Industry funds backed investment manager, IFM Investors has strongly denied to a Parliamentary Committee that it overvalued an investment in a Mexican energy company, Aleatica Mexico, when giving evidence to the committee last year.
IFM Investors was challenged on the issue by the chair of the House of Representatives Standing Committee on Economics, Tim Wilson, after specialist research house, Aurora Research, produced a report claiming that IFM Investors misled the committee when it denied it was valuing its stake in Aleatica Mexico at a substantial premium to its share price.
According to the Aurora Research claims, an IFM Investors executive had falsely denied to the committee that IFM valued its investment in Aleatica Mexico at around $3.79 AUD per share, when those same shares were listed in Mexico’s stock exchange at a quoted price of around $1.52 AUD per share.
As chair of the committee, Wilson promptly sent off a question on notice to IFM Investors asking for an explanation.
IFM’s global head of investor relations and former Industry Super Australia (ISA) chief executive, David Whiteley responded to Wilson claiming the Aurora Research report allegations were “false and misleading”.
“The allegations in the report referenced by the Committee are false and misleading,” Whiteley’s formal letter of response said.
“Ensuring the valuations of IFM’s portfolio companies are completed independently, appropriately and in compliance with applicable accounting standards is critically important.
“Valuations of IFM’s portfolio companies are performed quarterly by independent, expert third-party valuation firms, and are conducted in compliance with international accounting standards such as US Generally Accepted Accounting Principles (US GAAP) and International Financial Reporting Standards (IFRS).
“A different independent valuation firm is appointed to value each of IFM’s investments every three years. In the case of IFM’s investment in Aleatica, two expert valuation firms have analysed the investment over time and have independently determined appropriate methodologies to establish their valuations, which must comply with the applicable accounting standards.”
“Further, IFM’s corporate auditor (currently Deloitte) reviews all of the independent valuations of IFM’s investments on an annual basis to ensure compliance with the applicable accounting standards. Deloitte does not act as the independent valuation firm for any of IFM’s investments in its portfolio companies,” Whiteley’s response said.