Malaysia’s EPF and Goodman spark JV plans in Australia

The A$150bn retirement fund has acquired an initial A$400m of Australian logistics properties from Goodman and plans to invest with the ASX-listed group in A$500m more. The deals down under are intended to spark a global investing joint venture.

Malaysia’s $148.3 billion pension fund, Employees Provident Fund (EPF), has teamed up with Australia Securities Exchange-listed logistics giant Goodman Group for a global investment partnership, sparked by initial investments in Australia.

According to an announcement by Goodman, which currently manages A18.9 billion (€14.8 billion: $18.6 billion) of assets predominantly in Asia and Europe, the partnership has been seeded with the sale of six of its logistics properties in Australia from its balance sheet and its funds valued at approximately A$400 million.

Following that sale, Goodman and EPF have committed to invest a further A$500 million into Australian logistics transactions with EPF assuming an initial 60 percent position in their investments and Goodman controlling the remaining 40 percent.

EPF’s deputy chief executive officer for investment Dato’Shahril Ridza Ridzuan said the partnership would then extend to include transactions globally. It is intended to address EPF’s underweight exposure to logistics and industrial real estate investments and to form part of its wider plans to increase its exposure to real estate generally. According to PERE Connect, as of August last year, EPF’s allocation to real estate was just 0.4 percent of total assets.

Dato' Shahril said: “EPF intends to increase its exposure to real estate, by investing with best in class property groups around the world. Our selection of Goodman as our global investment partner for logistics real estate was driven by their reputation, knowledge as a global sector specialist and high quality portfolio.”

Greg Goodman, chief executive officer at Goodman, described the venture as “another important step in the expansion of his firm’s funds management platform”. He added that the partnership would enable Goodman to recycle assets to fund its future developments and break into new markets while retaining management responsibility for its assets. Goodman said it would provide the partnership with EPF with management services on terms “generally consistent” with arrangements across its existing funds management business.

Acknowledging of today’s trend among the world’s largest institutional investors, particularly sovereign entities, towards teaming up directly with specialist investment partners rather than via blind-pool, commingled funds, Goodman said: “Major global investors continue to target high quality income producing investments in a structure that provides access to a specialist team with strong alignment.”

Dato' Shahril also identified Goodman’s ability to structure their investing relationship as a direct partnership as part of its reason for selecting to partner the firm. He said: “Goodman’s ability to demonstrate their alignment of interest by investing alongside EPF was a key differentiating factor.”

While this partnership with EPF is dedicated towards a series of transactions, Goodman has teamed up with other major investors in recent years to invest on a direct basis. In March last year, for example, Goodman led a syndicate including China Investment Corporation, Canada Pension Plan Investment Board and Netherlands-based Algemene Pensioen Groep in the privatisation of the ING Industrial Fund, a A$2.5 billion listed-Australian and European industrial property fund with 60 properties.