AUSTRALIA MARKET
Wednesday, May 17, 2017
Australia and New Zealand Banking Group (ANZ); Commonwealth Bank Of Australia (CBA); National Australia Bank (NAB); Westpac Banking Corporation (WBC):
The big four banks have begun a campaign to broaden the bank levy and include international banks in a bid to find a politically acceptable compromise and share the $6.2 billion load. Separate Treasury submissions released by ANZ Banking Group, Commonwealth Bank of Australia, National Australia Bank and Westpac on Monday all pushed for foreign banks to be included in the new levy, which has been framed by pundits as an antibusiness vote winner. The four banks have argued in their respective submissions that the tax will sideline Australian banks in key product areas and give the giant multinational banks an edge. Commonwealth Bank went on the front foot with its submission to Treasury, saying the structure of the levy favoured overseas-owned multinational banks and would allow them to aggressively compete for deposits. The bank named ING, HSBC and Rabobank among the international banks poised to benefit and demanded they be included in any levy. ‘‘The levy must be designed to also apply to the non-Australian banks,’’ the submission from CEO Ian Narev says. But former ANZ CEO and HSBC country head Mike Smith has expressed caution about the strategy and warned any move to widen the net could scare off international banks and see them withdraw.
Charter Hall Group (CHC):
Charter Hall Long WALE REIT has bolstered the retail section of its diversified portfolio with a Bunnings Warehouse at South Mackay, bought for $28.5 million. The deal was struck on a capitalisation rate of 6 per cent. It was acquired from the unlisted Charter Hall Bunnings Partnership Fund 2 through an open-market sale process run by CBRE’s Justin Dowers, Michael Hedger and Joe Tynan. The $830 million Long WALE property trust – its acronym refers to weighted average lease expiry – was launched in November last year through a spin-off of properties held across the Charter Hall’s unlisted platform. Fund manager Avi Anger said the deal would increase the trust’s exposure to retail property, which includes its stake in the Charter Hall managed Long WALE Investment Partnership which owns 54 hotel properties across Australia, on 20-year leases to ALH Group.
BHP Billiton Limited (BHP); Rio Tinto Limited (RIO):
US activist hedge fund Elliott is like a dog with a bone. History shows it is aggressive, determined and not afraid to run a long campaign. That strategy partly paid off last month when Samsung Electronics agreed to cancel more than $US35 billion of treasury shares, which were the consolation prize following a two-year campaign by Elliott to get the Korean company to split itself in two. Elliott is going to be a pest for BHP chief executive Andrew Mackenzie for some time and there was further evidence of this on Tuesday when it watered down two of its original proposals for the company but accompanied it with a fresh assault on the miner’s performance and accusations it was dodging tax. Mackenzie is due to meet Elliott representatives in Barcelona on Wednesday on the sidelines of a Bank of America Merrill Lynch mining conference. Elliott timed the release of its latest campaign to shake up the Anglo-Australian miner to try and extract a response from Mackenzie, who delivered a keynote address to the conference just hours later. The BHP chief executive is obliged to listen to his powerful shareholder but the meeting will be anything but friendly. When activist investor Elliott Associates sought to highlight BHP Billiton’s total shareholder return (TSR) performance against its peers, it was no surprise the New York hedge fund chose 2008 as the start date for the comparison. That year was famously a tough one for BHP’s biggest rival, Rio Tinto, as it battled a heavy debt load from its $US38 billion Alcan acquisition with the onset of the global financial crisis. Rio’s Australian shares fell from $123 to just $25 in the space of seven months that year, while BHP’s slipped from $46 to only $19. Rio was eventually forced to conduct a $US15 billion rights issue.
Bendigo and Adelaide Bank Ltd (BEN):
Tensions between Australia’s banks are on the verge of boiling over as yet another second-tier bank has come out in support of the federal government’s 6 basis point levy on the liabilities of our five biggest banks. Support for the measures will inflame the already strained relationships between members of Australian Bankers’ Association, which is caught between the haves and the have nots of Australian banking. ABA chairman and National Australia Bank boss Andrew Thorburn was among the big four to come out swinging against the tax at the same time as ABA deputy chair and Bendigo Bank boss Mike Hirst supported the initiative designed to raise $6.2 billion from the banks. ME CEO Jamie McPhee joined Bendigo Bank’s Mr Hirst on Monday by expressing his support for the levy. ME, formerly ME Bank, is owned by 29 Australian industry super funds and has about $25 billion in liabilities. Mr McPhee said he supported any measure that levelled the playing field and that he believed that all banks should have the opportunity to compete fairly.
Cromwell Group (CMW); Investa Office Fund (IOF):
Cromwell Property Group could make a fast exit from Investa Office Fund if it fails to put together backers for a fresh tilt at its takeover target, according to JP Morgan. The sell-down of Cromwell’s near 10 per cent stake in IOF could come as soon as within the next two weeks under a scenario contemplated by JP Morgan analysts, including Ben Brayshaw. The most likely buyer would be the fund’s unlisted sister, the Investa Commercial Property Fund, taking that vehicle’s total stake to about 19 per cent. But in alternative scenarios canvassed by the JP Morgan team, Investa’s listed peers could move in for the kill, using the Cromwell stake as launch pad for their own cash bid for IOF.
Wednesday, May 17, 2017
Australia and New Zealand Banking Group (ANZ); Commonwealth Bank Of Australia (CBA); National Australia Bank (NAB); Westpac Banking Corporation (WBC):
The big four banks have begun a campaign to broaden the bank levy and include international banks in a bid to find a politically acceptable compromise and share the $6.2 billion load. Separate Treasury submissions released by ANZ Banking Group, Commonwealth Bank of Australia, National Australia Bank and Westpac on Monday all pushed for foreign banks to be included in the new levy, which has been framed by pundits as an antibusiness vote winner. The four banks have argued in their respective submissions that the tax will sideline Australian banks in key product areas and give the giant multinational banks an edge. Commonwealth Bank went on the front foot with its submission to Treasury, saying the structure of the levy favoured overseas-owned multinational banks and would allow them to aggressively compete for deposits. The bank named ING, HSBC and Rabobank among the international banks poised to benefit and demanded they be included in any levy. ‘‘The levy must be designed to also apply to the non-Australian banks,’’ the submission from CEO Ian Narev says. But former ANZ CEO and HSBC country head Mike Smith has expressed caution about the strategy and warned any move to widen the net could scare off international banks and see them withdraw.
Charter Hall Group (CHC):
Charter Hall Long WALE REIT has bolstered the retail section of its diversified portfolio with a Bunnings Warehouse at South Mackay, bought for $28.5 million. The deal was struck on a capitalisation rate of 6 per cent. It was acquired from the unlisted Charter Hall Bunnings Partnership Fund 2 through an open-market sale process run by CBRE’s Justin Dowers, Michael Hedger and Joe Tynan. The $830 million Long WALE property trust – its acronym refers to weighted average lease expiry – was launched in November last year through a spin-off of properties held across the Charter Hall’s unlisted platform. Fund manager Avi Anger said the deal would increase the trust’s exposure to retail property, which includes its stake in the Charter Hall managed Long WALE Investment Partnership which owns 54 hotel properties across Australia, on 20-year leases to ALH Group.
BHP Billiton Limited (BHP); Rio Tinto Limited (RIO):
US activist hedge fund Elliott is like a dog with a bone. History shows it is aggressive, determined and not afraid to run a long campaign. That strategy partly paid off last month when Samsung Electronics agreed to cancel more than $US35 billion of treasury shares, which were the consolation prize following a two-year campaign by Elliott to get the Korean company to split itself in two. Elliott is going to be a pest for BHP chief executive Andrew Mackenzie for some time and there was further evidence of this on Tuesday when it watered down two of its original proposals for the company but accompanied it with a fresh assault on the miner’s performance and accusations it was dodging tax. Mackenzie is due to meet Elliott representatives in Barcelona on Wednesday on the sidelines of a Bank of America Merrill Lynch mining conference. Elliott timed the release of its latest campaign to shake up the Anglo-Australian miner to try and extract a response from Mackenzie, who delivered a keynote address to the conference just hours later. The BHP chief executive is obliged to listen to his powerful shareholder but the meeting will be anything but friendly. When activist investor Elliott Associates sought to highlight BHP Billiton’s total shareholder return (TSR) performance against its peers, it was no surprise the New York hedge fund chose 2008 as the start date for the comparison. That year was famously a tough one for BHP’s biggest rival, Rio Tinto, as it battled a heavy debt load from its $US38 billion Alcan acquisition with the onset of the global financial crisis. Rio’s Australian shares fell from $123 to just $25 in the space of seven months that year, while BHP’s slipped from $46 to only $19. Rio was eventually forced to conduct a $US15 billion rights issue.
Bendigo and Adelaide Bank Ltd (BEN):
Tensions between Australia’s banks are on the verge of boiling over as yet another second-tier bank has come out in support of the federal government’s 6 basis point levy on the liabilities of our five biggest banks. Support for the measures will inflame the already strained relationships between members of Australian Bankers’ Association, which is caught between the haves and the have nots of Australian banking. ABA chairman and National Australia Bank boss Andrew Thorburn was among the big four to come out swinging against the tax at the same time as ABA deputy chair and Bendigo Bank boss Mike Hirst supported the initiative designed to raise $6.2 billion from the banks. ME CEO Jamie McPhee joined Bendigo Bank’s Mr Hirst on Monday by expressing his support for the levy. ME, formerly ME Bank, is owned by 29 Australian industry super funds and has about $25 billion in liabilities. Mr McPhee said he supported any measure that levelled the playing field and that he believed that all banks should have the opportunity to compete fairly.
Cromwell Group (CMW); Investa Office Fund (IOF):
Cromwell Property Group could make a fast exit from Investa Office Fund if it fails to put together backers for a fresh tilt at its takeover target, according to JP Morgan. The sell-down of Cromwell’s near 10 per cent stake in IOF could come as soon as within the next two weeks under a scenario contemplated by JP Morgan analysts, including Ben Brayshaw. The most likely buyer would be the fund’s unlisted sister, the Investa Commercial Property Fund, taking that vehicle’s total stake to about 19 per cent. But in alternative scenarios canvassed by the JP Morgan team, Investa’s listed peers could move in for the kill, using the Cromwell stake as launch pad for their own cash bid for IOF.
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