prolonged Investa sale

The Investa Commercial Property Fund has finalised the acquisition of the Investa management platform, setting the scene for another significant week in the drawn-out sales process.

A key document, expected to be released this week, will put the proposed $2.5 billion merger between ICPF’s listed sister fund Investa Office Fund and DEXUS Property Group under fresh scrutiny ahead of a vote in April.

The explanatory memorandum, of several hundred pages, may come out as early as Tuesday or Wednesday.

Investa Office Managemnt's leadership team, including Michael Cook, Jonathan Callaghan and Peter Menegazzo, has presented itself as a viable alternative to the DEXUS proposal. Photo James Alcock

The Australian Financial Review reported in February that IOF unitholders have a clear choice. They can either vote yes to the DEXUS proposal or maintain the status quo and stay with the broader Investa platform.

The EM will provide essential information, such as details of IOF’s strategic review, for investors making that decision.

The document will come hot on the heels of ICPF settling on the $90 million acquisition of the Investa management platform late on Friday.

“The acquisition resolves the ownership of IOM and ensures continuity of the platform’s operations which have underpinned the strong performance of the funds managed by Investa Office Management,” said Investa Wholesale Funds Management, the new ownership company. The group said it is a viable alternative to DEXUS.

The sale of the management platform has been a lengthy process. The deal with ICPF all but winds up Morgan Stanley’s ties to Investa Property Group – minus its stake in IOF.

The deal has been described as revolutionary given no Australian wholesale fund has ever internalised its management before.

Precedent in governance

Padraig Brown, head of real estate investment for Mercer Investments – the second largest investor in ICPF – said it has actively supported the fund’s acquisition of the platform.

“We believe this transaction sets a precedent in the governance of Australian Wholesale Funds Management,” he said.

The new ownership has presented itself as a viable alternative to DEXUS.

Despite this, IOF’s independent board maintains the DEXUS proposal is in the best interests of IOF unitholders and has recommended they vote in favour of the merger.

In its statement, Investa Office Management said it has hired executive search firm Egon Zehnder to recruit three independent directors including the chair. The two funds, IOF and ICPF, have also been asked to nominate a director taking the board of the Investa platform to five non-executive members.

Both funds will retain their separate board charters as well and neither has sought any enhancements to their governance arrangements. Investa said this was a strong endorsement of the existing governance structure.

The implementation deed, which provides IOF with a right to acquire half of the platform under certain circumstances, remains in place.

At the close of sharemarket trade on Friday IOF securities closed at $3.94 after falling 11¢; DEXUS shares finished at $7.53 after falling 32¢.

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