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IFM instructs Atlas Arteria to ‘immediately’ drop latest purchase plans

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The power of super funds is on full display with a not-so-subtle warning directed at Atlas Arteria. 

IFM Investors has threatened Atlas Arteria with a board spill if it continues to pursue the purchase of a US toll road.

In a letter, made available to InvestorDaily, IFM Investors' global head of infrastructure communicated his “strong reservations” in relation to Atlas Arteria's planned acquisition of Chicago Skyway. 

Kyle Mangini said IFM Investors has plenty of reasons to object, including that it expects the acquisition to be “highly dilutive to distributions” — a  belief which, Mr Mangini said, is shared by IFM's major shareholders. 

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In June, IFM disclosed that it had acquired a 14.96 per cent stake in Atlas Arteria via its Global Infrastructure Fund (GIF) and requested access to certain limited company information in order to help it decide whether to proceed with a non-binding indicative takeover proposal.

However in July, the company which invests money on behalf of Australia's major superannuation funds, confirmed it had ended takeover discussions with the toll road operator. 

But tension is now high with IFM confirming in the letter sent on Monday that Atlas Arteria does not have its support in relation to the pursuit of “a large equity funded acquisition”. 

“As a major shareholder, acting on behalf of investors who represent the retirement savings of millions of working people in Australia and globally, we are singularly focused on the preservation of value of IFM GIF's holdings in Atlas Arteria,” Mr Mangini said.

“As such, we are not supportive of Atlas Arteria pursuing the Chicago Skyway acquisition at the likely sale price because we believe it would be significantly value destructive. We do not believe the company could construct any credible set of parameters or assumptions in order to justify the pursuit of the Chicago Skyway acquisition,” he added. 

IFM confirmed that it had made its feelings known to Atlas Arteria in a meeting on 31 August.

However, despite its opposition, Atlas Arteria filed a statement with the ASX on Monday morning addressing recent media speculation in respect of its participation in the sale of Chicago Skyway. 

“ALX regularly reviews opportunities and strategic options available to ALX,” the company said. 

“ALX confirms that it is participating in the sale process for Chicago Skyway. However, there is no certainty that a transaction will eventuate.”

Concerned with this statement, Mr Mangini said IFM will consider all legal options available to it, including seeking an accelerated board transition by way of an extraordinary general meeting. 

“We expect Atlas Arteria shareholders to strongly support IFM GIF in pursuit of these options, particularly in the context of the company continuing to progress large equity funded offshore acquisitions such as Chicago Skyway, and the fact that the company should be focused on funding and creating value from its existing asset portfolio,” Mr Mangini said.

“We request that the company make an ASX announcement immediately that it has withdrawn from the Chicago Skyway sales process.”

Owned by Australia's industry super funds, IFM currently manages just under $200 billion in assets.

IFM instructs Atlas Arteria to ‘immediately’ drop latest purchase plans

The power of super funds is on full display with a not-so-subtle warning directed at Atlas Arteria. 

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Maja Garaca Djurdjevic

Maja Garaca Djurdjevic

Maja's career in journalism spans well over a decade across finance, business and politics. Now an experienced editor and reporter across all elements of the financial services sector, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies.

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