Australia’s Largest Pension Looks to Boost Direct Investing; Part of Bid to Bring Management Duties In-House

AustralianSuper, the county’s largest pension fund, is looking to manage 40 percent of its assets in-house by 2018 (currently, that number sits at around 20 percent).

As part of that process, the fund is pushing for more direct investing – specifically, the fund wants to begin buying shares from companies before they go public.

From Bloomberg:

AustralianSuper Pty wants to lend to companies and invest directly in their shares before initial public offerings as it seeks to deploy the growing reserves of the country’s largest pension fund.

It sees the potential for more such transactions as it expands its in-house investment team, head of equities Innes McKeand said in an interview Wednesday.

“Australian corporates should pick up the phone to us,” McKeand said. “We see a lot more potential for that sort of investment and we believe we can push that area a lot further,” he said, referring to pre-placement share acquisitions.

Direct transactions, such as buying shares before a firm goes public, will allow the pension fund to pick up sizable stakes without inflating the target’s stock price, he said. AustralianSuper, which has almost doubled its funds under management in three years, also wants to lend to companies, pitting it directly with banks.

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“We are in the early stages of direct investment, writing big checks in the equity space, and we have had great results early on with some relatively low-risk transactions,” McKeand said.

AustralianSuper manages $70 billion in assets.