[ad_1]
AustralianSuper is taking great care to make sure it isn’t regarded as the bully of Australian sharemarkets.
The $130 billion super fund, believed to be the single largest shareholder in the local market with the exception of BlackRock, will abstain from voting at this morning’s Healthscope annual general meeting, where chairman Paula Dwyer is up for re-election.
AustralianSuper is part of the BGH Consortium which has made a conditional, non-binding offer for the private hospital operator, at $2.36 a share.
As part of the offer, the consortium, which now owns 19.31 per cent of Healthscope after building on AustralianSuper’s initial stake in the past week, said it won’t support any other offers – whatever the price.
With such a large stake, the consortium could have the ability to swing the votes, almost guarantee a strike, had it chosen to do so. That’s a powerful threat to induce the board, which has already rebuffed BGH’s offer once, to grant due diligence.
Advertisement
But cloaked under the catch-all reason of “corporate governance” AustralianSuper is abstaining.
It is choosing not to vote on Healthscope’s remuneration report, which has provoked criticism from some proxy advisers, Ms Dwyer’s re-election or the election of Michael Stanford to the board.
AGM voting is one of the few times that shareholders can really send a public message to the board, and voting against remuneration reports is often considered a protest for other issues. But AustralianSuper isn’t going down that path.
Why not? Surely it’s the knock-out blow that would get BGH and AustralianSuper into due diligence.
But in reality, the decision to abstain shows the super fund is trying to play a much longer game.
It’s an attempt to protect the fund’s long term reputation and ensuring that if it chooses to keep employing this model (it has another similarly-structured offer on the table for education provider Navitas) it won’t be seen as overly aggressive by boards.
Let’s not forget that the initial reaction to the structure of this bid provoked all kinds of behind-the-scenes mutterings about whether the fund was disadvantaging other investors by styming the potential for counter-offer.
That discussion has now moved on, with Allen Gray’s Simon Mawhinney saying boards must adapt to new tactics but still comes with some lingering unease.
AustralianSuper, which manges the retirement savings for 2.2 million people, says it must be focused on three things: its members, the long-term value of the company and the health of the broader economy.
Clearly, the fund believes it has the best chance to do that when it’s not seen as overtly aggressive. The local sharemarket is small, and humiliating a company’s board may not be the best way to make sure a company engages next time around.
It shows that the super fund isn’t thinking about this as a one off – because it’s rare that private equity chooses to keep the board or often senior management once it acquires a company.
Rather than go for the public humiliation, the super fund is choosing to go for the iron fist in a velvet glove approach.
Because, however politely this is done, the BGH consortium has more than just 19 per cent of the company – it also has Ellerston Capital, which holds 9.3 per cent of the company, saying it wants Healthscope’s board to grant due diligence.
And so, at this morning’s annual meeting, it will be left to other investors to challenge the board via their voting rights. The question is whether Healthscope will choose to pre-empt that and grant due diligence to its patient suitor.
[ad_2]
Source link
