Argo appoints Taylor Collison to act as joint arrangers and joint lead managers
April 1, 2015
Argo Investments sets up new listed infrastructure fund
Australian Financial Review (by Simon Evans)
The $5.3 billion listed investment company Argo Investments, which was once chaired by Sir Donald Bradman, is breaking with 70 years of tradition to set up a new ASX-listed company specialising in infrastructure investments like airports, pipelines, railways and telecommunications towers.
New York-based infrastructure management Cohen & Steers has been hired as the manager of the infrastructure portfolio, as Argo moves to create a new long-term income stream. Argo was first established in 1946 and has more than 75,000 shareholders relying on the listed investment company for a steady flow of fully-franked dividends.
Argo chairman Ian Martin says the new Argo Global Listed Infrastructure company will be involved in a sector which is growing strongly. There are more than $3.9 trillion in infrastructure assets in the global infrastructure market across a variety of industries which also include toll roads, satellites, electricity utilities, gas and renewable energy assets.
Jason Beddow, managing director of Argo, says infrastructure is a well-understood asset class in Australia but the options for investing have become more limited, so it made sense to look offshore and to partner with a specialist with a strong track record.
“The pool of investment options in the listed space is fairly limited here,” he says.
Cohen & Steers has “a fairly unique process” in its investment approach and its methods and culture are in sync with Argo. “That was important from our perspective for the Argo brand,” Mr Beddow says.
Argo expects to lodge a prospectus with the Australian Securities and Investments Commission in May and eligible Argo shareholders will be able to subscribe for shares in the new company under a priority allocation. Mr Beddow won’t comment on how much might be raised.
Argo has a conservative approach and is a bedrock in the portfolios of many self-funded retirees and has had just three managing directors in its history. Cricketing great Sir Donald Bradman, who died in 2001 at the age of 92, was a former chairman of Argo and a director of the company for three decades. Argo’s shares have risen from $7.40 in mid-October last year to just above $8 now as the broader sharemarket climbed.
Cohen & Steers is listed on the New York Stock Exchange and has $65 billion in funds under management, including $6.7 billion in global listed infrastructure assets.
Mr Beddow says he thinks the new company will be appealing to those with a long-term horizon. “We think it’s a good medium-to-long term total return story”.
Argo is being advised by Rothschild, with CBA Equities and Taylor Collison acting as joint arrangers and joint lead managers. Morgans and Ord Minnett are also acting as joint lead managers.
Mr Martin, a former chief executive of BT Financial Group, became chairman of Argo in 2012.
see also ASX Announcement