Japan’s Mitsui takes 20 per cent stake in Westbourne

Posted by Anton Murray Consulting on 13 May, 2015

Sally Pattten

Debt infrastructure boutique, Westbourne Capital, has sold a 20 per cent stake to Mitsui, Japan’s second biggest trading company, in a move designed to strengthen the firm’s balance sheet and enable it to co-invest alongside clients.

Westbourne was established in 2008 by former executives from Westpac Banking Corp-owned Hastings Funds Management, and has attracted $4 billion from 24 Australian and global clients. It intends to embark on a further capital raising when it has invested the amassed funds. The firm’s local clients include the $117 billion Future Fund, Mercer Investments, Qantas Superannuation Plan and Sunsuper.

The price paid by Mitsui was not disclosed. The acquisition of the minoritystake is the latest in a string of deals completed by Japanese companies in Australia and is a concrete sign that under newly appointed chief executive Tatsuo Yasunaga, Mitsui is planning to expand the non-resources part of the business. Already this year Mr Yasunaga has pursued investments in tele-shopping in India and battery storage in the United States.

Mitsui has an option to buy a further 10 per cent of Westbourne in the next three to five years.

Westbourne managing director David Ridley said the Melbourne-based boutique was attracting strong interest from global insurance companies which had been stung by ultra-low bond yields, but which still needed to match their liabilities.

“Insurance companies are driving senior debt as they are looking to replace low-returning government debt and corporate [bond] spreads are very low,” Mr Ridley said.

DEMAND GROWING

Demand for junior, or mezzanine debt, was coming from typical infrastructure equity investors, who were attracted by the enhanced risk/returns rewards because infrastructure debt markets were less competitive.

Mr Ridley said Westbourne had raised $2 billion over the past year from two sovereign wealth funds, including the National Pension Service of Korea, and a British insurer.

Only about 20 per cent of Westbourne’s investments were in Australia, although it was part of a consortia in several coming deals, including the sale of the NSW transmission and distribution assets, the privatisation of the Port of Melbourne and the sale of mobile phone tower operator Crown Castle Australia by Crown Castle USA. Westbourne had invested in projects such as Victoria’s EastLink toll road, the Sydney convention centre, the Dalrymple Bay coal terminal, Hobart Airport and the Dampier to Bunbury gas pipeline. In Europe it was an investor in Copenhagen Airport.

Mitsui had been one of the largest foreign investors in Australia since the 1960s, with new investment of $14 billion in the past 10 years, which made Australia its largest offshore operation.

Westbourne already had an existing alliance with Mitsui subsidiary Japan Alternative Investments, designed to help the Australian firm to raise capital from Japanese pension funds, life insurance companies and government funds.

The Australian Financial Review

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