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Australian Financial Review : October 17th 2006
FBA 018 COMMERCIAL FISHING VESSELS Active Results Australia Wide YAMAHA 25.6 METRES LONGLINER • GRP construction • LOA 25.6m, Beam 5.0m, Draft 2.3m • Yanmar engine 400 H.P. , 65 KVA genset • Fuel 16,000 litres, water 2000 litres • 22 tonne capacity HARRISCRAFT 17.84 METRES - USL3B SURVEY • Single chine, flybridge • Kevlar & carbon fibre foam sandwich • Cat- erpillar D343-33B 22kva genset • Fuel 5000 litres • Sleeps 4 a/cond. 2 steering stations • LOA 17.84m, Beam 5.53m, Draft 1.3m 27.78 STEEL LONGLINE / IDEAL MOTHER SHIP • Launched 1980, builder AC McLeod, USA • LOA 27.78 m, Beam 7.29m, Draft 3.5m • Detroit 650 H.P., 2 x Detroit gensets • Insulated and refriger- ated freezer hold 30T capacity • Fuel 120,000 litres, water 20,000 litres SMITH & POOLMAN 18.7M LONGLINER • Steel construction • Detroit main engine 223.7kw. 2 x gensets 60 & 80kva • 15 ton holding capacity, 3 ton freezer capacity • LOA 18.7m, Beam 5.15m, Draft 2.7m • Fuel 15,000 litres • Complete refit 2005 • NSW 3B Survey WESTCOASTER 18.3 METRES - USL3B SURVEY • Launched 1997, moulded GRP foam sandwich • Detroit 8V-92TA turbo 650 H.P., 26 kva genset • Large brine refrigeration and freezer areas • LOA 18.3m, Beam 5.56m, Draft 1.8m For further details contact: John Edwards 0438 766 045 firstname.lastname@example.org Adrian Seiffert 0418 783 358 email@example.com THURSDAY 26th OCTOBER at 10.00 a.m. Parkyn Parade, The Spit, Mooloolaba, Qld MARINE AUCTIONS www.marineauctions.com.au Auction terms: 10% deposit, balance 7 days, 7.5% + GST buyers premium. The Australian Financial Review Tuesday 17 October 2006 www.afr.com 18Financial Services Edited by: firstname.lastname@example.org Breaking news at www.afraccess.com Perennial pair in line for $40m Brendan Swift RIDING THE TIDE Returns of Australian share funds to September 2006 Ranked by 3-month return Manager/Fund BEST 3 months (%) Rank 1 year (%) Rank 2 years (%) Rank Lazard Select Aust Equity Challenger Select Australian Share Fund Lazard Aust Equity Maple-Brown Abbott Aust Shares BT Wholesale Focus 12.1 9.6 7.7 7.1 7.1 (1) (2) (3) (4) (5) 9.1 25.2 11.8 16.5 27.7 (82) (2) (77) (39) (1) 23.5 n.a. 21.6 21.4 n.a. (52) (65) (67) WORST Macquarie Alpha Plus Macquarie High Conviction Concord Capital Aust Equities Comp GMO Aust Equity Momentum AMP Capital Value Plus Number of funds Top quartile S&P/ASX All Ords --0.5 --0.7 --0.9 --1.0 --1.0 (82) (83) (84) (85) (86) 14.8 n.a. 14.8 11.3 12.2 (57) (57) (78) (75) 24.3 n.a. 23.1 23.7 21.8 (35) (55) (46) (64) 86 2.96 2.88 (24) 82 18.15 16.16 (43) 71 26.20 22.94 (59) Median 2.09 16.24 24.27 Source: Mercer Investment Consulting CASHING IN: Mike Crivelli, left, and Anthony Patterson of Perennial Investment Partners KEY POINTS IOOF seeks approval to buy out Perennial Investment Partners. Analysts are surprised at the high price IOOF is prepared to pay. Memorandum provides details. The two top executives of Perennial Investment Partners are set to share more than $40 million if IOOF shareholders approve the trans- action at the group's annual general meeting in November. The payout ± revealed in docu- ments yesterday ± forms part of the $67.9 million IOOF Holdings plans to pay to acquire the remaining 21.85 per cent stake it doesn't own in Perennial Investment Partners. Perennial executive chairman Michael Crivelli will be paid an initial $15 million for his 4140 shares in the firm, while managing director Anthony Patterson will gain $26.6 million for his 7335 shares. They will also be in line to receive lucrative deferred payments if Per- ennial Investment Partners reaches certain performance hurdles in 2008-09. The payout follows the record $66 million paid to hedge fund manager Spencer Young for his interest in the MFS-backed HFA, which was listed on the Australian Stock Exchange earlier this year. However, analysts have expressed surprise at the high price the firm is willing to pay to gain full control of Perennial Investment Partners, with the sharemarket hovering near record levels, and doubt that IOOF will meet its goal of making the deal earnings accretive from fiscal 2008. ''Given the very high price paid for the minorities, we believe that most of the valuation upside has been paid away to the minority shareholders,'' JPMorgan analysts said when the deal was announced earlier this month. The payouts were disclosed yes- terday in an explanatory memor- andum and independent expert report, which provides further detail on the acquisition. It values Perennial Investment Partners ± which holds stakes in several high profile boutique funds management firms such as John Murray's Perennial Value Manage- ment ± at $320 million, or a multiple of 25 times 2008-09 net profit. Perennial Investment Partners executives will also be in line for a $9.4 million payment for their claims over current shares in addition to a deferred payment in fiscal 2009. But Mr Crivelli and Mr Patterson could forfeit their portion of the deferred payment for accelerated deferred payments of $7.8 million and $13.8 million respectively if certain events occur before June 30 2009, such as a change of control at IOOF. Independent expert KPMG said the proposed acquisition was both ''fair and reasonable'' to IOOF shareholders. It said the implied premium on offer most likely reflected IOOF's expectations of significant future growth in Perennial Investment Partners net profit, as well as other strategic considerations and benefits. Perennial Investment Partners posted a net profit of $23.3 million for the year ended June 30, 2006, compared with $15.1 million the previous year, according to the KPMG report. Revenue rose to $213.3 million for the full year com- pared with $176.5 million previously. KPMG said the $320 million acquisition price for Perennial Investment Partners represented 2.8 per cent of its funds under management at September 30, 2006, which was below an average of 3.3 per cent for similar transactions. However, it also said the acqui- sition price implied a higher forecast price earnings ratio than similar transactions. ''Although the forecast PE ratio of 32 times 2007 net profit after tax for Perennial Investment Partners is higher than the typical multiples, we note that Perennial Investment Part- ners is forecasting significant future growth in both earnings and funds under management,'' it said. ''In this regard, Perennial Invest- ment Partners is forecasting growth in net profit after tax for the 2007 year in the order of 25 per cent.'' Perennial Investment Partners manages about $19.4 billion in fixed interest, Australian equities, and international equities. Mr Crivelli, who has previously been a director of BT Funds Management and the Sydney Futures Exchange, has been a director of IOOF since 1997. He was paid $319,450 in 2005-06. Mr Patterson earned $821,197 last financial year. Diverging performers in funds Brendan Swift The performance of the best and worst Australian equities fund managers diverged in the September quarter as sectors that drove the market over the past year, such as materials and energy, came off the boil. The median manager posted a solid 1.1 per cent gain in September and 2.2 per cent over the quarter, bringing returns for the 12 months ended September 30 to 16.1 per cent. Mercer principal David Carruthers said the spread between the best and worst fund manager widened as different sectors of the market drove returns. The materials sector was the worst performer last month, falling 2.5 per cent, while the energy sector declined 2.4 per cent. ''The sectors have been determining the returns . . . there is some overlap but a value manager is more likely to be in a utilities sector or banking sector than a growth sector,'' Mr Carruthers said. Lazard portfolio manager Philipp Hofflin said the market had been increasingly driven by momentum during the past three years until May and June when sentiment shifted back towards fundamental stock valuations. ''Our performance in the quarter was driven by a broad range of stocks, whose common feature was that they were undervalued,'' he said. The Lazard Select Australian Equity fund benefited from an underweight position in resources stocks, as well as being overweight telecommunications stocks. Challenger Financial Services Group's head of equities, Peter Greentree, said interest rates and costs were going to be the main issues. ''Our view is [that] it's going to be a stock specific market,'' he said. The Challenger Select Australian Share Fund gained from positions in Tattersall's, Brambles and Foster's and an underweight exposure to the resource sector. It also benefited from a stake in Mayne Pharma. Toronto woos companies The Toronto Stock Exchange yesterday encouraged local companies to raise capital on the Canadian market. ''Some of the feedback we've been getting from the Australian companies is that they've been having more difficulty financing international projects in Australia,'' senior vice-president of business development of the Toronto Stock Exchange (TSX) and TSX Venture Exchange Kevan Cowan said at the Offshore Capital Raising for the Resources Industry Conference. He said a Canadian listing gave access to North American capital markets. AAP Credit Suisse loss Credit Suisse Group, Switzerland's second-biggest bank, lost about $US120 million ($160 million) on South Korean derivatives in the third quarter, an undisclosed stumble by equity traders struggling to catch the leaders in the securities industry. The debacle, which wasn't reported to shareholders, resulted from the bank's failure to protect itself against swings in the value of Korean stock options, two people with knowledge of the matter said. Bloomberg Suncorp: it's not over yet Stewart Oldfield '' Suncorp would consider walking away . . . '' Suncorp chairman John Story headed for Sydney yesterday to finalise proposed terms of the $7.8 billion takeover offer to be put to a board meeting of Promina tomorrow. Yesterday, both parties continued the due diligence process in the offices of their respective law firms. The companies' shares were subdued yesterday, with the expectation that any bid by a rival to disrupt the deal would likely come after the release of documents for the scheme of arrangement that will include detailed company valuations. Shares in Promina, which closed 3¢ higher at $6.95, continued to trade at a signifi- cant discount to the scrip- and-cash bid from Suncorp as investors doubted the compe- tition regulator would sanc- tion the deal. Sources close to the Suncorp board dismissed the desire of Promina share- holders for Promina manag- ing director Mike Wilkins to lead the merged entity. ''That would be a deal killer,'' one source said. The expectation was that Mr Story would continue to chair the merged entity and Mr Mulcahy would remain as chief executive. Another source said Suncorp would consider walking away if Promina shareholders followed through with their demands. Last year, Mr Wilkins joined the board of Alinta as a non-executive director. Broker UBS suggested that a break-up of Suncorp by Westpac and QBE would deliver the biggest synergies of about $228 million, com- pared with $114 million in synergies associated with a Suncorp-Promina marriage. A QBE bid for Suncorp would address its under- weight position in local per- sonal lines business. ''QBE may miss the oppor- tunity to acquire scale in domestic personal lines in the event that the Suncorp- Promina merger completes,'' UBS said. It said Westpac was a potential bidder for Suncorp because it was underweight Queensland and it believed short-tail personal insurance products had similar charac- teristics to credit cards. Top Promina and Suncorp executives are taking part in the due diligence process.