A CABAL of Hong Kong hedge funds has raided the share register of ING Industrial Fund, in a bid to build a blocking stake before the investor vote to approve ING’s tie-up with the renascent Goodman Group.
The hedge funds control the ING Industrial fund’s $400 million in preference units. They are understood to be fearful that, if the Goodman deal were to proceed in its present form, they would be ”taken private”, or locked in, with no access to distributions.
Yesterday, the funds moved concertedly, buying some 300 million units on market to take their stake to around 15 per cent. All up, some 500 million units changed hands at 53¢ and 53.5¢ apiece. They may disclose their position as early as today.
Goodman had struck an agreed deal with ING Industrial Fund last year to merge via a $1.5 billion scheme of arrangement. However, sources close to the advisers said there was no provision in the scheme documents which ensured that the preference units would be redeemed.
Such an outcome would leave the preference unit holders as simply unsecured creditors in the new vehicle, with no protections on payment of distributions.
Their beachhead in the stock now delivers a platform to agitate against the Goodman deal. Although the scheme documents don’t appear to provide protection, an adviser said: ”The terms of the preference shares are clearly stated in the offer documents for the preference shares”.
The sale of ING Industrial by the Dutch banking giant is part of a general, controlled exit from real estate investment trust markets in Australia. ING is endeavouring to do a deal with Investa to sell its ING Office Fund.
Like almost all its peers in the listed trust space, ING has had a rocky time since the 2008 financial crisis sent most of the heavily geared REITs – including Goodman itself, which has now turned expansionist once again – close to the wall.