Third time’s a charm as Westpac offloads Hastings

The sale allows UK investment firm Northill Capital to gain a foothold in infrastructure, ending a sale process that had been running for almost two years.

UK-based asset manager Northill Capital has bought Australian infrastructure fund manager Hastings, ending banking group Westpac’s 15-year ownership of the business.

Through its debut infrastructure deal, Northill will gain control of the A$12.6 billion ($9.8 billion; €8.4 billion) in funds Hastings manages on behalf of its institutional clients, adding to the $48 billion of assets under management by businesses in which Northill owns a majority stake.

Existing Hastings investments include a series of Australian airports, Northern Ireland’s Phoenix Natural Gas and, most recently, a land registry lease in New South Wales. A number of these assets sit in Hastings’ Utilities Trust of Australia fund and Northill is keen to maintain this portfolio.

“The very significant part of Hastings’s business is the UTA fund, which is an open-ended fund and isn’t common outside of Australia,” Ryan Sinnott, director of strategy at Northill, told Infrastructure Investor.

“We do think in many ways it is a better vehicle to hold infrastructure assets given it’s much better mapped for the time horizons that the investors are looking to match their liabilities to. It’s a very mature portfolio which we don’t want to grow very quickly because the investors don’t want dilution and we’re very respectful of that.”

The agreement, if concluded following due diligence and regulatory approvals, brings an end to Westpac’s attempts to sell Hastings over the past two years. A competitive process began at the outset of 2016 but was suspended at the beginning of March that year, with bids from TIAA-CREF and MassMutual Financial Group thought to be well below the A$500 million Westpac was allegedly seeking then. Media reports have pegged the purchase price at around A$160 million, although Northill declined to comment on this.

Interest resurfaced this summer when real estate group Charter Hall entered into exclusive discussions with Westpac but talks broke down three weeks later.

“While the sale process attracted nearly a dozen bidders from around the world, our objective has always been to find the right fit,” said Lyn Cobley, chief executive of Westpac’s Institutional Bank. “It has been important to all parties to see that Hastings continues as a long-term successful asset manager with a highly disciplined approach.”

In the period between the two offers, executive director Peter Johnston left to join Lighthouse Infrastructure Management, while former head of global investments Peter Taylor and executive director Richard Hoskins departed to Carlyle Group. Their exits were followed by executives Heiko Schupp, Cassandra Stevenson and Ingrid Weston following the suspension of fundraising for its €1.5 billion European Core Infrastructure Income Fund. Rob Collins, previously head of global Investments in North America and Europe for Hastings, also left in March to lead 3i’s North American infrastructure business.

“Investors have very justifiable concerns after what has been a very long-winded and disruptive sale process,” Sinnott said.

Hastings subsequently regained complete ownership of Britain’s South East Water and also received a mandate from the Development Bank of Japan to invest in infrastructure debt.

Sinnott added to Infrastructure Investor that while Northill sees opportunities to expand Hastings geographically in the medium-term, it remains focused on steadying the business.

“Our focus at the moment is very much to stabilise the business given investors have very justifiable concerns after what has been a very long-winded and disruptive sale process,” he said. “We’re investing in Hastings for the very long-term without any view for an exit. We think that long-term focus is advantageous for any asset management company.”

Westpac first bought a 51 percent stake in Hastings in 2002 for A$36 million before taking full control in 2005.