IFM ready for bigger buyouts with new $1b fund; UniSuper, Hostplus in
IFM Investors is finally pushing ahead with its mooted larger-format private equity fund, which would write cheques around the $300 million mark for companies in Australia and New Zealand.
IFM Investors executive director Jeremy Larkin.
The new Long Term Private Capital (LTPC) strategy is targeting $1 billion in commitments, of which it’s understood to have locked in $450 million including from local pension funds UniSuper and Hostplus. Both are among IFM’s 24 odd shareholders.
The fund was expected to pick up north of $750 million in co-investments through its life, pushing its total size towards the $2 billion mark.
The buyout fund is led by Jeremy Larkin, who joined IFM in 2019 from JPMorgan where he advised on big-ticket deals including Qube’s $12.8 billion play for Asciano; NSW Electricity Networks on its $10.3 billion acquisition of Transgrid; and Link Group, Morgan Stanley Infrastructure and CBA on their $1.6 billion acquisition of PEXA.
Larkin’s also part of the fund’s investment committee, with the firm’s global head of private equity Stuart Wardman-Browne, and executive directors Adrian Kerley and David Odgers, who joined three years ago.
Kerley joined IFM from Commonwealth Superannuation Scheme where he was the head of capital. Odgers was previously at Bain Capital, with responsibility for the firm’s investment in MYOB, Retail Zoo and Cap Australia.
Taking its picks
LTPC’s expected to focus on Australian and New Zealand companies and look to invest about $300 million at a time for 30 per cent to 100 per cent of a business.
Adding debt on top, it would bring its individual investment sizes to $500 million odd.
The team in interested in sectors it sees as more economically durable, including companies in business services, consumer staples, healthcare, logistics and waste management.
For deal flow, it was expected to look at family-owned businesses seeking help with succession-planning, multi-national companies with large local footprint who want to maintain presence but get some liquidity; and lastly via private equity firms looking to exit their investments. It’s also understood to be happy to look at take-privates of ASX listed companies.
The strategy is a branching out from IFM private equity team’s hitherto approach of investing in growth companies with investment sizes in the $30 million to $100 million range.
IFM’s picked a longer than usual term for a buyout firm at 15 years over the traditional eight to 10 years. It’s understood to think traditional exits at four to five years leave value at the table, and end up in fee leakage to bankers as a company changes hands via multiple owners during its life.
Of course the longer fund term also means longer waits for the limited partners, whose portfolio needs may change in the 15 years.
And perhaps so. IFM is understood to have woven in a five-year secondary market liquidity mechanism via a market maker, in what would be a first for Australian buyout funds.
IFM was expected to hire a private markets placement agent, whose job would be to match LTPC investors keen for an earlier exit with a pension fund or an investor happy to buy their units.
Subscribe to gift this article
Gift 5 articles to anyone you choose each month when you subscribe.
Subscribe nowAlready a subscriber?
Introducing your Newsfeed
Follow the topics, people and companies that matter to you.
Find out more