Capital effort by Macquarie

THE boom conditions on the Australian stock market in 2003 laid a solid foundation for 2004, with most broking firms reporting improved totals in the WA Business News 2004 equity capital raising survey.

Of the $2.4 billion raised by Western Australian businesses last year, national merchant bank Macquarie again dominated the market, raising a total of $905 million on nine Western Australian-related transactions.

Macquarie was involved in some of Western Australia’s premier capital raisings, including the massive Alinta $464.8 million rights issue as well as a $195.8 million placement.

Alinta’s corporate finance work during 2004 won praise from many WA brokers (see story, page 13).

Macquarie director David Griffiths said while the Alinta rights issue, which was hammered initially by the market, was very tough, it received a terrific reaction once it was fully understood.

Global firm UBS was knocked from the top spot in 2003 down to sixth last year, only completing one $100 million IPO for property developer Peet and Company following its survey-topping $900 million IPO for construction giant Multiplex in 2003.

The major players among local firms were fast-growing broker Patersons Securities and listed boutique firm Euroz.

Once dominant Perth broker Hartleys also staged something of a return to past form.

The remainder of the market was made up of large national and international firms with local offices working on one or two big transactions around the $100 million mark.

Other established regional brokers, as well as smaller, more specialist corporate advisory firms such as Azure Capital, also made the most of the boom conditions.

Most agreed that 2004 had been one of the most successful years in recent times with investors happy to dig deep.

Patersons, which has expanded rapidly throughout Australia in the past four years, earned itself the mantle of busiest broker of 2004, completing 70 transactions to raise a total of $751.6 million.

This topped a huge year for Patersons, which also ranked in ninth spot in the annual Thomson Australian Equity Raisings, opening up its third office on the east coast in three years, this time in Canberra.

The amount of capital raised by Patersons represented a significant increase on 2003, a year when it also dominated the local market.

Patersons director Aaron Constantine said it was the best year the broker had experienced in corporate finance.

“The big volumes and greater liquidity created a very conducive environment to completing raisings,” he said.

Mr Constantine said there had been interest in stocks across all sectors, rather than just resource stocks.

Mr Constantine told WA Business News he expected the upbeat mood to carry through into 2005 and that Patersons, now with nearly 250 full-time staff, was looking to expand further with the market.

“There is a lot more cash around looking for new opportunities,” he said.

Listed boutique Perth firm Euroz was another local operator to stand out. It was able to cement a place among the top performers in the local industry raising $426m – and substantially improving its own bottom line.

Euroz improved its pre-tax profit from just over a $1 million in 2003 to $9 million last year.

Euroz’s 2004 efforts represented a substantial increase on 2003 when it raised $202 million.

Last year’s buoyant conditions also provided good news for Hartleys. The once-dominant Perth broker was able to move up the ranks from seventh to fourth position following a major restructure and management buyout in 2003.

Hartleys, which placed 24th on the Thomson table, raised $134.2 million last year, mostly for mining stocks. This was up from $40 million in 2003.

National firms Bell Potter, UBS and the joint venture between ABN Amro and Rothschild also raised amounts around the $100 million mark.

Each of ABN Amro Rothschild and UBS took part in one large trans-action, while Bell Potter was invol-ved in small to medium-sized capital raisings for a wide-ranging group of Western Australian companies.

ABN Amro Rothschild, jointly with Euroz, managed the $100 million spin-out of GRD’s New Zealand gold assets into OceanaGold, while UBS underwrote the $100 million float of Peet & Co.

One firm that made a dashing entry into the survey was Azure Capital, the boutique merchant bank headed by John Poynton and Mark Barnaba.

Azure raised $34.5 million in 2004, including a two-part $14.5 million placement for local gold explorer Tanami Gold.

The survey also included a number of other local and interstate firms regularly involved in transactions in this State.

Local broker DJ Carmichael raised almost $10 million for a range of mostly small resource plays, while Sydney-based broker Austock raised $12.5 million for three Western Australian mining companies.

DJ Carmichael’s overall total raised in 2004 was down on the previous year.

But like many other firms, DJ Carmichael actually took part in a large number deals as a partici-pating broker, however these were not considered as part of the survey.