BREAKFAST DEALS: Genworth fillip

The IPO market looks to be getting a boost at long last, both here and across the Tasman.

You wouldn’t bet the house on it, but the tentatively positive signs stemming from the Greek debt deal negotiations enhances the argument that maybe, just maybe, Europe can crawl its way out of its present situation. The possibility of a eurozone collapse is something the IPO market does not take lightly, with investors and investment bankers hoping that the markets can calm down long enough to get some floats away. News that Genworth Financial is still looking at the second quarter for the IPO of its Australian arm will surely be encouraging, particularly after reports that CLP Holdings still thinks 2012 is the year for TRUenergy. Meanwhile, Business Spectator could be snapped up by any one of up to five domestic or international players if the price is right; Rio Tinto is laying down the law to now majority-owned Ivanhoe Mines; Spotless Group directors are staying silent after a crucially-timed board meeting and Woodside Petroleum isn’t selling down its Browse LNG stake as hard as first thought.

Genworth Financial

Investors hoping for some life to be injected into the IPO market might take some comfort from the relative calm at Genworth Financial. The US company announced plans to list up to 40 per cent of its Australian arm, generating as much as $800 million. Goldman Sachs picked up a joint lead manager spot last year, but The Australian Financial Review has gotten word that Macquarie Group, UBS and Commonwealth Bank are also set to be appointed, although nothing is official yet.

The newspaper also understands that the timetable for the proposed float, set for the second quarter, has not changed. This will be reassuring news to IPO watchers who were given a small scare 10 days ago when it was reported that TRUenergy’s parent company, Hong Kong-based CLP Holdings, was starting to think more about 2013 rather than 2012 for its up-to-$4 billion float of the local energy retailer. The reasons were an IT upgrade that needs to settle and turbulent equity markets, but, as it turns out, the computer issues were factored in to the original timetable. If equity markets hang together, we could see $4.8 billion floated in 2012 from these two players alone.

Business Spectator, Fairfax Media, News Limited

Australia’s largest independent financial news and commentary website, Business Spectator, could be sold to a group of bidders as part of a strategic review. Late last week, Australian Independent Business Media chairman Alan Kohler addressed staff members about a possible sale of the business following a string of offers. AIBM comprises Business Spectator, Climate Spectator, Technology Spectator and subscription-based Eureka Report and Kohler told staff members the interested players are Fairfax Media, News Limited, The Financial Times, Reuters and Euromoney.

Kohler made it clear to staff members that the business has not been created to be sold, but an information memorandum has nonetheless been sent round to interested parties to get some serious discussions going about what price could be put forward. Fairfax reports indicate that the media company’s own management had no comment on the prospect of a competitor being sold. The Australian reported shareholders Kohler, Stephen Bartholomeusz, Robert Gottliebsen, James Kirby, Karen Maley, Mark Carnegie and John Wylie had varied opinions on a sale.

In other media news, The Australian Financial Review reports that billionaire Kerry Stokes has abandoned his stake in Ten Network Holdings just two months after taking it on.

Mighty River Power

Speaking of floats, some Australian firms look set to pick up some business across the Tasman as the New Zealand government embarks on an ambitious asset sale program. Late last week Credit Suisse Australia/First New Zealand Capital, Macquarie Capital New Zealand and Goldman Sachs New Zealand were named as joint lead managers of the Mighty River Power float, which has been valued by PricewaterhouseCoopers at $NZ3.7 billion ($2.9 billion). New Zealand’s Key government has expressed confidence that the float program, particularly Mighty River, will attract interest from Australian investors, although Kiwis will have first dibs of course.

Rio Tinto, Ivanhoe Mines

Rio Tinto chief executive Tom Albanese isn’t wasting any time stamping his authority on his newest prize, a majority stake in Canada’s Ivanhoe Mines. The company said late last week in a statement to the US Securities and Exchange Commission that it could seek to make changes to Ivanhoe’s senior management and board, with "at least a majority of the non-Rio Tinto appointed directors”. The question is whether they try to stack the board so heavily with Rio directors that it becomes untenable for founder Robert Friedland, who has clashed with the Australian miner on a number of occasions, to remain a director. Rio promised in 2010 to keep the majority of the board independent and current deputy chairman Peter Meredith made sure the market remembered that in a statement delivered to the SEC.

The next question is when Rio moves to get a direct stake in the $US10 billion Oyu Tolgoi project in Mongolia, the sole reason it entered the Ivanhoe register to begin with. Documents filed to the SEC also reveal that Rio might look to grab a stake in Oyu Tolgoi in conjunction with another party. Start thinking about its largest shareholder, Chinalco, the homeland of which sits a geographical stone’s throw away from Mongolia.

Spotless Group

Spotless Group chairman Peter Smedley and his fellow directors sat down for their monthly board meeting on Friday, declining the opportunity to have a four-day weekend. As yet, we’ve still not heard any word about what the directors are going to do about their agitated shareholders baying for some no-holds-barred engagement with private equiteers Pacific Equity Partners over a $711 million offer. It appears the Spotless board must be pretty comfortable with its position and will only be drawn into something deeper if a shareholder like Orbis or Investors Mutual call for an expensive and time-consuming extraordinary general meeting in the hope of spilling the board.

Woodside Petroleum

It turns out that Woodside chief executive Peter Coleman is looking at selling down the oil and gas company’s stake in the Browse LNG venture a little earlier than expected, but not to the degree we thought. A media report indicated that Woodside could reduce its stake from 50 per cent to 16.67, which would bring it into line with the ownership structure of the North West Shelf. However, Woodside says while it is exploring the possibility, it will only sell a minority of its 50 per cent stake, which means a maximum of 24 per cent. Analysts have further estimated that selling a 16 per cent stake would generate about $US1.6 billion – that’ll do.

Brambles

The world’s largest pallet supplier Brambles doesn’t absolutely need to sell its US document management business, Recall, which is a luxury in this market. Brambles announced its intention to offload the unit in August, hoping for something north of $2 billion. At first private equity players Carlyle Group, Onex, Apollo Global Management and Thomas H Lee Partners emerged as interested buyers, with the sales process being led by UBS and Merrill Lynch. Now The Australian Financial Review understands that Carlyle has dropped out of the race. Less competition takes some of the heat out of the price, but chairman Graeme Kraehe doesn’t have to pull the trigger for the wrong figure.

Telstra, Optus, AFL

Telstra and Optus should have a better idea of how they’re planning to broadcast AFL sporting matches by the middle of this week. Telstra has already thrown up the prospect that it would scrap its existing deal with the AFL, worth $153 million, if a Federal Court of NSW upholds that Optus can keep selling its internet television service. This deal undermines the Telstra agreement and if Justice Steven Rares finds in favour of the Singapore-owned telco it could also throw up some serious questions for pending rights deals on a number of sports, including rugby league, cricket and the tennis.

Wrap up

Southeast Asian carrier Skywest Airlines has received its fifth ATR72-500 aircraft with another one expected to arrive within two weeks. The planes will be used as part of Skywest’s alliance with Virgin Australia, which has been granted intertim authorisation by the Australian Competition and Consumer Commission.

Unfortunately, the administrators of collapsed menswear chain Fletcher Jones couldn’t find a buyer happy to take on the business as a going concern. Instead, Bruno Secatore of Cor Cordis has accepted an offer from specialist liquidator Hilco Merchant.

Related Articles