US hedge fund Och-Ziff buys 7.6pc of GPTFont Size: Decrease Increase Print Page: Print Florence Chong and Turi Condon | August 08, 2009 Article from: The Australian US hedge fund Och-Ziff has paid almost $356 million for a 7.61 per cent stake in Australia's oldest property trust, GPT Group.
The hedge fund purchased the bulk of the stake on Wednesday -- the day GPT created a world record with about 4.2 billion securities traded.
Law firm Mallesons Stephen Jaques lodged a change of substantial holding notice with the ASX on behalf of the hedge fund yesterday.
The holding is equal to 700 million units.
Sources said there had been heavy trading of GPT securities this week leading up to the group announcing the separation of its Babcock joint venture in Europe as an unlisted vehicle.
GPT said it would issue an "in specie dividend" of ordinary shares in the stand-alone vehicle to all its security holders, removing some $3.5bn of the joint venture's debt from the group.
Sources said some institutional investors had been selling out of GPT to avoid being issued securities in the unlisted joint venture vehicle, BGP Holdings.
That was because their mandates only allow them to invest in listed securities.
Sources said investors were trading out of the stock before it went ex-dividend for the in-specie securities in the unlisted vehicle after Wednesday's trading. However, many of these investors were expected to return to the register, they said.
Sources said Och-Ziff had been active in capital raisings in Australia, across all sectors, not just property.
Och-Ziff and other hedge funds are believed to have taken advantage of large discounts, usually of at least 20 per cent to last traded price, in these capital raisings.
One source doubted that Och-Ziff would be a long-term investor in GPT.
"I suspect they are in it to get the free shares in the unlisted vehicle (BGP Holdings)," he said.
"Hedge funds would be comfortable to hold the shares in the joint venture," said another source, who agreed that Och-Ziff could trade out of the stock in coming days or weeks.
Industry analysts said Och-Ziff had been an opportunistic and strategic investor but was not known for hostile deals. "This is not a big buy for a group the size of Och-Ziff," the analyst said.
ING Asset Management property securities head Justin Blaess said some thought the battered real estate sector would emerge as a hedge against inflation.
"If you can buy at a 30 per cent discount to stated net assets and you believe those assets will rise in value, it can be a fantastic hedge," Mr Blaess said.
Stockland's 15 per cent stake in GPT could also be seen as an attraction to a strategic investor.
"If GPT's share price slips, Stockland moves to take it over, underpinning the price," Mr Blaess said. Late last year, Och-Ziff reportedly sold its 7 per cent-plus stake in Consolidated Media.
It was also reportedly involved with Taemas Bridge, whose consortium members included Coupland Cardiff Asset Management, Laxey Partners and Northward Capital when it tried in April to take over Babcock & Brown Capital.
Och-Ziff's website describes it as a leading global institutional alternative asset manager.
GPT Price at posting:
$2.68 Sentiment: LT Buy Disclosure: Held
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