Future Fund lands an airport windfall
Sydney Morning Herald
Tuesday March 8, 2011
It may be a late Christmas present or an early one, but David Murray's Future Fund has bagged a 56 million ($90 million) special dividend on its investment of more than $200 million in Britain second-largest airport, Gatwick.Future Fund was the last player to join the party of ownership at Gatwick, which Global Infrastructure Partners bought for 1.5 billion in 2009 after the then owner, BAA, was told by its regulator it had to reduce its various airport holdings.GIP, which has an Australian presence via the Port of Brisbane, then sold its holding in Gatwick down to 42 per cent, with Future Fund's purchase in late December of a 17.2 per cent stake the last to be done. It joined the $US206 billion Californian pension fund CalPERS, Abu Dhabi Investment Authority and National Pension Service of Korea.The sell-down raised more than $700 million in equity, with most investors paying about $12 million for each percentage point.Future Fund, which has been increasing its exposure to infrastructure as it sells down its stake in Telstra, had known the dividend was in the wind when it bought into Gatwick. Although the exact size of the payout was unknown, the likely dividend was built into the price bid by the fund for its stake.The payout has come earlier than expected, given it is barely 11 weeks since the fund made its investment, and is slightly bigger than originally thought."A dividend like that certainly gives confidence around the structure and the robustness of the business case," an infrastructure analyst said.The special dividend paid to the shareholders totals 330 million, and follows a bond issue and refinancing to lower the cost of the debt - remember the kind of market conditions prevailing in 2009 when much of the world lending market was a basket case.And the word from Britain is that if current strong conditions persist for Gatwick, there may be more to come.SPALVINS ON CASEIt is almost two decades since the corporate corsair John Spalvins sailed the seas at the helm of Adelaide Steamship, but he still keeps a weather eye on his investments - and right now he is plotting against Aditya Birla Minerals, a miner based in Perth.Spalvins, whose fleet was impounded and broken up by bankers in the 1990s, published an open letter to the Aditya board yesterday, castigating them for not doing more to promote the company and lift its share price as far as Spalvins is concerned, Aditya might be mining the Nifty deposit, but it is hardly a nifty miner."My main areas of concern are : (1) the lack of effort by Aditya to improve the general market awareness of the company and its operations; (2) recent trading in Aditya shares; and (3) your approach to continuous disclosure," Spalvins wrote.Speaking to Insider from his sometime base in Idaho, where he has been getting in a bit of skiing, Spalvins said the reference to share trading was all about the company missing an opportunity to advertise its wares when the ASX queried it over a sharp price rise, rather than a suggestion of rum things afoot."The situation is that the copper price is rising ... profit will be significantly up ... but they are not promoting it," he said.Aditya's Mount Gordon operation is also due to come into production soon, and once that has been funded from Nifty, Goldman Sachs are tipping a return to dividends in the 2012 financial year.Spalvins argues that Aditya shares are trading on earnings multiples of between two and three times, and ought to be trading at about seven, given current copper prices and the company's debt-free status. That would give it a price closer to $3.50 a share than the existing $1.30 to $1.35.Spalvins is probably too polite to point out that Aditya's last results in October were below expectations because receivables due from its 51 per cent parent, the Indian metals group Hindalco, had more than doubled to over $75 million.FEX LICENCEFresh from clearing its desk of Chi-X matters, the corporate regulator has asked for public comment on Financial and Energy Exchange's application for a licence to run a specialised derivatives market.While it looked from the outside yesterday that FEX, controlled by the long-time trader Brian Price, was trying to get some publicity while multibillion-dollar global exchange takeovers and licensing are hot news, he says that isn't so.Price said his first application was in 2007 and he renewed it early last year, but conversations with the Australian Securities and Investments Commission have been desultory.There is a feeling that the British firm LCH.Clearnet, which has the contract to handle the settlement of any FEX trading, might have spurred on ASIC by asking what is behind the delay in approval.ASIC has asked for submissions by April 18 from interested people on the idea of giving FEX a licence to trade in energy, commodity and environmental derivatives.Shareholders include not only Price's Iron Mountain, which has 31 per cent, but Perth's Bennett family (Angela Bennett is the daughter of Peter Wright, the one-time business partner of Lang Hancock) on 13 per cent, and two Hong Kong-registered companies with a little more than 20 per cent. Price says they both represent Australian-based Chinese investors. Nasdaq OMX, which is supplying technology, has 5 per cent.insider@fairfaxmedia.com.au
© 2011 Sydney Morning Herald