All super funds have made bad investments.
RBF is certainly no exception.
The Hobart Airport investment via Tasmanian Gateway Consortium (TGC) was a classic example, predicated on the assumption that the good times would last forever as per Macquarie Bank’s crystal ball.
Macquarie came to town as part of Operation Stealing Candy from a Baby HERE and sweet talked RBF into parting with $100 million for a non controlling minority interest in an airport at nearly twice the going rate at 27 times earnings, which necessitated a high degree of leverage to achieve the required return, which in turn led to the fixing of interest rates, ostensibly to placate nervous financiers but realistically designed to lock in returns for lenders, which together with a management fee which approximated 15% of earnings for a bit of paper shuffling and a couple of long lunches with bankers, ended up removing all the investors’ gains.
RBF should have been extracting steady rents from the deal. It was in a good position as a cashed up fund with implicit State Government backing.
Instead it became the perfect partner for the financiers and deal makers as the latter locked in their returns ahead of RBF who ended up with an empty promise of blue sky.
Had RBF been unwilling, it would have been daylight robbery.
But there was worse.