IFM Resigns Itself to Keeping only 10.8% of the Capital and Having Less Power

IFM’s takeover bid for Naturgy comes to an end with a bittersweet taste. The Australian fund must settle for only 10.83% of the Spanish company’s capital after achieving that low degree of acceptance of its offer. Thus, IFM becomes the fourth largest shareholder in the company after Criteria, which has 26.7% and the CVC and GIP funds, with 20% each. You can only choose one advisor. At the close of the session, Naturgy shares have risen 4.62% to 24.01 euros, having risen by 6% after announcing the outcome.

Initially, IFM had proposed to acquire between a minimum of 17% and a maximum of 22.69% of the capital of Naturgy, and for this it offered 22.07 euros per share to interested shareholders. However, in the end he has waived that minimum acceptance limit. By way of a breakdown, IFM’s offer has been accepted for 105 million shares – compared to the maximum of 220 million shares to which IFM aspired -, representing that 10.83% of the capital.

However, from the bottom they celebrate the result in their own way. Kyle Mangini, IFM Investors’ Global Head of Infrastructure, says he is “looking forward to working closely with Naturgy’s shareholders so that the company can implement its latest strategic plan, which involves helping to make Naturgy a key player in the energy transition “.

“Naturgy fits perfectly into IFM GIF’s strategy of investing long-term in critical assets with strong, recurring and regulated cash flows,” says Mangini.

Back with the dividend
He also cites one of the latest controversies. The fund remembers that your entry makes you one of the main shareholders of the company. “As such, it will actively support Naturgy to help complete its long-term vision that is based on (…) a prudent dividend proposal, in line with the new dividend reduction policy included in the 2021-2025 Strategic Plan , or even potentially a lower dividend if necessary. ”

And, before knowing this result, Jaime Siles, vice president of the Australian fund IFM – in an interview with the Economist – assured that they would not hesitate to eliminate the dividend if it was better for the company. Some statements that did not sit well within Naturgy. Moreover, not 24 hours later, the Spanish had to step out to remember that there was a strategic plan present and that any change required the approval of the council.

“Our stake in Naturgy is another example of how millions of pension fund members, through IFM, can access highly diversified investment strategies and asset classes on a scale that they could not do alone,” says David Neal, Board Member. IFM delegate.

A corporate soap opera
The operation has been complex in its formulation and development. As Servimedia recalls, on the one hand, the reluctance of the main shareholders to facilitate the entry of the fund given their plans or strategy and, on the other, by having to receive the approval of the Government for being Naturgy a strategic company.

Thus, the offer was made by IFM after an agreement with CVC and GIP: While Criteria has strengthened its shareholding position, above 26%, while at the same time taking a position against the fund’s decision to review the dividend policy and adjust it at Naturgy.

The authorization of the OPA came after the approval of the Government to the operation, after IFM accepted all the conditions required by the Council of Ministers such as maintaining the headquarters and a prudent dividend to continue with the investments and not addressing divestments other than those included in the Strategic Plan 2022-2025 or exclude it from the stock market or lose control of the subsidiaries that ensure the transport and distribution of energy in Spain.

However, these conditions were set considering the 17% threshold that had been set to consider the operation successful. As the final purchase is around 10%, IFM may have more margin when it exercises voting rights in the company … or not.