Hostile toll-road bid shows patient-capital limits

Naturgy Energy

28/04/2026 13:00

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Antony Currie

MELBOURNE, April 28 (Reuters Breakingviews) - Wars can last for years, but takeover battles are usually concluded far more quickly. Not so for IFM Investors' slow-boil conflict with Atlas Arteria ALX.AX. After years of forbearance, the investment firm with some A$266 billion ($192 billion) in assets on Monday finally went straight to shareholders to buy the 65% of the toll-road operator it doesn't own at a valuation of at least $5 billion. The saga is a case study in both how patient capital can operate and where its limits lie.

IFM is the archetypal long-term investor. Owned by 15 Australian superannuation funds and one UK counterpart, its roots date back to the early 1990s as a platform to plough pension money into infrastructure and private equity. It operates with permanent capital and owns toll roads of its own, as well as holding a variety of controlling and minority stakes in assets, including Anglian Water, Sydney International Airport and Spanish utility Naturgy NTGY.MC.

The investment firm first drove into Sydney-listed Atlas Arteria's stock in June 2022, taking a 15% stake partly on fears it would become a leveraged buyout target. Within months, IFM had essentially become an activist as Atlas, under then-boss Graeme Bevans, decided to buy a two-thirds stake in the Chicago Skyway. IFM objected publicly, but Bevans rejected the advice and sold $2 billion of new equity to pay for it. The American tollway has performed badly, and its new owner's stock has tanked, closing on Friday some 47% below IFM's initial purchase price.

IFM's infrastructure team, run by Kyle Mangini, responded with characteristic patience. Takeover rules Down Under usually force investors to make an offer for the entire company once they own just shy of 20%, unless they only increase their stake by no more than 3% in any six-month period thereafter. Using this so-called creep provision, IFM now owns 35% of Atlas.

But two factors have now changed the game: first, expectations of people driving less with the Iran war spiking petrol prices lowered the cost of a takeover by lopping about 10% off the target's stock price. Perhaps more pressingly, current Atlas boss Hugh Wehby in February stated he was on the look-out for acquisitions. Doubtless fearing a repeat of the Chicago Skyway fiasco, IFM's patience ran out.

The toll-road operator's board says it is considering the bid, though the tender offer puts investors in the driving seat. How many accept what will at best be an 18% premium will reveal just how many others have lost patience with Atlas, too.

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CONTEXT NEWS

IFM Investors on April 27 offered to buy from shareholders the remaining 65% of Atlas Arteria that it doesn't already own in a bid valuing the toll-road operator's equity at a minimum of A$6.9 billion ($4.95 billion).

At A$4.75 per security, the offer represents a 10% premium to the last closing price. If at the end of the offer period IFM owns 45% or more of the company, it will increase the price to A$5.10 per security, a A$7.4 billion valuation and an 18% premium.

IFM, which is owned by 15 Australian superannuation funds and one UK pension fund, has A$266 billion in funds under management.

Atlas stock has been in reverse for years https://www.reuters.com/graphics/BRV-BRV/zjpqmdxnlpx/chart.png

(Editing by Hudson Lockett and Una Galani; Production by Ujjaini Dutta)

((For previous columns by the author, Reuters customers can click on CURRIE/antony.currie@thomsonreuters.com))