After cutting investment ties with Chifley Financial Services, the $5 billion NSW Local Government Superannuation Scheme (LGSS) aims to sell its 33 per cent stake in the services provider.
LGSS aimed to sell its stake now that it had wound down all of its investments with Chifley and obtained a public offer licence, making it a competitor of the services provider, which manages the $264 million FuturePlus Super, Peter Lambert, chief executive officer of the fund, said.
“Chifley now really only runs a public offer fund, which competes with us now that we have a public offer licence,” Lambert said.
Unions NSW, another part-owner of Chifley, is also tied to another public offer fund in Asset Super, as it is represented by Mark Lennon, Naomi Steer and Michael Want on the fund’s board.
LGSS had obtained an independent valuation of its stake in Chifley and shared it with Unions NSW and the third part-owner, the Energy Industries Superannuation Scheme (EISS), aiming to “finalise the price with them,” Lambert said.
“We’ve been looking at the potential profitability of Chifley in light of the fact that they have an administration agreement with FuturePlus that needs to be renegotiated.”
But the negotiations were stymied by the emergence of a proposal to merge LGSS and EISS.
In December, a plan formed by EISS and the NSW Treasury to merge the two funds – all the while unbeknownst LGSS – was revealed. The Treasury has since backed away from the discussions, stating that no merger would occur until both funds had assessed the proposal.
The outcome of this deal is crucial to the LGSS’ Chifley sale, because if the fund sold its stake to EISS and the merger eventuated, “we would have sold it to ourselves,” Lambert said.
In addition to running FuturePlus Super, Chifley manages a wholesale multi-manager trust, the Chifley Investment Fund, which held $663 million, according to the fund’s 2008-09 annual report.
However last week LGSS announced that it had pulled $580 million in domestic property investments from the manager, following the withdrawal of $450 million in hedge fund-of-funds in February 2009.
LGSS has axed all of its investment mandates – which also include international listed property and small-caps – with Chifley.
Last year, the manager also lost its implemented consulting contact with the $600 million NSW Aboriginal Land Council, during which the head of investments at Chifley, Chadwick Pocock, left to take the same role at the statutory fund.