Decision time for $240b IFM, ISPT mega-merger



Nick LenaghanProperty editor
Oct 29, 2023 – 1.45pm

The slow-moving dance to merge infrastructure heavyweight IFM Investors with property platform ISPT – to create an investment management behemoth run by industry funds with near $240 billion of assets – has entered the final round, with a decision expected by mid-November.

Talks between the two industry fund-owned platforms have inched forward steadily since they were first revealed in June by The Australian Financial Review. But crunch time is finally looming after IFM lobbed a non-binding initial offer to its smaller peer.

The exterior of 405 Bourke Street In Melbourne, one of ISPT’s top office assets. 

“In relation to a potential merger between the two organisations, ISPT is currently considering a NBIO submitted by IFM Investors, and a response is anticipated by mid-November,” the two groups said in a joint statement.

A tie-up between the two investment platforms has been mooted in the past, but this time around the merger proposal has maintained enough traction to proceed to an offer.

In its favour is the fact the two platforms have many industry super fund shareholders in common, including AustralianSuper, Cbus, UniSuper, HESTA and Hostplus.


A union between the two would create a real assets platform, bringing together the $215 billion in global funds under management overseen by IFM with the smaller pool of $21.5 billion in local real estate run by ISPT. A merged platform would improve diversification, while potentially creating management savings and deepening the pool for prospective capital-raising.

Detail on the proposed deal is yet to emerge. Industry observers expect any deal to be structured on a “no consideration” basis, given the large crossover in industry fund super shareholders between the two platforms.

But there are also a number of complicating factors that must be addressed before a merger could be agreed. Along with the differing organisational structures, there is not an identical overlap in super fund shareholders between the two the platforms. As well, the investment focus of each platform clearly differs, with ISPT focused on the domestic market, while IFM has a global compass.

Both platforms share a common challenge, as higher interest rates and rising bond yields test returns from bond-proxy type investments, such as real estate, infrastructure and utilities, globally.

The 2023 financial year accounts for IFM, lodged on Friday, show its growth in funds under management fell by almost half, to 8.1 per cent compared with 15.6 per cent in the previous year. The management platform itself delivered a minor bump in profit to $138.1 million in 2023, up from $136.9 million.


IFM has been aggressively pursuing overseas investments, a strategy which its new chairwoman, Cath Bowtell, a former super fund boss, Labor candidate, and Australian Council of Trade Unions official, is expected to maintain.

The platform invests on behalf of 665 global institutional investors, including its 17 Australian industry fund shareholders. Almost half its funds under management are invested in infrastructure, with the remainder in private equity, listed equities and debt investment.

Just last week, IFM shrugged off a Europe-wide squeeze on infrastructure projects, to win a $3 billion Polish tender to build and run a passenger and cargo airport at the centre of a $12 billion regional transport hub.

It has been a key player in global deals, including the $US11 billion ($17 billion) buyout of data centre operator Switch last year and its growing investment in toll roads owner Atlas Arteria.

On its side, ISPT must negotiate headwinds blowing hard across the commercial property sector, which have cut returns over the past year. ISPT’s $18 billion core fund, which has a diversified portfolio including investments in major office towers in Sydney and Melbourne reported a robust 11.38 per cent net total return in its 2022 financial year,

By April this year, the fund’s total return had shrivelled to around 3 per cent over the previous 12 months to April, making it one of the hardest hit of Australia’s major unlisted commercial property funds.

This month ISPT announced it was looking to sell a $600 million portfolio of five assets, including Melbourne’s GPO, from its core fund. As well, it sold a retail property in the Brisbane CBD from the same fund for $145 million.

Nick Lenaghan edits the property section, which covers all aspects, from residential real estate and housing and construction to commercial property – office, retail, industrial – and major ASX-listed developers and real estate investment trusts. Connect with Nick on Twitter. Email Nick at

 A tie-up between the two powerful industry funds’ investment platforms has been mooted in the past, but this time around the proposal has proceeded to an offer. A tie-up between the two powerful industry funds’ investment platforms has been mooted in the past, but this time around the proposal has proceeded to an offer. 


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