Australian fund manager cleared to buy up to 15% of Chorus

 Government approval granted to exceed the 10% Kiwi share restriction.

Australian fund manager L1 Capital has been granted approval to boost its Chorus stake to as much as 15% by the Crown.

The Melbourne-based company held a 9.6% stake in the local telecommunications network operator as at October 2 and was today granted government approval to rise above the 10% Kiwi share restriction, which was carried over to Chorus after its demerger from Telecom Corp, now Spark New Zealand, in 2011.

L1 has previously built up a major stake in Chorus, but sold down its stake to book profits in 2015.

The Kiwi share obligation was imposed on Telecom when it was privatised in 1990 and required Crown approval for anyone wanting to build a stake of more than 10% and also if a foreign entity wanted to buy 49.9% or more of the company. Spark was unshackled from the obligation after the demerger.

AMP Capital was granted approval to go above the 10% threshold in 2012 after the fund manager bought Axa Asia Pacific and acquiring its rival's investment portfolio. That attracted criticism by then Green Party co-leader Russel Norman at a time when the previous administration was preparing state-owned power companies for partial privatisation.

Chorus shares increased 0.1% to $4.04, and have gained 1.6% this year. The stock is rated an average 'hold' based on five analyst recommendations compiled by Reuters, with a median price target of $4.29.

Largest Chorus shareholder today is the govt with its 43.12% holding of non-voting stock (via Crown Infrastructure Partners, formerly Crown Fibre Holdings).