Australia

Big Oil’s old profligacy lives on Down Under

15 Mar 2023

Chevron, Shell and others are ploughing some Ukraine-related windfall earnings into new projects, but sharing the lucre with shareholders too. Australia’s Santos is being stingier, with governance and climate concerns to boot. Its lagging stock is dry powder for activists.

TPG starts a dicey dance with death Down Under

7 Mar 2023

The private equity firm is offering $1.5 bln for funeral-services firm InvoCare. The target could use some help after losing market share. But the 41% premium means the buyer would be piling on debt as interest rates rise. Making a decent return would require some deft footwork.

Adani contrarian is a win for Hindenburg, too

3 Mar 2023

GQG’s $1.9 bln investment is a fillip for the tycoon. But shares of his firms are close to the short-seller’s target. And a court has ordered India’s securities watchdog to probe its allegations. Even if cleared, Adani may struggle to secure the backing of mainstream financiers.

M&G would be a tricky hop for kangaroo raider

2 Mar 2023

Australia’s $48 bln financial giant Macquarie may bid for the $6 bln UK fund management group. A swoop would be well timed given M&G’s new boss is still bedding in, and the deal math just about works. But any transaction would involve a messy breakup, and the risk of a rival bid.

Energy transition’s $12 bln deal becomes forex bet

22 Feb 2023

Brookfield and MidOcean have reduced their offer for Australia’s coal and gas-heavy Origin Energy, but only by 1%. Large investors also will be paid partly in U.S. dollars. If exchange rates move only slightly, it would more than compensate them for the price cut.

BHP investors aren’t seeing the wood for the trees

21 Feb 2023

Boss Mike Henry is upgrading the $170 bln miner by selling its most polluting units, buying more energy transition metals and speeding efficiencies – while digging up good results. But shareholders eager for quick fixes don't appreciate the shift in how the giant is operating.

Central banks’ inflation fall guy lives Down Under

16 Feb 2023

Philip Lowe’s Reserve Bank of Australia has raised rates less than the U.S. Fed. But soaring mortgage costs, and silly gaffes, have put him on the spot. With more hikes likely and a report due on the RBA’s future, forcing him out would be an easy, if unfair, political win.

Australia is shuffling towards mortgage crisis

15 Feb 2023

Commonwealth Bank is trading at a heady 2.4 times book as higher rates boosted its interest income by 20%. Peers are up too. But households have yet to fully feel the pain of higher payments and home prices are plunging. Risk buffers aren’t nearly as sturdy as investors think.

Brookfield’s $13 bln climate power play may trip

8 Feb 2023

The asset manager and partner MidOcean want to cut their offer price for Origin Energy, AFR reports. Gas rules are in flux and shares 20% off the bid, supporting a reset, but the target is boosting its earnings outlook. Too much resistance risks short-circuiting a good thing.

Gold miner unearths risky M&A seam

6 Feb 2023

U.S.-based Newmont is offering $17 bln for Australia’s Newcrest. On paper, a deal would stack up. But Canadian rival Barrick, which Newcrest spurned in 2019, might jump back into the fray. It has the makings of a value-destructive bidding war.

Tycoon-burned Sun Cable would shine with new owner

1 Feb 2023

Top backers Andrew Forrest and Mike Cannon-Brookes may compete to buy the insolvent solar power export firm. They are pursuing risky plans. Keeping the energy in Australia should allow rival mooted bidders like Macquarie and Iberdrola to pay more and generate better returns.

Surging big-city rents reveal real estate puzzle

27 Jan 2023

The cost of renting apartments in New York, London and Sydney soared last year even as higher interest rates pressured property values. Professionals want more home-working space while students are returning to cities. Yet rents and house prices cannot diverge forever.

Virgin Australia IPO relies on Qantas flight path

20 Jan 2023

Bain Capital may relist the carrier it bought in 2020 as travel revives and rivals’ shares rally. Virgin could be worth $800 mln if it replicates the projected juicy margins and growth rates of its larger rival. If not, the private equity firm might wait in the departure lounge.

AGL’s new boss has a $14 bln target on his back

19 Jan 2023

That’s how much Damien Nicks needs to turn Australia’s top carbon emitter into a renewables giant. Unlike predecessors, he has a proactive board, improving earnings and a half-placated billionaire agitator. He’ll still get hauled over the coals if he can’t find funds quickly.

Rio Tinto plays chancy round of Mongolian roulette

7 Dec 2022

After years of wrangling, the fate of a $3 bln offer for the rest of the Oyu Tolgoi copper mine’s partner heads to a vote. A win would make a key piece of growth easier to manage. If the bid fails, minority shareholders face stake dilution and Rio managers may merit the boot.

Fortescue boss sets himself up for climate bonanza

7 Dec 2022

Twiggy Forrest has bought wind-farm firm CWP for some $2.7 bln via his personal fund. Being the largest owner of Aussie renewables is a great hedge for his miner’s punt on green hydrogen. And if the gas takes off, he’ll earn even more selling the clean energy needed to make it.

Aussie energy woes put miners in windfall hole

5 Dec 2022

Canberra may cap the soaring price of coal or tax profits to reduce electricity costs. That’s a potentially explosive new risk for producers like Whitehaven, which is buying back up to a third of its stock at near record highs. Such short-term largesse could come back to burn.

Blockchain hype gets useful Aussie wake-up call

17 Nov 2022

Bourse ASX is pausing its much-delayed distributed-ledger clearing system and taking a $170 mln hit. The troubled project was beset by old-school problems like poor communication and planning. Such human flaws, though, bleed into how the technology gets developed.

Brookfield crafts compelling Plan B climate deal

10 Nov 2022

The Canadian investor is leading a $12 bln bid to break up Origin and will spend a similar amount itself to speed up the Australian target’s energy transition. It’s a trickier buy than a failed move on rival AGL. If it succeeds, it will offer a model for other consortiums.

Money manager M&A mess is dismal industry advert

3 Nov 2022

A consortium including newly enlarged EQT is offering $1.1 bln to dismember Australia’s Perpetual. It’s a promising starting bid. But it comes months after the target agreed to buy a rival. The convoluted affair belies everyone's pitch of being good stewards of capital.