BREAKFAST DEALS: Coaxing Macquarie
Macquarie gets some friendly advice from competitor UBS, while China Investment Corp keeps a keen eye on Tasmania.
Macquarie Group is being urged by financial services giant UBS to offload its investment banking and securities business, which dragged the silver donut’s profit down to an eight-year low in 2013.
UBS made the observation that the company’s results would improve if it sold the businesses in its latest note on the company, which included an upgrade to ‘buy’ from ‘neutral’.
While Macquarie has been cutting back jobs like anyone in the investment banking business, there are few external signs that the Australian icon is thinking of going down this road.
Recently, Macquarie has made headlines about leading big investors on bids for major assets, particularly infrastructure.
On cue, the UK’s The Telegraph reports that Macquarie Bank is leading a group of investment funds in a battle for British airport Stansted.
Macquarie was apparently going up against rivals that included a posse led by Morrison & Co, but they dropped out after failing to lock in finance.
Closer to home, many are interested to see if Macquarie ends up making something big of its new and growing relationship with Yellow Brick Road, which is aiming to seriously undercut the big four banks on mortgage rates.
China Investment Corp, Van Diemen’s Land Company
China Investment Corp looks to be making good on its intentions to pursue Tasmanian dairy producer Van Diemen’s Land, according to The Australian.
The newspaper reports that two people familiar with the situation say that the enormous sovereign wealth fund is due to visit the state next month, with VDL looking for $180 million to expand production.
You might remember that when this news first emerged back in September last year, it happened to coincide with a speech that opposition communications spokesperson Malcolm Turnbull made on Chinese investment in Australia.
Turnbull might have been straying somewhat from his portfolio – something many wish he’d do more often.
But it was somewhat related because Turnbull deals with telecommunication and China’s Huawei has effectively been locked out of the National Broadband Network.
On agriculture, Turnbull had the following to offer: "Australian agriculture will benefit from increased investment – for decades, it has suffered from a lack of investment.”
"The rise of Asia offers new markets and we will need to scale up to take advantage of them. Some of the most productive agricultural businesses in Australia are owned by foreign companies and this has been so for a very long time”
Regardless, if CIC manages to secure the VDL deal, we can expect a return of the debate about whether Australia is selling the back yard to China for minimal short-term gain.
The corporate regulator appears to have conducted a raid on the property of the environmental activist that fooled around with Whitehaven Coal on Monday.
Jonathan Moylon claimed in an interview with the ABC yesterday that the Australian Securities and Investments Commission came to his NSW property, taking his phone and laptop with them.
Moylan is a member of the Frontline Action Coal group, an anti-coal mining organisation. He made headlines, literally, by sending out a fake press release to media organisations claiming that ANZ Bank was pulling its $1.2 billion funding for the miner’s Maules Creek site.
The Australian Securities Exchange has defended its decision not to cancel the trades made on the back of the false reports.
The event has again highlighted how vulnerable ASX-listed companies are to hoaxes, with David Jones and Macmahon Holdings suffering similar incidents last year.
And we can probably add yet another to the list. A Brisbane-based explorer that’s listed on the Toronto Stock Exchange called Nautilus spiked hard following news that algorithm trader Michael Bailey was going for a hostile bid at $C238 million ($230 million).
Doesn’t look like that’s actually the case.
Fairfax Media, Seven West Media
The minuscule shareholding in Fairfax Media taken up by activist investors John Singleton and Mark Carnegie is getting yet more attention as the pair seek a meeting with another outspoken player, Allan Gray’s Simon Marais.
According to The Australian, Singleton and Carnegie are trying to secure the support of Marais as they team up with mining billionaire Gina Rinehart for a strategy change at Fairfax.
Marais has 11.43 per cent of Fairfax, Rinehart has around 15 per cent and the Singleton-Carnegie team, known as Gutenberg Investments Trust, has 0.15 per cent. That gives you an idea of who has the leverage.
Rinehart and Gutenberg have put their likened thoughts down on paper, something that Marais said he’s unlikely to do. But he did say that at some point he’d sit down with the pair.
Meanwhile, The Australian Financial Review reports that Fairfax, its publisher, appears to have watched its talks with Seven West Media over jointly owning online property assets go quiet.
Commonwealth Bank of Australia
Commonwealth Bank of Australia’s market cap might have dipped back below $100 billion for the moment, but the lender is still starting off 2013 on a high note.
According to RBC Capital, the bank is planning to launch a US dollar-denominated covered bond, not long after Westpac Banking Corporation went the exact same way for $US2.25 billion.
RBC Capital is one of the lead managers along with Barclays and CBA itself.
The deal is split between a three-year tranche priced at 60 basis points over the treasury rate and a five-year tranche at 80 points above.
The skinny rates underline just how easy it is for our banks to access overseas markets.
Former Leighton Holdings boss Wal King is now at the centre of a complicated battle at listed coal miner Bumi Resources.
Bumi, founded in conjunction with the influential but indebted Bakrie family, controls a series of coal assets throughout Indonesia via a 29 per cent stake in Bumi Resources.
Financier Nat Rothschild, who also helped found the company, is trying to buy the Bakrie family out and install King as chairman.
And finally, a relatively minor shareholder in streetwear company Globe International says it’s unlikely that Mariner Corporation is going to get much support from the register for its takeover bid, according to The Australian Financial Review.
"They’ll get a few acceptances but I’m not sure I’ll be one of them,” Kidder Williams managing director David Williams told the newspaper. "It would be compelling if I saw them pick up 10 per cent of the stock.”