It's long been said that Australian banks are well regarded overseas – now we have some proof. The latest whisper from Wall Street is that one of our big-name financial bosses could be a contender for the top job at Barclays, which lost its chief executive to the rate-fixing fiasco still rocking the industry. Meanwhile, Crown bets on Barangaroo, Goldman Sachs wins the ear of the NSW government, and Perpetual clears the air at Fairfax.
In the wake of a Libor scandal that cost Barclays its chief executive and chairman, it makes sense for the bank to search for external replacements. But who knew the hunt would take the firm all the way to Australia?
An unnamed source told The Wall Street Journal that Barclays may consider ANZ boss Mike Smith as a successor to its former chief executive, Bob Diamond, who was pressured out of the top job at the British bank after it was revealed that interest rates were distorted under his watch. A source told the newspaper that other contenders include William Winters, a former JP Morgan Chase executive, and Naguib Kheraj, who has a history at Barclays and JP Morgan.
Of course, Barclays' gain would be ANZ's loss. Fairfax points out that Smith is on a rolling 12-month contract, leaving him free to resign with up to a year's notice. He would personally stand to lose close to $5 million in short- and long-term incentives, but that's pocket change compared to the $16.5 million Diamond is said to have taken home in 2011.
Barclays has reportedly tapped executive-search firm Spencer Stuart to find a CEO, with a shortlist expected by July 19. The board, understandably in a hurry, wants to fill the posts within three months.
No word from ANZ or Smith – yet.
Crown, Genting, Lend Lease
James Packer's fight for control of Echo Entertainment was always about the target's casino monopoly in Sydney. With the fate of Echo itself in the hands of regulators, Crown's chairman will now move to his next battleground: the Barangaroo development in Sydney.
The site, at the tip of the city's central business district, is a natural home for a new casino. And now that developer Lend Lease has secured $2 billion in funding to cover the first of its two commercial towers there, it will be free to decide who will be awarded the prized hotel space that remains.
Over the weekend, Lend Lease chief executive Steve McCann told the ABC's Inside Business program that Crown would be well placed to build a casino at Barangaroo if Echo and the NSW government agree to grant a permit. However, you can bet Packer won't be the only player at the table, with hot competition from several hotel operators which are already in discussions with the developer.
Crown will also be watching Genting, which has also emerged with a 9.9 per cent holding in Echo. The Malaysian group has applied to gaming regulators NSW and Queensland to lift its stake above a 10 per cent cap, and the issue will now be put to a public submissions process.
In the meantime, analysts are wondering whether Crown has the financial strength to emerge victorious in any showdown with the deep-pocketed Genting. At RBS, Michael Nolan notes that Crown's leverage ratio is running at 2.5 times – above its target of two times – and so it will already be feeling pressured to reduce its debt load ahead of any investment in Echo. He thinks Crown will need to tap shareholders for about $570 million just to double its stake in its target to 20 per cent.
For now, Packer may have lined up two cornerstone investors to back a bond sale by his company, each willing to put up $100 million at a margin of about 250 bases points over the bank bill rate, according to The Australian Financial Review.
Citigroup, Goldman Sachs
Goldman Sachs will enjoy some of the financial buzz flowing from the $3 billion sale of the NSW government's electricity generators, after the state's treasurer, Mike Baird, named the investment bank as an advisor for the transaction.
As part of the deal, Goldman will immediately begin developing sale strategies and potential financial structures, according to The Australian. The bank, which recently advised the state government on the $2.3 billion leasing of the Sydney Desalination Plant, is said to have been selected over BurnVoir, Credit Suisse, Gresham, Lazard, Macquarie and UBS.
Baird is also understood to have selected Citigroup for his government's Cobbora coal mine mandate, according to The Australian Financial Review. The mine, set up to feed cheap coal to state-owned generator, is expected to be sold or leased.
When Gina Rinehart sold a small slice of Fairfax to Perpetual last week, she appeared to add a new friend to the register. But initial reports about the fund manager supporting the mining heiress' bid for boardroom representation appear to have been overstated.
At the time, a Perpetual representative was quoted as saying that Fairfax would benefit from a "fresh set of eyes". A spokeswoman has now clarified that the company is simply calling for a broader renewal of the Fairfax board.
"The make-up and size of the board is a matter for the chairman,” she told The Australian Financial Review. "Perpetual Investments believes that it is reasonable for an investor with a 15 per cent shareholding to have a seat on the board. In the case of Fairfax, given the structural change occurring in the sector, having non-executive directors with an understanding of the digital media landscape would be logical.”
Leighton Holdings is understood to have sold its rubbish business, Thiess Waste Management, to German construction company Remondis for roughly $200 million, The Australian Financial Review reports. Remondis, advised by law firm Gilbert Tobin, is said to have outbid local player Transpacific Industries, in a deal that was hammered out over the weekend.
Leighton hired JP Morgan and Freehills to help run the sale, which comes after major cost blowouts at some of the builder's projects forced a string of profit downgrades earlier this year.
Elsewhere, property companies have reportedly found encouragement in long-term financing deals at Westfield, Stockland and Commonwealth Retail Property Trust. Those companies may soon be joined in debt markets by A-REITS including Mirvac, CFS Retail Property Trust and Commonwealth Property Office Fund, according to The Australian Financial Review. Keep an eye out for announcements in the coming weeks.
The paper also reports that Calibre Group's IPO roadshow is coming to Melbourne this week, after stopping in Sydney on Friday. As discussed here on Friday, the company aims to raise $75 million from institutional investors this month – selling shares at $1.68 each, worth 15.7 per cent of the company – ahead of a float in August. Fund managers expect the company to put the funds towards bolt-on acquisitions.
Separately, sources have told The Australian Financial Review that Greenhill Caliburn is aggressively running the rugby league media bidding process. The advisor to the new Australian Rugby League Commission is reportedly insisting that television networks sign confidentiality agreements, to leak-proof negotiations it hopes will raise at least $1 billion.