CBD
Australia's most-hated bookmaker, Tom Waterhouse, sure seems to be doing well.
His suits are nicely tailored and his shirts look made of fine cotton. His marriage took place in a picturesque Sicilian village.
And his bookmaking operation, part-owned by dad Robbie, has been splashing cash around, reportedly becoming the highest-spending advertiser in the sports betting industry. His inescapability has made him a voodoo doll for anti-punt activists, but has it paid off?
It's difficult to say. While he's reportedly been offered $500 million for the business, Tom Waterhouse NT, which holds his bookie ticket, doesn't file financial accounts.
But it is possible to say that despite the advertising blitz (and free publicity due to mum Gai's blow-up with well-seasoned adman John Singleton) he doesn't lay claim to a huge slice of punters' money. Totalisator giant Tabcorp still dominates the $25 billion a year wagering market, with about 44 per cent. The rest of the totes hold about 25 per cent, betting exchange Betfair has 6.3 per cent and corporate bookies, of which Tom Waterhouse is just one, hold about 24 per cent.
Industry estimates are that Waterhouse has about 10 per cent of the corporate bookie market, giving him just 2.5 per cent of the total market. This despite spending a reported $10 million - too much for his much larger rivals to spend - on the infamous marketing deal with the Nine Network that catapulted him into lounge rooms, and infamy, as a pseudo-commentator.
Kingmaker role
Canny fund manager Geoff Wilson has emerged as kingmaker in a newly reignited stoush between former Ausbil Dexia workmates Paul Xiradis and Reub Hayes over undervalued investment company Emerging Leaders Investments (ELI).
Hayes, who was one of Ausbil Dexia's owners back in the day, last month tried to turf ELI's board, including Xiradis, but the company rejected his call for a shareholder meeting as "invalid".
On Monday, Hayes said he would call his own meeting at which he would ask shareholders to evict Xiradis, John Evans and John Skippen from the boardroom and replace them with himself, fellow Treasury Group director Peter Kennedy and investment banker Matthew Stubbs. Hayes, who owns 5.7 per cent of ELI through his super fund Solhurst, complained that an $8.2 million capital-raising last month was priced at 82¢, a steep discount to ELI's net tangible asset backing of about $1.01 at the time.
Interestingly, the one-for-four share issue was partly underwritten by Ausbil, which is run by Xiradis and manages ELI's investments. However, despite a shortfall in the capital-raising Ausbil had to lay out less than $200,000 because Xiradis generously put his hands in his own pockets and stumped up an extra $850,000, above his entitlement, to buy more shares. He now owns 4.3 per cent of ELI.
Hayes also complained that shareholders who didn't take up their entitlement have been diluted and Ausbil given a 20 per cent rise in its base management fee.
In addition to changing the board, Hayes wants to declare a special dividend and offer shareholders a buyback at the company's net tangible asset backing. "I've had lengthy dialogue with the board over the past four months and been stonewalled," Hayes told CBD. "All we're really seeking is for the board to recognise that the shareholders want value out of it."
Given scrip is trading at about 82¢ and NTA is around 97.2¢, Hayes' proposal would seem very attractive for Wilson's Wilson Asset Management, which has bought as much of the stock as it can - 19.9 per cent.
Wilson was inscrutable on Monday when CBD asked his intentions. "What I find is the best thing is to see clearly what their [Solhurst] proposition is and clearly what the ELI proposition is," he said. Pressed, he admitted that if there was a franked special dividend, "we'd enjoy that", and that it would "be tough" to resist a buyback at a premium.
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Frequently Asked Questions about this Article…
Tom Waterhouse is a high-profile corporate bookmaker (Tom Waterhouse NT) and public face of a family-run bookmaking business. Despite heavy advertising and media exposure, industry estimates put his share at about 10% of the corporate bookie segment — which equates to roughly 2.5% of the total $25 billion-a-year Australian wagering market.
The Australian wagering market is roughly $25 billion a year. Totalisator giant Tabcorp is the market leader with about 44% market share. Other totalisator operators hold around 25%, Betfair (the betting exchange) about 6.3%, and corporate bookies (including Tom Waterhouse) make up roughly 24% of the market.
No — even with a reported $10 million marketing deal with the Nine Network and substantial publicity, Tom Waterhouse’s market share remains relatively small. Industry estimates still place him at only about 2.5% of the total wagering market, so heavy advertising hasn’t translated into dominance.
The dispute centers on perceived undervaluation and corporate control at ELI. Reub Hayes (owner of about 5.7% via his Solhurst super fund) has sought to replace ELI’s board — including Paul Xiradis — and wants a special dividend and buyback at net tangible asset (NTA) backing. Geoff Wilson and Wilson Asset Management have become influential (holding up to 19.9%), while Ausbil (run by Xiradis) manages ELI’s investments and partially underwrote a recent capital raising.
ELI completed an $8.2 million one-for-four share issue priced at 82 cents per share, which Hayes and others argued was a steep discount to the company’s NTA (about $1.01 at the time). The issue was partly underwritten by Ausbil; because Paul Xiradis bought extra shares above his entitlement, Ausbil’s outlay on any shortfall was relatively small. Critics say the placement diluted shareholders who didn’t take up entitlements and coincided with a 20% rise in Ausbil’s base management fee.
Hayes has indicated he will call a shareholder meeting to try to: replace current board members (Paul Xiradis, John Evans, John Skippen) with himself, Peter Kennedy and Matthew Stubbs; push for a special (possibly franked) dividend; and offer a buyback at the company’s NTA backing to return value to shareholders.
Wilson Asset Management has accumulated about 19.9% of ELI. Geoff Wilson has described himself as a potential kingmaker and has been intentionally noncommittal publicly, but he indicated he would welcome a franked special dividend and would find it hard to resist a buyback at a premium.
Because ELI’s shares were trading at around 82 cents while its NTA was reported between about $1.01 (at the capital raise) and roughly 97.2 cents later, a franked special dividend or a buyback at NTA could help close the discount to net asset value, return cash to shareholders and reduce dilution — outcomes many investors, including significant holders, have signaled they would welcome.
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