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'We're not greedy'

By Nick Stride

Friday 24th September 2004

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All those jokes about greedy rights issues seem finally to have got under Lloyd Morrison's skin.

In its latest newsletter Infratil, the investment company Morrison's Morrison & Co manages, has printed a four-page management fee analysis by Ernst & Young corporate finance.

It shows Infratil has paid $29.4 million in management fees over its 10-year life.

Ernst & Young then surveyed six other actively managed funds in comparable sectors.

It found they paid a fee of not less than 1%.

Ernst & Young then calculated what Infratil would have paid over 10 years had it been charged 1% or 1.5%.

Without performance fees the bill would have been $32.5 million or $48.8 million.

With performance fees, it would have been $74.1 million or $90.4 million.

The amount Infratil pays in fees has risen sharply over the years, to $5.6 million last year.

But so has the company's value ­ from a market capitalisation of just over $100 million in 1996 to $685 million at recent prices.

The fee has averaged 0.95% of the company's value.

The lowest fee among the comparable companies was AMP NZ Office Trust (0.9% to 1.65% a year and no performance fee) and the highest was JB Were Private Equity Fund (2.5% a year and 20% of returns above 8.2% a year).

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