Brookfield Office Properties is reportedly looking at an IPO for its Australian property portfolio once again, signifying the return of A-REITs and a possible resurgence in Australian sharemarket floats. Discovery Metals is a little lonelier this week after Cathay Fortune walked away, still unable to conduct due diligence. Meanwhile, Joseph Gutnick is experimenting again in Western Australia gold, GUJARAT NRE Coking Coal thinks Jindal Steel & Power (Australia) can do better than a 1-cent premium and Westpac Banking Corp recently tried to expand its patch in Asia.
Brookfield Office Properties
The growing sense that the Australian real estate investment trust sector will reclaim a mantle of sorts in 2013 has drawn out a possible headliner IPO for this year, according to The Australian Financial Review.
The newspaper reports that Brookfield Office Properties has rekindled hopes of a $4.2 billion float of its Australian office portfolio.
FKP Property Group is already looking at an $875 million IPO. This comes on the back of GPT Group’s $3 billion offer for the commercial, industrial and investment property businesses of AustraLand. Mirvac Group is also thought to be interested in AustraLand, majority-owned by Singapore’s CapitaLand, although it has never been drawn out officially.
The AFR reports that Brookfield Office Properties chief Dennis Friedrich said over the weekend that he and chief financial officer Bryan Davis have been "spending more time” on the portfolio.
The newspaper also reported separately that private-equity owned in-vitro fertilisation company Virtus Health is prepping for a $500 million sharemarket float.
With mortgage insurer Genworth Financial and CLP Holdings’s TRUenergy also tentatively slated for 2013 IPOs, could this finally be the year when domestic floats break their shackles?
These sorts of questions are much easier to pose when the market is up 13.5 per cent in two and a half months.
Many analysts believe that the sharemarket rally has more to do with loose monetary policy conditions around the world and nothing to do with earnings expectations.
If that holds true and earnings season contains enough negative surprises, then some heat could come out of the market and spook these tentative IPO explorations.
If we get through earnings season unscathed, it could finally be on.
Discovery Metals, Cathay Fortune
African-focussed copper miner Discovery Metals will begin trading this week without a suitor, after Chinese private equity bidder Cathay Fortune effectively pulled up stumps late last week.
Concerns about Discovery’s flagship Boseto project in Botswana and its stubborn refusal to allow Cathay, bidding with China-Africa Development Fund, to conduct due diligence finally brought $830 million offer to a halt on Friday.
Cathay said in its sixth supplementary bidder’s statement that it would not make the offer unconditional without due diligence and the proposal would now lapse on February 13.
The news came within just minutes of the market close, where Discovery shares lost 3.3 per cent $1.04. They’ll probably lose a little more ground this morning.
Discovery stock was already trading at a mindblowing discount to the $1.70 offer price, reflecting the market’s perception that this deal was utterly dead in the water.
Now the copper miner has to sell a turnaround narrative to its shareholder base.
Before the Cathay bid emerged, Discovery stock was changing hands at above $1.30 a share. A brief dip in September below $1 inspired Cathay’s argument about instability and Discovery’s counterargument about its bidder’s opportunism.
Now Discovery’s stock is back around those levels without much hope of another bidder emerging. Why they weren’t allowed to conduct due diligence will be a key question, if not the only real question.
Joseph Gutnick, Blackham Resources
Melbourne mining figure Joseph Gutnick, who once commanded enormous influence over Western Australian goldfields, is expected to announce a return of sorts this morning through a junior explorer called Blackham Resources.
It’s anticipated that a private company associated with Gutnick will take a 19.9 per cent stake in Blackham, which was started by Cazaly Resources’ Nathan Macmahon, who continues to own 10 per cent of the company.
Blackham entered a trading halt on Friday and Gutnick’s arrival is expected to be announced to the market as early as this morning.
The explorer currently owns the Matilda gold project near Wiluna in Western Australia which has about 1.4 million ounces.
Blackham is currently weighing up whether to do the project itself, or set up a deal with another local operator to take the lead in exchange for a fee.
Gutnick’s movements in the mining industry are closely watched as the former Melbourne Football Club president was once one of Australia’s leading mining industry names.
GUJARAT NRE Coking Coal, Jindal Steel & Power (Australia)
Shareholders in Gujarat NRE Coking Coal have been told by directors to take no action in relation to the $275.2 million takeover offer from Jindal Steel & Power (Australia).
The unconditional bid, lodged late last week be the 19.5 per cent shareholder, at 20 cents a share is just a single-cent premium to the previous trading price of 19 cents.
Jindal Steel & Power vice chairman Vikrant Gujral described in a letter to the target’s shareholders "an attractive 5 per cent premium”. Attractive to whom, this columnist would like to ask.
The target’s share price has reacted accordingly. Gujarat’s ASX-listed stock is at 22.5 cents a share, a 12.5 per cent premium to the offer price. If this doesn’t reflect the market’s attitude towards an ‘attractive’ 5 per cent takeover premium, nothing will.
The offer came just two weeks after the NSW Minister for Planning and Infrastructure Brad Hazzard approved the extraction of a longwall panel at its NRE No 1 mine, which will see production rise to 550,000.
Gurajat is majority owned by Kolkata’s Gurajat NRE Coke, which has made it clear that it doesn’t want a bar of Jindal’s 20 cents a share.
Westpac Banking Corp, Bank of East Asia
Westpac Banking Corporation is reportedly understood to have been looking for investment opportunities in Asia over the past 12 months, having emerged as an unexpected bidder for a stake in Hong Kong’s Bank of East Asia for $400 million.
The Australian Financial Review believes that Westpac was the underbidder for a 5 per cent stake in Bank of East Asia in early December. In the end the Australian lender lost out to Japanese mammoth Sumitomo Mitsui.
Westpac’s interest in Asia makes it four out of four of our big banks that are looking regionally, as well as domestically, for profits.
Commonwealth Bank of Australia generated some attention in mid-January amid reports out of Indonesia that it had lodged a preliminary bid of $US400 million ($380 million). We haven’t heard anything else from that front since.
Of course ANZ Banking Group is Australia’s aspiring ‘regional superbank’ under the watch of chief executive Mike Smith and even National Australia Bank is seeking deeper roots in Asia – if only it could uproot itself from the UK.
In three days Virgin Australia will learn from the competition regulator whether it has won approval to take up a 60 per cent stake in Singaporean-owned Tiger Airways.
The target’s shareholders gave their approval to the $35 million deal, but the biggest obstacle has always been the Australian Competition and Consumer Commission. D-Day is February 7.
Sticking with the airlines and the ACCC, Independent Senator Nick Xenophon has smashed the consumer watchdog for not properly scrutinising the claim by Qantas Airways that if its 5-year alliance with Middle Eastern giant Emirates doesn’t go ahead, its international business would face a "terminal decline”.
Meanwhile, Macquarie Group-backed OzForex, an online foreign exchange and payments provider, is in talks with investment banks for a possible trade sale, according to The Australian Financial Review.
In Gina Rinehart news, Hancock Prospecting has welcomed the Ausbil Dexia to the list of substantial shareholders in Fairfax Media.
The resources queen has also picked former foreign minster Alexander Downer as her second representative for the board of Gippsland Basin oil and gas explorer Lakes Oil. Rinehart is in line to pick up an 18.6 per cent stake in Lakes Oil through convertible notes.
Elsewhere, National Australia Bank has extended its debt facilities for Casella Wines, the maker behind the mega-export brand Yellow Tail, with negotiations set to begin on a new set of covenants.
And finally, China’s Guohua Energy Investment, a subsidiary of Shenhua Group, is set to close its purchase of a 75 per cent stake in Tasmania’s Misselroe wine farm as early as next week, according to sources that have spoken to The Australian.