Australia

Private equity gears up for a deal fest Down Under

11 Jul 2023

Blackstone, EQT, CVC and peers are shifting resources to Australia, partly due to geopolitical tension. The country’s stumbling economy will also leave property, consumer and other firms ripe for buyouts. That means M&A battles – once inflation, rates and debt markets settle.

El Nino will brew up potent new economic storm

4 Jul 2023

The Pacific Ocean phenomenon is back. Resultant floods, heatwaves, water scarcity and fires will damage crops and infrastructure, may cost trillions, and augur inflation and rate hikes. Worse, climate change makes such events stronger and more frequent, embedding supply shocks.

PwC cauterisation Down Under leaves infection risk

26 Jun 2023

The accounting firm’s Australia outfit hopes a new CEO and the sale of its government advisory unit for less than one dollar will stem a conflicts of interest scandal. With a tainted brand and probes continuing it’s unlikely. Keeping the fallout in-country would be a victory.

Windfall taxes get a breezy airing Down Under

14 Jun 2023

New levies on high coal prices accounted for a third of the $10 bln in resources royalties Queensland raked in over the past year. It helps the state invest in renewables, hospitals and childcare without trashing fossil-fuel firms’ margins. It’s how such tariffs should work.

Lithium miners unearth shovel-ready $11 bln deal

10 May 2023

Australia’s Allkem and US peer Livent are uniting to create an energy-transition titan. EV makers scrambling for battery materials should like a combined explorer and processor with no Chilean exposure. Bigger is strategically better, and helps the merger stack up financially.

Canberra lets energy windfall slip through fingers

10 May 2023

Tweaking an arcane resources tax will bag Australia’s Treasury just $400 mln extra a year. It’s barely a drop of the bumper earnings oil and gas companies drilled from war-stoked commodity prices. A direct levy on outsized profits can better channel cash to the energy transition.

Macquarie energy boost reignites valuation dilemma

5 May 2023

The $46 bln financial powerhouse posted record earnings thanks to market ructions supercharging commodities. Strip that out and it’s hard to justify the bank’s book-value premium. Yet Macquarie has a track record of having at least one such lumpy business a year outperform.

Aussie banks face do we, don’t we dance conundrum

4 May 2023

Top-four lender NAB is slowing its heels on making housing loans below its cost of capital. Others are probably doing the same. It’s smart, not least as a slowing economy is likely to push up losses. But the 5% drop in NAB’s stock shows they’re under pressure to keep going.

Aussie central bank prepares to join 21st century

20 Apr 2023

Canberra intends to implement all 51 proposals of a review into its interest-rate setting institution. That’ll improve everything from governance to communications to independence. Whether Philip Lowe stays in charge, though, hangs in the balance.

Aussie central bank fix will paper over inflation

4 Apr 2023

Canberra is driving overdue governance upgrades at the regulator. They will make the Reserve Bank of Australia smoother to run but won’t help beleaguered boss Philip Lowe much. Peers hoping the review yields new strategies for cooling supply-side price hikes will be disappointed.

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.