BHP uses commodity rally to fortify position 22 Aug 2017 The Anglo-Australian miner swung to an annual net profit of $5.9 bln. Plans to exit a troubled shale business and hold off on investing in potash chime with demands from Elliott, an activist hedge fund. The compromise, plus more focus on financial strength, looks sensible.
Sydney meets Shandong in $2.5 bln share sale 4 Aug 2017 Yancoal is raising more than 10 times its own market cap to buy Rio Tinto’s coal unit. To get this done, the indebted small-cap had to bring in some unusual underwriters. The result is a novel blend of Australian public-company process and Chinese state capitalism.
Rio Tinto’s new problem: What to do with its cash 2 Aug 2017 The miner more than doubled earnings in the first half and promised to return $3 bln to shareholders in buybacks and dividends. Higher prices and asset sales helped reduce debt to its lowest level since 2010. After years of deleveraging, spare cash is an unusual dilemma for Rio.
Australian banks can digest capital hike move 19 Jul 2017 Regulators in Oz have aggressively hiked capital requirements for big banks. The caution is warranted given the finance sector's concentration and record household debt. A grace period will soften the blow for lenders, but outsized returns could be a thing of the past.
Chinese green car boom fuels lithium rush 17 Jul 2017 Beijing's policy push toward electric vehicles is driving investor interest in lithium and lithium miners. The price of lithium carbonate has almost trebled since 2015, and acquisitions are underway. Demand for the suddenly strategic commodity could trigger a tussle over supply.
Viewsroom: Elon Musk’s Down-Under wager 13 Jul 2017 Tesla’s CEO is putting the firm’s reputation, and $50 mln, on the line in a deal to quickly provide energy storage to South Australia. Over in Texas, a battle is brewing between investment icons Warren Buffett and Paul Singer over a long-suffering and oft-wooed energy company.
Rio Tinto right to take China’s $2.7 bln and run 27 Jun 2017 In selling a group of thermal coal mines, the miner weighed up a higher, less certain price from China’s Yancoal, or a lower, more secure bid from Glencore. The former looks better. Selling to China could bring other benefits. The main thing is to get shot of dirty fuel assets.
Glencore misreads Chinese tea leaves in bid battle 21 Jun 2017 Rio Tinto still wants to sell $2.5 bln of coal assets to China's Yancoal, rather than taking $100 mln more from the Swiss trader. Worries that Beijing would create problems for the gatecrasher probably played a role. A sharply higher offer could persuade Rio to reconsider.
Packaging veteran ticks right boxes for BHP 16 Jun 2017 The Anglo-Australian mining giant named Ken MacKenzie as its new chairman. The former manufacturing executive lopped heads and boosted returns at his last job, and was unsentimental about weak business lines. Activist investor Elliott is pleased. Other shareholders should be too.
Mining debt junkies in danger of $100 bln relapse 13 Jun 2017 Glencore’s return to big dealmaking could signal a renewal of mining groups’ appetite for risk. The likes of BHP, Anglo American and Rio Tinto have also cut back their borrowings since the last boom. Now with lots of room to gear up again, they risk falling back into bad habits.
Glencore looks well-placed to snatch Rio coal unit 12 Jun 2017 The trading giant has shoved aside Yancoal's slow-moving purchase of Rio Tinto assets with a $2.6 bln cash bid - $100 mln over Yancoal's still not-quite-financed offer. Glencore is betting Yancoal has thin political support and weak financial firepower. That seems shrewd.
KKR bid tests investor faith in Aussie telco 7 Jun 2017 The U.S. buyout firm offered $1.7 bln for the struggling Vocus, a mild premium for a battered target. Shares in the Australian group are down over 60 pct since last June on downgrades and management problems. Given weak prospects, KKR is betting investors have lost confidence.
Condom boom and two-child policy make odd couple 26 May 2017 A Chinese drugmaker and a buyout firm are buying the world's No. 2 condom-maker for $600 mln. The rich price could pay off, as Chinese couples invest more in safer sex. But this also highlights the difficulties Beijing faces in convincing the middle class to have more children.
BHP should take Elliott’s activism as a compliment 16 May 2017 The fund has renewed its call for the miner to break up. BHP isn’t the only one with portfolio clash – rivals Rio Tinto, Anglo American and Glencore all have bits that don’t fit. But BHP’s oil business is well suited to a spinoff. Resistance makes it look more desirable.
Australia hands U.S. timely infrastructure example 11 May 2017 An investor group is paying A$7.6 bln for 50.4 pct of Endeavour Energy, a New South Wales electricity distributor. It's an "asset recycling" model that raises private capital against established operations to fund new government investment. Trump's team should take note.
Levy takes some sheen off Australian banks 10 May 2017 The government is slapping a 6 bps levy on big banks’ liabilities. The move will rake A$6.2 bln into federal coffers and shows bank-bashing is good politics, even in countries that weathered the financial crisis well. At least the sector is strong enough to absorb the hit.
Australian media buyout might need an edit 8 May 2017 TPG and an Ontario pension fund want to buy and break up Fairfax Media for $2.1 bln, keeping the group's property portal and some big newspapers. Long-suffering investors are being offered a decent headline price. But a fiddly cash-and-stock structure makes for awkward reading.
Review: Can we avoid another financial crisis? 5 May 2017 That's the question Steve Keen sets out to answer in his new book. He concludes that a capitalist economy can no better avoid another blowup than a dog can avoid attracting fleas. It’s only a matter of time. If the Australian economist is correct, we don’t have long to wait.
Morphing Macquarie powers ahead 5 May 2017 The Australian bank is a master of reinvention, relentlessly encouraging its financiers to move sideways into profitable new ventures. The result is record full-year earnings of $1.6 bln, a fat return on equity, and stock at 10-year highs – with a rich valuation that is justified.
ANZ edges towards capital safety zone 2 May 2017 The first big Australian bank to report first-half earnings shows improved capital levels. As Oz property prices keep skyrocketing, regulators want higher buffers defending the highly concentrated bank sector. ANZ's move is timely and necessary, even if investors aren't cheering.