RICH PICKINGS: Bargain bin

The first signs are emerging that Australia's wealthiest entrepreneurs are mobilising, despite the pain of the downturn, in search of a bargain or two.

Talk to an entrepreneur during a downturn and you’re likely to hear a clich repeated time and time again: in every recession, you can always find plenty of opportunities to make a bundle.

There’s a good reason for this sentiment. As discussed a few weeks ago, plenty of entrepreneurs made fortunes by starting, buying or expanding their companies during the recession of the early 1990s.

Yet picking the bargain hunters in this downturn is not so easy. Perhaps our wealthiest entrepreneurs are still waiting for the sharemarket and asset prices to hit the bottom, or perhaps they are still shell-shocked from seeing around 30 per cent of their fortunes disappear in the space of 12 months.

But there are tentative signs that at least some rich business people are mobilising in search of a bargain or two.

Richard Pratt

Cardboard king Richard Pratt has kept a low profile since Visy was fined over its role in a cartel with Amcor, partly because of poor health. But his private investment vehicle, Thorney Investments, continues to trade actively in the small and mid-cap markets. Amongst the sales are some interesting buys: a 16 million-share parcel in payments company Customers Limited (worth around $1.6 million and taking Pratt’s stake to 6.5 per cent) and a one million-share parcel in robot maker XTEK (worth $200,000, taking his stake to 19.8 per cent). But Thorney’s biggest bet came in early February, when it agreed to inject $2.5 million into manufacturing company Gale Pacific, which makes shade cloth and other polymer products. Thorney is likely to hold around 33 per cent of the company after the Gale rights issue is complete.

Clive Palmer

Queensland mining baron Clive Palmer may have pulled the float of his iron ore concern Resource Development International, but he is still making some hefty bets on the resources sector. In January, he announced RDI will spend $46 million on an exploration program in the North West Shelf. A month earlier, Palmer’s private company Mineralogy spent $125 million to buy Canadian coal miner Waratah coal.

Jan Cameron

The New Zealand-based, Australian born entrepreneur is the reclusive founder of camping goods retailer Kathmandu. In January, she spent about $3.6 million increasing her stake in New Zealand-based children’s clothing company Pumpkin Patch, which has been battered in recent months by falling consumer sales in key markets such as the US and Britain.

John Symond

John Symond has been one of the most active entrepreneurs during this downturn. He stitched up a deal to sell a chunk of Aussie Home Loans to Commonwealth Bank in the middle of last year and then swooped on the wreck of Wizard Home Loans for $26 million – a great bargain, given GE paid around $400 million for Wizard in 2004.

The Tieck family

Paul and Garry Tieck, the sons of the late Franklin’s Supermarket founder Norman Tieck, have quietly built a reputation as formidable investors and control a portfolio worth over $900 million. Paul looks after the investing side of the business, while Garry is in charge of property. The pair are long-term investors and love buying when assets prices are depressed, so it was no surprise to see them pop up in January as the buyers of an office building at Martin Place in the Sydney CBD. The family paid $83 million, a discount of around 10 per cent according to analysts.

Chris Morris

In mid January, Computershare founder Chris Morris took part in a $1.9 million rights issue for fledgling brewer Empire Beer Group. Morris, who also became chairman of the company, has been a long-time supporter of Empire, although we’re not sure if this is bargain hunting or a bit of fun.

Bob Ell

Property developer Bob Ell hasn’t exactly bought a bargain, but the fact he is willing to push ahead with two property developments worth a total of $7 billion makes him a lot more adventurous than many in the property sector. Ell’s plans to build major residential developments at Cobaki Lakes and Kings Forest progressed to the community consultation phase in December and are expected to hit the market at the end of 2009 or in early 2010.


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