Billionaire asks Elanor fund to hire forensic accountants amid bid
Primo billionaire Paul Lederer went straight to shareholders with a hostile bid for the $279 million Elanor Commercial Property Fund in August.
Now, his advisers are questioning the robustness of the listed fund’s financial disclosures and trying to bring in a forensic accountant, while its manager Elanor Investors – itself, subject to a recapitalisation proposal – digs in its heels and denies all allegations.
Street Talk understands Lederer Group’s lawyers at McCullough Robertson late last month sent a seven-page letter to the Elanor Commercial Fund, care of Arnold Bloch Leibler, raising concerns about the fees charged to investors since the 2022 financial year.
Lederer Group, which owns 27.5 per cent of the fund, has been trying to win over shareholders with an off-market takeover bid pegged at 70¢ per unit.
The letter, which is circulating among investors, notes that over the past three years Elanor entities have charged the Commercial Fund’s investors nearly $6 million in fees and cost recoveries that are either prohibited by its constitution, exceed what is allowed, or are already included in the management fees.
“Our client is concerned that EAS [Elanor Asset Services] has committed material and consistent breaches of the IMA [investment management agreement] and the PMA [property management agreement] since FY2022 through the charging of the fees and cost recoveries outlined above,” McCullough Robertson partner Natalie Kurdian wrote in the September 30 letter.
The letter goes on to accuse Elanor of benefiting at the cost of the Commercial Fund’s unitholders. It ended by calling for the fund to appoint a forensic accountant, requesting it get full access to the books and key Elanor staff.
A spokesperson for Elanor Investors Group denied the seven-page letter’s contents, painting it as a takeover tactic.
“Elanor categorically denies Lederer’s assertions and furthermore notes that these allegations have been made in the context of a stalled hostile takeover and following an independent expert’s report finding that Lederer’s offer is not fair or reasonable to ECF securityholders,” the spokesperson said.
Elanor Commercial Fund’s board has told unitholders to reject Lederer’s bid, citing a report from financial and risk advisory firm Kroll which labelled the 70¢ offer “neither fair nor reasonable” and suggested 73¢ to 75¢ as an acceptable range.
Sources said Lederer has secured 33 per cent of the register, or about 5.5 per cent more than what it had already owned, as several big players hold out in hopes of it raising its bid. They added the 70¢ offer price, although billed at a 5.3 per cent premium to the last close, was on par with the value of the underlying assets. In short, it is more a promise of liquidity and escape from Elanor’s troubles, rather than a big, juicy premium.
Elanor Investor Group’s shares have been suspended for more than a year, and it is considering a recapitalisation proposal from Singapore’s Rockworth Capital Partners. It has lost a $3.5 billion mandate from Challenger as first reported by The Australian Financial Review, and is facing similar pressure from investors in its healthcare fund.
