AUSTRALIA - The Australian government is considering transferring part or all of its outstanding 51% share in telecom Telstra to the Future Fund if demand for the planned sale is not robust.
The government currently owns 6.4 billion shares, worth approximately A$23.4bn, and has announced plans to divest itself of the shares later this year. However, if retail and institutional reaction to the divestiture is not strong, the government may consider transferring all or part of the shares into the Future Fund rather than sink the share’s price.
“Our option is to either sell all the shares and transfer the money to the Future Fund, transfer the proceeds from a partial sale plus other shares or transfer the shares entirely to the Future Fund,” said a spokesman for senator Nick Minchin, minister for finance and administration.
“Whilst we haven’t made a final decision, it’s likely in the event of not selling the government stake in Telstra that the shares would be transferred to the Future Fund.”
The Future Fund was created by an act of parliament in March 2006, and was seeded with an initial $18bn in May. It was designed to meet the government’s unfunded superannuation liabilities, which may balloon to $140bn by 2020.
The government anticipates selling its stake in Telstra around October or November, with a final decision as to how much will be sold and how much would potentially be transferred to the Future Fund to be made ahead of that time, the spokesman confirmed.
Future Fund chairman David Murray expressed concerns about the transfer of Telstra shares into the fund at a recent Finance and Public Administration Legislation Committee hearing – first, that the government would put an escrow period on the shares to delay their sale and second, that having such a large overweight in Telstra shares would distort the portfolio’s structure and performance.
By Rachel Alembakis
The Next Generation Pensions Committee is on a mission to promote and encourage younger voices in the industry. Kim Kaveh looks at its key objectives
This week's top stories included an analysis finding the cost of equalising guaranteed minimum pensions in schemes could hit FTSE 100 profits by up to £15bn.
Employers whose dividend to deficit recovery contribution (DRCs) ratios fall outside the "normal range" should expect to see higher regulatory scrutiny, although no fixed ratio will be set.
Investment consultants and fiduciary managers should expect a final decision on the investigation into the market to be published by the end of the year, the competition watchdog says.