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CBD

The old Allco gang band together 

The camaraderie among the former executives of Allco Finance Group is so tight that they will not even let a multi-billion dollar corporate collapse get between them.

More than a year since the implosion of the debt-laden financial engineer, four former Allco principals have remobilised to form a new financial outfit, Sturt Capital Partners.

Based in Gold Fields House at Circular Quay, just a stone's throw away from the former Allco offices in the Gateway Building, Sturt's directors include the former Allco principals Jim Hope Murray, Tim Rich, Nigel Windsor and Justin Lewis.

While the former Allco bigwigs David Coe and John Kinghorn have kept themselves occupied at the mangy financial concern RHG Limited, Sturt plans to gear up its operations next year as an investment adviser.

One wonders if it will be structured along the same lines as Allco Principals Trust, the investment vehicle that arguably led to the collapse of Allco.

The trust was the margin-loan filled vehicle that held shares in Allco Finance and its other associated satellites on behalf of the 10 principals of the now collapsed firm.

Sturt, which is fully owned by Hope Murray, welcomed the three other former Allco principals to its board late last month.

Hope Murray headed Allco's wholesale financial services business. Rich was an Allco veteran, having helped set up several of the group's now collapsed property ventures, including Record Realty.

Lewis was the executive director of capital markets at Allco and Windsor helped oversee Allco's ship leasing arm.

It seems Sturt may have followed Macquarie's lead in drawing its name from Australia's famous colonial ranks. The explorer Captain Charles Sturt led two expeditions of the interior in the 1800s to try to discover the inland sea that was believed to exist in the middle of the continent.

The good news is that Sturt survived despite finding no large body of water.

Warming up

The Sturt Capital director Tim Rich said it was too early to go into detail about the business.

"We're not in the game yet. It's too early to talk about the form it's going to take," he said. But he confirmed its interest would be advising clients in the debt and property spheres.

"It's not meant to be a new Allco," he said, noting that Sturt was more interested in offering advice rather than investing in things.

At least the team at Sturt seem to know what they are talking about. "There's a lot of people out there who just don't know how to deal with banks," Rich told CBD.

Up the hill

Elsewhere, up the hill on Macquarie Street, is another firm occupied by some former Allco operatives. And the recently established Spar Capital Partners unlike Sturt, appears to have already entered the game.

"We provide advisory, structuring and arranging services in relation to debt, credit, securitisation, interest rate, property and structured products," blurts the company website about its array of talents.

Spar describes itself as a "high conviction financial services provider". "Our unique strength is dealing with complex debt, capital markets, structuring and property issues.

This strength is borne out of the breadth and depth of experience of our team in origination, syndication, trading, funds management, structured finance, property and tax," says Spar.

Its directors include the former Allco principal Chris West. Spar has also drawn on the skills of operatives of other fallen investment firms.

It has snared the former directors of the collapsed margin lender Lift Capital, Robert Bucci and Joseph Nakat. Another one of Spar's directors is Stuart Fowler, one of the founders of the collapsed hedge fund Basis Capital.

Spar also has recruited the former Allco Max chief executive John McGhee as an investor and director. McGhee owns half the firm, and the former Basis Capital operative Chris Graham owns the other half.

The firm also has the former Basis Capital staffer John Murphy on board. Spar is clearly not exaggerating about the wealth of experience in its team of advisers.

"Each member of our executive team has an average of 20 years experience in their respective fields, covering roles as issuers, investors, advisers, structurers and traders," it says.

One handy thing about the location of Spar's office is that it is across the road from one of Allco's former lenders, the Royal Bank of Scotland.

The company lists its potential clients as "financial service providers, financial institutions, insolvency and recovery firms, corporates, multi-nationals and government entities".

Foster's flea 

The analyst who was once told by the Foster's former chief executive Trevor O'Hoy to take a two-year holiday has been honoured by the Hong Kong magazine Asiamoney.

David Errington of Merrill Lynch was voted the best Australian analyst in a poll taken across the region of 2300 investors.

Errington, who has recently turned his focus from pestering Foster's to Woolworths and Wesfarmers, was ranked the top analyst by 9.09 per cent of respondents.

The Australian analyst to score the second most votes was JP Morgan's property watcher Rob Stanton. Macquarie's Tanya Branwhite was in third place.

The magazine poll also voted Macquarie as the best local brokerage and best overall for its research.

Best sales service went to the Swiss government-owned UBS. Macquarie - whose chief executive, Nick Moore, is one of meanest PowerPoint slide presenters in the investment banking business - also won the top gong for its skills in staging events and roadshow presentations.

Singapore smoke 

Spotted heaping praise on Australia's ruler, Kevin Rudd, at a recent breakfast in Singapore: the former Liberal state opposition leader John Brogden.

According to a CBD spy, the recently appointed head of the Investment and Financial Services Association generated a few chuckles when he took the lectern.

According to the informant, Brogden spent about 10 minutes "doing absolutely nothing but blowing smoke up Rudd's &*%@".

The breakfast was timed to coincide with Rudd's visit to the APEC leader summit.

Brogden may well be hoping that for his own sake he blew enough smoke to help improve his standing in Canberra, where the Federal Government is expected within months to make changes to the rules governing the superannuation system.

Got a tip? email srochfort@smh.com.au

 

Insider

Edited by Jamie Freed
 
Last drinks from the equity well

Time is running out for companies looking to raise equity by the end of the year - at least under certain capital raising structures.

It takes four weeks to conduct an entitlement offer, including the retail component, which means that any issue launched after next Monday or so will close right around Christmas.

At that time of year retail shareholders are typically more interested in spending on gifts than shares.

Therefore, any last-minute raisings are more likely to be institutional placements or rights issues where the retail component is not underwritten.

By now, it is also too late for private equity groups to embark on a float that would close by the end of the year.

While plenty of public offerings are being prepared at the moment, they are unlikely to release a prospectus until they can include the audited accounts for the half-year ended December 31.

That means it could take until March to float companies like Ascendia Retail and Bilfinger Berger's Australian arm.

Bilfinger Berger executives from the head office in Germany have been in Sydney this week meeting potential advisers for the $1.5 billion float of the construction and services group.

A select group, including Deutsche Bank, Macquarie Capital and RBS, is believed to have been invited to pitch for the gig, and others, like UBS, which lacked a prior relationship with Bilfinger Berger, were not granted meetings.

There are suggestions that Bilfinger Berger could also consider a trade sale alongside the plans to float.

Champ

Private Equity recently ran a dual-track process for United Malt Holdings and pulled a planned float at the last minute after striking a deal with GrainCorp. Yesterday Merrill Lynch suggested Lend Lease could team with a services group to make a joint bid for the local arm of Bilfinger Berger.

GPG circling

It appears Patersons Capital Partners is not the only vulture circling Babcock and Brown Power as it digests the consequences of a recent arbitration decision affecting its West Australian gas business.

Guinness Peat Group, the largest shareholder in BBP with a 10.6 per cent stake, is also contemplating a recapitalisation deal. GPG's founder, Sir Ron Brierley, told Insider yesterday his group was involved in the talks about refinancing BBP's $2.6 billion corporate debt facility and had capital available to inject into the business.

GPG would obviously prefer BBP to stay out of administration, as the huge amount of debt in the business means it would see little, if any, return on its equity stake.

It is believed GPG's talks with BBP and its lenders are at a serious enough stage to have allowed it access to due diligence materials. BBP shares remain suspended until next week at the earliest as it takes stock of its precarious situation.

But no doubt it would have been encouraged by Babcock and Brown Infrastructure's ability to complete a complex recapitalisation involving a cornerstone investor on Monday.

Maiden run

The benefits of the book-build component of the Simultaneous Accelerated Renounceable Entitlement Offer recently developed by UBS are about to be tested for the first time.

Today marks the last day retail shareholders can subscribe to CSR's $375 million rights issue and to Macquarie Media's $294 million rights issue - the first-ever raisings using the structure.

The difference from traditional renounceable rights issues is that one book-build will cover the renounced institutional and retail entitlements, meaning the renounced rights will receive equal consideration.

CSR's book-build is scheduled for Thursday and MMG's is next Friday. CSR conducted its raising at $1.66 a share and closed at $1.865 yesterday, while MMG raised its funds at $1.55 a share and closed at $2.11 yesterday.

The amount of entitlements renounced and the trading performance next week will be key factors in the price shareholders will receive for their renounced rights.

Somersault

Investors take note: Sometimes contentious annual meetings can lead to a rapid change in strategy.

Last week the former Rams Home Loan Group, now known as RHG, was batting down rebel shareholder attempts to get on the board and explaining why it needed to hoard cash rather than hand it back to shareholders.

RHG explained its value was underpinned by its ability to roll over its multibillion-dollar loan book, and in some cases this required the company offering more money as collateral.

And the founder and chairman, John Kinghorn, said it was easy to make a decision to buy back shares when they were trading at 8c - which it did at the time - but around 70c the choice was less clear.

So it was interesting to see the company flag plans yesterday to buy back another 10 per cent of its shares.

The stock rose 7 per cent to close at 66.5c on the news. It is not unclear whether the Kinghorn family, who are the largest shareholders with nearly 22 per cent, will participate in the buyback.

Their stake was instrumental in ensuring David Coe was re-elected to the board last week and fending off a protest vote on other issues.

If the Kinghorns do not participate, their collective stake will rise to 24.3 per cent - handy for any boardroom showdowns, or the vote in 2011 when shareholders face the choice of a return of all RHG's cash or following Kinghorn into a new venture.

jfreed@smh.com.au

Business briefs

Fund-raising
 
Amcor seeks $915m Amcor is to raise $US850 million ($915 million) by issuing fixed coupon notes to US private investors, diversifying its $3.4 billion of net debt. The company is preparing to complete the $2.44 billion acquisition of Rio Tinto's packaging division.

Food
 
Goodman in talks Goodman Fielder said it was in "detailed discussions" with a preferred bidder for its fats and oil business - expected to fetch about $200 million - after a number of parties expressed interest.

Loan assets 

Firstfolio move The mortgage and financial services group Firstfolio is in negotiations to acquire up to $6 billion in loan assets from three separate companies, First Chartered Capital, Loan Services Australia and Xplore Capital.

Resources
 
China deal OK Australian regulators have allowed a Chinese state-owned company to take up to a $40 million stake in a South Australian magnetite joint venture. Baotou Iron and Steel will receive up to 50 per cent of a proposed joint venture with Centrex Metals to develop its Bungalow deposit.

Retail
 
Zampatti rights David Jones has secured exclusive department store rights to the Carla Zampatti fashion label. The deal also includes the rights to the Bianca Spender label produced by Ms Zampatti's daughter.

Energy

Still suspended Babcock & Brown Power's shares will remain suspended at 7.6c while the debt-laden firm continues to discuss gas prices with the North West Shelf joint venture.

Gas

US partner Beach Petroleum has entered into a non-binding deal with a US synthetic fuels technology company, Rentech Incorporated, with a view to the joint development and commercialisation of Beach's large gas resources in South Australia.