Satori cashes in on China’s appetite for Australian assets

The Shanghai-based firm is advising Aurizon on its joint bid with China’s Baosteel for iron ore and coal miner Aquila Resources.

While boutique China-based advisory firm Satori Investments has clinched the role of Aurizon’s lead adviser on the $1.4 billion takeover offer for Aquila Resources, a deal led by China steel giant Baosteel, it is not thumping its chest.

Satori’s executive chairman Paul Glasson is keen to stress his Shanghai firm is working with Aurizon’s other investment banking adviser UBS.

“We’re working as a team,” Mr Glasson told Data Room in an interview.

Founded in 2000 and named in honor of Mr Glasson’s mother’s family, Satori has forged close ties with all the principal parties involved in the takeover bid.

Four years ago Satori was the sole adviser to Baosteel on a $1.8bn acquisition of an Australian mining asset. A year earlier it advised Baosteel on a $US85 million joint venture with iron ore miner Fortescue. In 2009 Satori advised Aquila on a $285m share placement to Baosteel, enabling the Chinese company to take a 15 per cent stake in Aquila.

Satori and Aurizon's relationship dates back four years. Since 2008 Aurizon has sought co-investment opportunities with firms outside Australia who buy Australia’s natural resources. Aurizon sought out Satori because of what it saw as strong relationships with some of China’s biggest consumers of Australian coal and iron ore, such as Baosteel.

Mr Glasson, an Australian, has been living in China since 1997. Satori focuses on providing advice to Chinese companies seeking investments beyond their own shores.

“We have long standing expertise in China,” says Mr Glasson.

If the Aquila takeover succeeds, Baosteel could end up with as much as 85 per cent of Aquila’s stock and Aurizon 15 per cent.

The Foreign Investment Review Board will have to approve what is in effect Baosteel’s acquisition of Aquila, albeit with a significant Australian partner that wants to develop a 432 kilometre heavy-haul rail line in Western Australia from Aquila’s iron ore deposits in West Pilbara to a new deep water port at Anketell Point.  

Baosteel and Aurizon are offering $3.40 cash a share for the rest of Aquila’s shares, a 39 per cent premium for the stock compared to its closing share price last Friday. The two companies say Aquila’s shares have not closed above the offer price for two years. At 1:35 pm Aquila shares had surged 90.5 cents, or 37 per cent, to $3.355.

Baosteel and Aurizon seem well placed to make a push for control of Aquila. Baosteel currently has a 19.8 per cent stake in Aquila, which has hired Goldman Sachs and King & Wood Mallesons to examine the takeover offer while urging investors not to sell shares to the would be acquirers.

More work is in store for Satori, UBS and law firm Ashurst who together are advising Aurizon. Deutsche Bank is advising Baosteel. All of Baosteel and Aurizon’s advisers are likely to field calls asking their clients to increase their takeover offer.

(Reporting by brett.cole@businessspectator.com.au)

(Editing by miranda.maxwell@businessspectator.com.au)