future fund sell down

Future Fund sells Telstra stake

BLOOMBERG
August 20, 2009, 4:21 pm
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DeliciousTwitterMyspaceDiggStumble UponFacebookPrintThe Federal Government’s Future Fund is selling $1.7 billion worth of shares in the country’s biggest telco Telstra.

The Future Fund, whose assets were worth $58 billion as at March 31, is selling a total 497.7 million shares at $3.47 each, a 4.9 per cent discount to today’s closing price, according to an e-mail sent to investors.

UBS is managing the sale, which closes at 6pm.

The Future Fund, which owns 2 billion shares or 16 per cent of Telstra’s issued capital, has been the biggest investor in the company since being established in 2006 to provide for government pension liabilities.

The government put the last of its Telstra holding into the fund when it completed the third stage of its privatisation of the company.

Prasad Patkar, of Platypus Asset Management, said the sale was always likely given the stake was jammed down the Future Fund’s throat for political reasons.

Mr Patkar said it was a positive development for Telstra as the perceived overhang was dealt with through the sell-down.

Under former chief executive Sol Trujillo, Telstra was shut out of the government’s plan for a $43 billion national high-speed internet network.

New chief executive David Thodey is pledging closer ties with the government and may consider selling assets into the project or helping its construction.

The Future Funds sale is equivalent to about a quarter of its stake in Telstra.

The head of public affairs for the Future Fund couldn’t immediately be reached for comment.

"The sell-down is in line with the board's previously stated plan to reduce the portfolios overweight holding in Telstra in an orderly manner over the medium term and to build a portfolio consistent with its long-term mandate and strategy," the e-mail said.

Telstra shares closed at $3.65 today and remain less than half the value of when the government sold a second slice of the company almost a decade ago.

Argo Investments fund manager Rob Patterson said it was a value proposition at the prices asked for.

“There’s still a lot of unresolved issues, in terms of regulation and the national broadband network, but we are comfortable with investing in the company,” he said.

“We will be participating.”

Telstra last week reported second-half profit had climbed 22 per cent as mobile phones overtook traditional fixed-line services for the first time.

Net income rose to $2.16 billion in the six months ended June 30.

interesting thanks bloomberg