BREAKFAST DEALS: Hancock haul

Gina Rinehart has sealed a long-awaited $1.2 billion deal with Indian conglomerate GVK to jump-start the development of her coal assets in the Galilee Basin. With the mining magnate offered a seat at GVK's board as a non-executive director, Rinehart can now see the assets finally come to life and may already have her sights on some coal juniors in the region. Meanwhile, UBS's chief executive says he's not going anywhere as the Swiss banking giant sheds more light on the rogue trading scandal. Back in the mining sector, Ivanhoe Mines stands committed to its local subsidiary and a Russian steel giant may be interested in deals with Mongolian-focused ASX-listed outfits Xanadu Coal and Aspire Mining. In other news, CBA's executive reshuffle could be a signal of the bank's Asian aspirations and India's second-largest bank gains a foothold in Australia.

Gina Rinehart, Hancock Prospecting, GVK Power and Infrastructure

Australia's richest person, Gina Rinehart, has sealed a long-awaited $1.2 billion deal with Indian conglomerate GVK Power and Infrastructure, which will take a 79 per cent stake in the mining magnate's Alpha and Alpha West projects and a 100 per cent stake in the Kevin's Corner project. Rinehart's Hancock Prospecting and GVK had been locked in talks for six months despite suggestions that the two parties were not eye-to-eye on the valuation of the projects, and that GVK may not have the necessary financial muscle to pull off the deal. The Indian conglomerate has signed a deal, however, and will take full ownership of rail and port projects owned by the Hancock group to underpin the development of the infrastructure to get coal in the Galilee basin to Asian buyers. GVK will pay Hancock $500 million up front, with $200 million to be paid in a year's time and the rest at the financial close of the project, expected to take no more than three years. The $1.2 billion sum is realistically just the start for GVK, which is expected to invest close to $10 billion on developing the mines and the infrastructure, and the deal is perceived as a win-win for both parties. Given the scale of investment needed to maximise the potential of the projects, Rinehart always had to find a partner and in GVK she has found an entity that is willing to spend the cash needed to build the rail and port infrastructure. For GVK, the need to secure long-term coal supplies for its domestic power projects is paramount and the output from Galilee is a key part of that supply equation. GVK also said that about 45 million tonnes of the expected 84 million tonnes output from the mines has been earmarked for delivery to Asia, adding that it was talking to major utilities in China, Japan, Korea, Taiwan and Vietnam. Rinehart will now have a box seat as the coal resources are developed, with the magnate invited to join the board of GVK, and there is talk that she might have more coal on her mind. According to The Australian Financial Review, Hancock Prospecting has developed a taste for coal minnows in the Galilee. Coal junior Carabella Resources informed the market at the start of the month that Hancock had taken a 0.74 per cent stake in the company, and the AFR reports Hancock has also began buying shares in Endocoal and Australian Pacific Coal. Both are located next to the proposed rail line from the Galilee basin to the Abbot Point port terminal that GVK will now build for Rinehart.

UBS

Swiss banking giant UBS has shed some more light into murky dealings uncovered last week that led to a $US2.3 billion loss. In its first detailed statement since the news emerged, the bank said that the unauthorised speculative trading in various S&P 500, DAX, and EuroStoxx index futures over the last three months was conducted by a trader in its Global Synthetic Equity business in London. UBS didn't disclose the name of the trader but UK authorities are questioning 31-year-old equities trader Kweku Adoboli in relation to the scandal. UBS has launched its own taskforce to investigate the trading, while the UK Financial Services Authority and its Swiss counterparts are running a joint investigation to get to the bottom of the situation. However, those expecting any radical fallout from the scandal on the bank's head honchos will be disappointed, with UBS chief executive Oswal Grübel telling Swiss paper Sonntag that he is not going anywhere and the calls for his head in the wake of the scandal were purely politically-motivated. Grübel's defiance may be justified to some extent but will only further antagonise the voices calling for changes at the investment bank. However, as the Financial Times points out, UBS is fresh out of options for the time being, with respect to who would be strong enough or willing to fill Grübel's shoes.

Ivanhoe Mines, Ivanhoe Australia, Xanadu Coal, Aspire Mining

Back to the mining sector, and Ivanhoe Australia has announced plans to raise up to $180 million at $1.39 per share, with $150 million to be invested into development work at its projects and the rest earmarked to repay $30.6 million of debt owed to its majority shareholder, Ivanhoe Mines. There was some talk that Ivanhoe Mines, led by Canadian mining baron Robert Friedland, was getting ready to spin off the business, but the miner's decision to subscribe to $92 million worth of shares in the raising would indicate that Friedland is not keen to wash his hands of the local subsidiary just yet. The issuance would reduce Ivanhoe Mines' holding in the Australian unit from 62 per cent to 59 per cent but the money spent by Friedland means that an imminent exit is not on the cards. The spin-off talk was fuelled by rumours that Ivanhoe Mines was looking to sell its 57 per cent stake in Mongolian coal miner South Gobi Resources, in a bid to clean up its structure ahead of an expected takeover bid from Rio Tinto. The two are working together at the Oyu Tolgoi project in Mongolia and Rio owns a 46.5 per cent stake in Ivanhoe Mines. Elsewhere, with all the attention on Hunnu Coal, there is talk that some of the other ASX-listed Mongolia-focused outfits are also turning heads. According to The Australian, Russian steel giant Severstal may be interested in doing deals with Xanadu Mines and Aspire Mining, both of whom have exploration acreage close to the Russian border. Interestingly, Aspire has South Gobi Resources and Noble Group on its register. Noble has also taken a major stake in, and struck an exploration joint venture with, Xanadu.

Commonwealth Bank, Punjab National Bank

Now to some banking news, with management changes at Commonwealth Bank of Australia and India's second-largest bank reportedly looking to open an Australian branch. We start with CBA, which announced an executive reshuffle last Friday ahead of new CEO Ian Narev stepping into Ralph Norris' boots on October 1. The reshuffle will see CBA wealth management group head Grahame Petersen take on the role of group executive business and private banking and group head of strategy Annabel Spring move to the role of group executive wealth management. Spring's position will be filled by former Credit Suisse executive Robert Jesudason and the AFR suggests that his appointment could be another sign that CBA is serious about scoring bigger deals in Asia. ANZ Banking Group is already heavily active on that front and both it and CBA have plenty of targets to choose from. However, most of the dealmaking will have to be focused on buying stakes in Asian banks rather than out-and-out takeovers. Meanwhile, the paper also reports that India's second largest bank, Punjab National Bank, has established a representative office in Sydney and expects to open a branch within a year. PNB chairman K.R. Kamath told the paper that the bank, which has 5800 branches back home, is hoping to capitalise on to the rising bilateral trade between Australia and India with plans to assist Indian companies in Australia and help Australian companies set up in India.

Wrapping up

It looks like James Packer may have a few good reasons to contemplate a potential tilt at the $2.6 billion Echo Entertainment, which is enjoying life since spinning off from its parent Tabcorp. Packer has a small stake in Echo but has so far demurred at the suggestion of adding Echo to his Crown empire. However, UBS analysts reckon a move makes a lot of sense. According to The Australian, the analysts said that the acquisition of Echo would give Crown a viable avenue to grow its VIP revenues at a time when business in Melbourne has reached a point where it will soon have to pay a 'super tax' for earnings above a base rate set under a deal with the Victorian government agreed in the mid-1990s. The analysts also said that a merger of Crown and Echo could generate $50 million in yearly savings. Even if Crown paid $4.90 a share for Echo, a 30 per cent premium on Friday's close of $3.77, the deal would add 5 per cent to EPS. Meanwhile, ConnectEast's shares dipped to their lowest level since the toll road operator became a target, after suitor CP2 declared its 55 cents a share offer final. The prospect of no higher offer spooked investors who are now increasingly worried that any chance of the target's leading investors – Lazard, Rare Infrastructure and Magellan – agreeing to a deal may now be effectively dead. Finally, the AFR reports that bankers have been circling Jetset Travelworld with an eye on instigating a potential sell down by the company's major shareholders – QH Tours (Qantas), CVC Asia Pacific, UBS and Sintack – or even a complete re-IPO. All the major shareholders are locked in until the end of this year but the papers suggests that some of them may give the considerations some thought next year.