AusSuper’s Delaney ready to re-shape capital markets
Mark Delaney’s readiness to stare down two of the globe’s biggest investors is just one reason behind his nomination for The Australian Financial Review Business People of the Year for 2023.
AustralianSuper has done plenty of pioneering, building and leading, and this year it turned stirrer as it almost single-handedly blew up Origin Energy’s attempted $20 billion takeover by two private equity firms.
AustralianSuper chief investment officer Mark Delaney, who has run the $310 billion superannuation fund and its predecessor since it had just $3 billion in assets, says the premise of the Origin campaign was simple. Shaun Manuell, who runs the fund’s Australian equities book, told him the bid undervalued Origin and the team was inclined to reject it.
Mark Delaney’s restless spirit has helped him grow AustralianSuper to $310 billion in assets under management. David Rowe
“I said ‘Well, if you think it is worth a lot more, you shouldn’t agree to sell it for a price less than what you think it’s worth,’” he says, only two weeks after spoiling what would have been a landmark Australian M&A transaction.
“No one expected [the level of public interest] to get as big as it did.”
It was the first time a big Australian takeover bid that had been recommended by the board collapsed. AustralianSuper’s stance was highly controversial, pitting it against other high-profile investors such as Australian Retirement Trust.
Delaney’s preparedness to use the retirement fund’s enormous firepower to stare down two of the globe’s biggest investors, as well as a swath of local Origin shareholders, combined with AustralianSuper’s growing footprint across local and international sharemarkets, and debt and private capital markets, is behind his nomination as one of The Australian Financial Review Business People of the Year for 2023.
AustralianSuper has increased assets more than 15-fold to $310 billion since the 2006 merger between Australian Retirement Fund and Superannuation Trust of Australia, and he now has about 350 people in his investments team, including 50 in London and 20 in New York.
On the Origin deal, Delaney says he got more involved as the situation got bigger, but the reason for blocking the bid never changed.
“It was no more complicated than we thought that it was worth more than what the share price was,” he says. “So we didn’t [sell].”
AustralianSuper started the year with a 12.7 per cent Origin stake and increased it to more than 17 per cent as its opposition to the deal grew. That 17 per cent ended up being nearly enough to sink Brookfield and EIG Partners’ bid on its own.
It was a striking display of power by Australia’s biggest superannuation fund. After years of backing takeovers and tipping more money into private markets, it flexed its muscles to keep the utility in Australian hands and on the ASX, despite Origin’s board recommending it sell.
It was also a sign of what is to come as the fund’s assets swell.
Delaney says the fund will be bigger, more global and be managing more of its own money internally by the end of the decade and, worryingly for the investment banks, will be close to originating its own deals.
“Our footprint in capital markets will be larger,” he says.
Delaney says AustralianSuper has had to re-think its investment strategy a few times in his two decades at the fund and its predecessor Superannuation Trust of Australia, and will continue to do so in coming years as assets move towards $1 trillion.
Delaney got more involved in the Origin Energy decision as its opposition to the deal grew. Elke Meitzel
He has already done it in cash, for example, allocating some of AustralianSuper’s cash to his London team because it was getting too much for the local market to handle.
Delaney likens the changes to wearing shorts; he likes to wear shorts, but the shorts he wears in 10 years will be different to the ones he had in his 20s. “In 10 years’ time, I can be a bit fatter and I might need a new pair of shorts,” he jokes.
“I’m a restless person,” he says. “The fact I’ve got to keep on developing and changing excites me; faced with a choice between a small change and a big change, I’ll always go for the big change.”
He says his best investments include long-held stakes in Australian airports (via IFM Investors); buying US equities after the global financial crisis; being underweight the Australian dollar at the end of the resources boom nearly a decade ago; all-but avoiding fixed interest as interest rates bottomed in 2022; a stake in American sustainable infrastructure projects group Generate Capital; and investing in Peel Ports in the UK.
There is a bit of everything in that list – equities, currencies, fixed income, private equity, infrastructure – which is a perfect cocktail for a “restless” investor.
Read more on AFR Business People of the Year
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