'We're not greedy'

By Nick Stride

Friday 24th September 2004

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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