Management move opens the way for a takeover

Externally managed funds are difficult to take over due to the conditions and poison pills often embedded in management agreements.

In DUET's case, it will be one of the last listed infrastructure funds to bring management in-house after Macquarie raised more than $400 million in 2009 internalising a suite of managed listed funds.

The tide has turned against externally managed funds on the basis most charged excessive fees and had interests not necessarily aligned to those of investors.

The internalisation of DUET's management - if approved - will be a nice one-off payment for joint external managers AMP and Macquarie Group. Between them, they will get an estimated $98 million in cash and securities, a pretty rich compensation package, albeit not the most generous received to ditch external managers.

It comes as Macquarie grapples with life as an investment bank and AMP is digesting its AXA acquisition.

DUET was established in June 2003 as a wholesale unit trust. A year later it listed on the ASX, and AMP set up a joint venture by selling to Macquarie 50 per cent of the entities that held DUET management rights. DUET's portfolio of assets includes investments in the Dampier Bunbury Pipeline, United Energy Distribution and Multinet Gas.

There is a lot of activity in the listed infrastructure space, with Australian Infrastructure Fund and Hastings Funds Management announcing in June the board was in talks about internalising management.

Hastings and Hastings Diversified Utilities Fund are at the centre of competing bids from Pipeline Partners and APT Pipelines, and received a decision by the Takeover Panel yesterday that it had declined proceedings on an application from investor AFIC into the affairs of Hastings.

The application concerned the provision of a full independent evaluation of the internalisation of management of Hastings Diversified in the context of a takeover bid for Hastings by Pipeline Partners. The battle ensues.