Property developer and investor Charter Hall is looking to increase its funds under management platform with the potential purchase of Westpac's $14.3 billion infrastructure investment business, Hastings Management.
Westpac on Monday said it had entered into exclusive discussions with Charter Hall to sell Hastings.
It has been looking to sell the business, which has offices in Melbourne, Sydney, London, New York, Singapore and Seoul, for more than a year.
Any deal, which is subject to due diligence and regulatory approvals, would give Charter Hall a springboard overseas and into a new business silo.
According to brokers at Macquarie Equities, there were merits in Charter Hall extending its significant domestic and international property investor relationships and retail distribution channels into new infrastructure opportunities.
"Indeed, listed and unlisted investment teams across real estate are increasingly also considering opportunities in infrastructure," the analysts said.
"The rationale for combining two fund managers with specific experience in each sub-sector appears reasonable."
Charter Hall chief executive David Harrison declined to comment on the deal, saying he and Westpac would provide a further update on the outcome of the negotiations.
Macquarie Equities said vendor expectations for a price above $500 million appeared to be unlikely.
The brokers said if the deal were completed, it would be a "company-transforming transaction for Charter Hall, combining two similar skill sets in two asset classes that are increasingly being viewed as one".
"The mid-point of the above earnings base and multiple would imply about $250 million consideration. Nine times would improve the accretion of the deal to about 5.5 per cent. We also note Hastings has lost some senior personnel of late, with the cultural fit and incentive scheme clearly crucial in any potential deal with Charter Hall."
Under Mr Harrison, Charter Hall has increased funds under management to $17.5 billion across the office, retail and industrial sectors. The group has offices in Sydney, Melbourne, Brisbane, Adelaide and Perth.
The rationale for combining two fund managers with specific experience in each sub-sector appears reasonable.
Macquarie brokers
Its most recent deal, in late June, was when  its $2.4 billion wholesale Prime Industrial Fund purchased a 24.89-hectare site with improvements of 81,008 sqm from Coca-Cola Amatil on a 20-year sale and leaseback arrangement.
The property, located at 220-260 Orchard Road, Richlands, Queensland, was acquired for $156 million.
Charter Hall is being advised by JPMorgan on the Hastings discussions.Â