Construction heavyweight Lendlease will be hit with a second class action over claims it failed to keep investors fully informed about troubles in its engineering division.

Law firm Phi Finney McDonald is preparing a shareholder class action against Lendlease, which is involved in major projects including Melbourne’s Metro rail tunnel and Sydney’s NorthConnex tollway.

US pension fund goliath the Teacher Retirement System of Texas, which has about $US150 billion ($213 billion) under management, is one of the institutional investors backing the class action.

Investors were burnt last November when Lendlease shares tumbled 27 per cent over three days after the company said it would take a $350 million writedown due to the “underperformance” of the engineering division.

Major law firm Maurice Blackburn hit Lendlease with a class action over the same issue earlier this year.

In the Phi Finney class action, investors will allege Lendlease breached its continuous disclosure obligations to investors.

It will allege the company should have kept investors abreast of issues in the engineering division that dated back to October 2017.

The class action will be for investors who acquired Lendlease securities between October 17, 2017, and February 25 this year.

That was when Lendlease revealed further problems alongside its first-half results announcement.

Shares in the group fell more than 9 per cent from February 25 to February 27.

Phi Finney managing director Ben Phi said that the significant problems in Lendlease’s engineering division had come as a shock to investors.

“For more than a year, Lendlease had reassured investors that the storm was over, when in fact the worst was yet to come,” he said.

“Our clients allege that Lendlease failed to keep them properly informed of the problems, and their gravity, over a prolonged period.

“Lendlease is an ASX 100 company with thousands of mum-and-dad shareholders, as well as some of the largest superannuation funds in Australia.

“This class action seeks compensation for those shareholders who suffered loss and damage as a result of Lendlease’s conduct.”

Teacher Retirement System of Texas assistant general counsel Lane Arnold said that, as a public pension fund, it wanted to ensure the interests of its members were looked after. It has almost 1.6 million members.

METRO TUNNEL BEGINS TO TAKE SHAPE

The revelation that Lendlease faces another class action comes after the development heavyweight announced last weekthat it had struck its biggest ever deal.

Lendlease will develop three “mini-communities” in San Francisco over 15 years in a $US15 billion partnership with technology goliath Google.