Executive Summary: September 17, 2009
By Scott Rochfort | smh.com.au | 17 September
Trevor Rowe...more time to disseminate his thoughts.
CBD
When the top cats are away
Wiith the Commonwealth Bank's big kahuna, Ralph Norris, and his chief beancounter, David Craig, overseas on separate investor roadshows, the lender's institutional bankers have been let loose.
CBA's institutional banking head, Ian Saines attempted to show yesterday that the former government-owned enterprise was not all about cardigans, Dollarmite accounts and cryptic television ads.
Hosting a lunch in the spruced-up former Fairfax headquarters that the bank now occupies, the ex-BT banker was keen to showcase to CBD his "leadership team" and business, which he noted was often overlooked by the public.
"It would be a top 50 company in its own right," Saines mused of the business which generated $2.5 billion in revenue last year.
CBA's head of equities and capital markets, David Hancock, chipped in that no other Australian bank had achieved what the CBA had in the investment banking scene.
He also argued his bank was a massive talent magnet, especially since last year's implosion on Wall Street. "It's been quite clear that people have been very willing and able to want to come to work at the bank," said Hancock, who was drawn to the CBA from Japan's Shinsei Bank in 2007.
Apparently CBA staffers are not just obsessed with fat pay cheques. "We're seen as a great employer, we're seen as being stable," reasoned Hancock.
Noting CBA's prominent role in several large deals, such as the recent Amcor $1.6 billion equity raising, he remarked: "That's a surprising thing for people out there in the marketplace."
Hancock, however, did seem to get a little carried away about the bank, which has climbed to No. 7 on the equity deal-making league table.
He remarked how it was "hard to imagine Australia without the Commonwealth Bank".
The CBA says it is aiming for No. 3 to No. 5 on the league table. Other CBA operatives on show were the former ABN–Amroer Richard Green, former Macquarie Banker James Rickward, George Confos and Kelly Bayer Rosmarin.
One thing CBA forgot to boast about is that it is one of the few investment banks not to have had its hand out for a government bail-out.
Northern wisdom
BrisConnections' chairman, Trevor "Plato" Rowe, appears keen to share his wisdom with the wider world, having relieved himself of a few roles.
Since leaving the Queensland Investment Corporation, Bond University and announcing his plans to leave the ASX board, it looks like Trev wants to share his journey with us.
He will give an address at the Finance & Treasury Association's "Dollars & Sense" conference in Sydney next month.
His speech will be: "Recent lessons from the GFC and their relevance to the next five years". No doubt, Trev has learnt a lesson or two from the listing of BrisConnections.
The blurb in the brochure for the event notes how Trev chairs United Group and Rothschild Australia.
But for some reason there is no mention that he chairs BrisCon and once chaired the QIC. CBD hopes it is just a typo.
The blurb also notes how Trev scored his centenary medal for "distinguished services to the finance industry". Trev, however, should have it a bit easier at the toll-road company's annual meeting compared to heated meeting held earlier in the year when unit holders voted on whether to wind up the road project.
The meeting was called by the upstart corporate agitator, Nicholas Bolton, who ended up selling his votes to the builder of the road, Leighton, for $4.5 million. The biggest shareholders Trev will have to answer to at the next meeting are the road's underwriters, Macquarie and Deutsche Bank.
They will own 80 per cent of the toll road when the defaulted portion of the road's second instalment converts into a larger shareholding for the underwriters on October 29, coincidentally the same day Trev gives his speech.
One wonders if there might be any resolutions for the meeting to take BrisCon private and end its misery as a listed entity.
Monikers and tags
Virgin Blue's chief executive, Brett Godfrey, shared a few "untold tales" yesterday on the names he mulled over 10 years ago, before his airline first took to the skies.
The names included: National Shuttle, the highly creative OzJet and Taxi. Godfrey failed to say whether the name for Virgin's Pacific Blue subsidiary came from the Baywatch-like TV series about a team of police officers patrolling on bicycle in Santa Monica, California.
The show screened until 2000 and was apparently a hit in Sweden and Norway. Godfrey also reflected on the turbulent times in Virgin Blue's boardroom. "At one stage we needed to have name tags for directors," he said.
He did not mention whether Sir Dick Branson and the former Patrick dock worker, Chris Corrigan, wore tags.
Binns in the building
Hot-shot mining analyst Vicky Binns returned to her long-time employer, Merrill Lynch, yesterday, if just for the day.
She was in Governor Phillip Tower this time to present to other analysts in her capacity as BHP Billiton's head of global commodity analysis, based in Singapore.
Binns left some pretty big heels to fill when she left in January. Two of her former offsiders, Olivia Ker and Tom Price, decided last month to jump ship for UBS, and another, Mike Harrowell, is heading to BBY. But it seems Merrill has not wasted time in rebuilding its team.
This week it poached veteran mining analyst Peter O'Connor from Deutsche Bank.
He had only been there for a little more than a year, having moved over from Credit Suisse.
Got a tip? email srochfort@smh.com.au
Xchange
Edited by Jamie Freed
UBS gets the lion's share of $147b in raisings
The record $41.7 billion of equity and $100 billion of debt raised in the Australian market up to this week has made it a good year for most investment banks.
But the latest Dealogic league tables show those winnings haven't exactly been distributed equally around the big end of town.
UBS maintained its dominant position in overall banking revenues despite questions earlier in the year as to whether its bonus policy would allow it to retain talent. It has already raked in $233 million, or an 18 per cent share of the fee pool, up from $147 million for an 11 per cent share at the same time last year.
Next is Macquarie Capital with $165 million in fees and a 12.8 per cent share, up from third place this time last year. Macquarie has been doing fewer in-house deals, but it appears it has marketed itself successfully to outside clients and has been helped by the government guarantee.
Deutsche Bank has leapt into third place, with fees growing to $153 million this year from $85 million last year. It was boosted by deals such as Stockland's $2 billion raising, which represented the largest sole-managed raising in Australian corporate history.
Goldman Sachs JBWere fell to fourth place with $103 million of fees, down from second position with $119 million last year. It has picked up more business from high-profile floats such as Myer and Kathmandu which should add to its figures.
The biggest improver was Credit Suisse, which jumped into eighth place with $64 million despite ranking outside the top 10 last year. Its wins including acting as the sole manager of BlueScope Steel's $1.4 billion rights issue, and the fact that it was one of the banks to avoid a government bail-out wouldn't have hurt its attractiveness to clients.
Citi and Merrill Lynch have fallen a few notches in the rankings to seventh and ninth respectively, perhaps because unlike rival JP Morgan (up two ranks to fifth), they have received big US Government bail-outs that may have affected client confidence. However, Merrill Lynch has recently made some big recruitments and its rivals are watching carefully.
Woodside gusher
The market was yesterday punting that one of Woodside Petroleum's lower-profile overseas gambles had paid off.
Woodside shares rocketed 4.8 per cent late in trading to close at $50.82 after the Financial Times reported Anadarko was set to unveil a new oil frontier off Sierra Leone that stretched 1100 kilometres along the West African coast.
It was the first time Woodside's shares had cracked the $50 mark since the global financial crisis set in last October. Woodside has focused mainly on Australian projects since making a high-profile exit from Mauritania in 2007, but it retained a 25 per cent stake in the Anadarko-led joint venture in Sierra Leone which has been drilling the Venus prospect.
The other partners include Ireland's Tullow Oil, which bought Australia's Hardman Resources in 2006, and Spain's Repsol. It's worth noting that like Woodside, Anadarko, a $33 billion US independent with lots of projects in the Gulf of Mexico, has often been mentioned as a potential takeover target for BHP.
BHP last week confirmed it was hunting for petroleum acquisitions to boost growth.
Banks picnic in Forest
Commonwealth Bank and ANZ should be pleased by Forest Enterprises Australia's decision to raise $39.5 million at a monster 58.3 per cent discount in an offering managed by Southern Cross Equities.
FEA has $240 million of debt split between the two banks and it has been classified as a current liability because it breached its covenants even though it was not set to expire until February 2011.
FEA now expects its banks will relax its covenants within four to six weeks, which funnily enough is about the same amount of time it will take for it to complete the $35 million one-for-one rights issue component of the raising. FEA, advised by Kidder Williams, is also attempting to offload $100 million of property and loans.
It will also consider acquisitions, particularly on the industrial side of wood processing, although there is nothing in train at the moment. FEA's register could change significantly after the raising, which includes a $4.5 million placement to Hong Kong's Sun Hung Kai Investment Services, which will also sub-underwrite the rights issue.
At present, Elders owns 31 per cent of FEA and Gunns owns 18 per cent. Elders appears unlikely to tip in cash, although the deep discount could prove attractive. Its position could become clearer after its chief executive, Malcolm Jackman, returns on Monday from a week off after recapitalising the company.
Gunns, which is less constrained financially, also has yet to decide whether to participate. If neither chip in, Sun Hung Kai could end up with more than 20 per cent of the company. FEA shares closed down 2c at 16c yesterday after trading as high as 20c. Meanwhile, the competition regulator is reviewing the $100 million ITC timber acquisition by Gunns from Elders and is asking the market to comment on the effect the deal would have in Tasmania.
Bumpy train ride
Queensland Rail may have to start getting used to attracting more interest from the financial community.
The $7 billion state-owned company, which will be floated or sold as part of the Queensland Government's big assets sale, presented alongside a host of public companies at a Brisbane conference sponsored by RBS Morgan yesterday. RBS, along with Merrill Lynch and Rothschild are advising on the privatisation process.
While its publicly listed peers released their photos to the stock exchange, a QR representative told Xchange that its presentation would not be made public. Perhaps QR could learn a few marketing tricks from Myer, whose $3 billion float has received so much attention as to confound veteran investment bankers.
xchange@smh.com.au
A New League
Investment bank rankings
BANK NET REV. ($m) % SHARE
1 UBS 233 18.0
2 Macquarie Group 165 12.8
3 Deutsche Bank 153 11.8
4 Goldman Sachs 103 7.9
5 JP Morgan 100 7.7
6 RBS 78 6.0
7 Citi 69 5.3
8 Credit Suisse 64 5.0
9 Bank of America
Merrill Lynch 39 3.0
10 Westpac 30 2.3
Source: Dealogic
Business Focus
Super disillusionment
Almost one in four superannuants are considering switching funds because of poor returns since the global financial crisis began. A survey of 5600 investors by Investment Trends also finds 54pc of respondents no longer trusted their fund managers and would rather invest their savings themselves.
Korean gas deal
Days after pressing the go button on the $43b Gorgon liquefied natural gas project, the operator, Chevron, has signed an agreement with South Korea to supply 1.5m tonnes of LNG over 15 years. The deal is worth a rumoured $30b.
CUA profit rise
Credit Union Australia has posted a 17pc lift in its annual profit to $43m despite a rising interest bill and greater costs.
First published by Smh.com.au on September 17 2009
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