Mixed year for WA's wealth creators

27/11/2018 - 15:52

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SPECIAL REPORT: Asset sales and M&A action were the highlights of a busy year for WA's wealthiest.

Mixed year for WA's wealth creators
Gina Rinehart.

SPECIAL REPORT: Asset sales and M&A action were the highlights of a busy year for WA's wealthiest. 

Gina Rinehart

Estimated total wealth: $12.68bn

Gina Rinehart solidified her status as Australia’s wealthiest woman, with Hancock Prospecting reaping $1.37 billion in net profit, driven by spectacular earnings in iron ore and a significant lift in revenue for her cattle station investments.

Hancock’s prized asset, iron ore miner Roy Hill Holdings, has continued to impress since achieving its nameplate production capacity of 55 million tonnes per year in September last year, resulting in a 69 per cent lift in net profit to $558 million in the 2017 financial year.

(CLICK TO READ A PDF VERSION OF THIS THREE-ARTICLE SPECIAL REPORT)

Overall, Hancock Prospecting lodged a 36 per cent lift in revenue to $6 billion in FY17, with the Hope Downs iron ore joint venture with Rio Tinto also providing a solid profit lift.

Outside of iron ore, Mrs Rinehart’s agricultural empire is also building momentum.

Following last year’s $365 million acquisition of the S Kidman and Company cattle estate, in joint venture with Chinese firm Shanghai CRED, Hancock Agricultural Investment Group became Australia’s third largest beef herd owner.

It now manages more than $4.13 billion worth of assets across 22 stations and feedlots located in Western Australia, the Northern Territory, Queensland, South Australia and NSW.

Within its herd of 360,000 cattle, Hancock is estimated to own around 15,000 pure wagyu stock, most of which are exported to China under the high-end 2GR brand.

The enormous wealth creation capabilities of the Hancock empire was also illustrated by Mrs Rinehart’s children – John Hancock, Bianca Rinehart, Ginia Rinehart and Hope Welker – joining the ranks of the world’s billionaires, each with an estimated fortune worth at least $US1.3 billion ($1.79 billion), according to Forbes magazine.

 

Andrew Forrest

Estimated total wealth:                $6.1bn

Shareholding value:       $4.11bn

Iron ore billionaire and Fortescue Metals Group chair Andrew Forrest had a typically busy 2018, highlighted by a three-way takeover tussle with fellow mining magnates Chris Ellison and Gina Rinehart over Atlas Iron, and the development of a new Asia Pacific-focused rugby competition.

In April, Mr Ellison’s Mineral Resources announced a $280 million merger deal with Atlas, a proposal Mr Forrest attempted to block with the acquisition of a 19.9 per cent stake in the troubled junior.

But both Messrs Forrest and Ellison were ultimately outbid by Mrs Rinehart’s Hancock Prospecting, which offered $413 million to acquire Atlas and secured enough stock in the company to move to compulsory acquisition in early November.

Also in November, Mr Forrest increased his shareholding in Fortescue to more than 34 per cent through on-market trades totalling $23 million, his largest investment reported in the company since September 2013.

Mr Forrest’s planned rugby competition, Global Rapid Rugby, was recently given the green light by the World Rugby Council and will begin its inaugural season in February.

The tournament will feature the Western Force competing against teams from Malaysia, Hong Kong, Singapore, Japan, Fiji and Samoa.

Kerry Stokes

Estimated total wealth:                $4.93bn

Shareholding value:       $3.66bn

Media mogul Kerry Stokes maintained his investment in Capilano Honey rather than cashing in on his near-20 per cent stake after a private equity consortium made a $190 million bid for the 65-year-old honey manufacturer.

A consortium featuring private equity groups Wattle Hill and Roc Partners made a $190 million bid for Capilano in August, giving shareholders the option to accept $20.06 per share in cash or a one-for-one share swap in the new owner.

Mr Stokes elected for the share swap under the scheme, which was approved by the Federal Court of Australia and became effective in late November.

Overall, Mr Stokes’ shareholdings experienced a healthy uptick in value in 2018, with his 61 per cent stake in Seven Group Holdings rising to be worth around $3.2 billion, from just less than $3 billion around this time last year.

Mining equipment division Westrac largely drove Seven Group’s strong performance, experiencing a significant lift in demand thanks to improved conditions and fresh expansions in Western Australia’s resources sector.

Buckeridge family

Estimated total wealth: $2.2bn

The future wealth creation potential of an iconic WA construction sector brand remains uncertain, more than four years after the death of BGC founder Len Buckeridge.

Since Mr Buckeridge passed away at the age of 77, there has been widespread industry intrigue and speculation over whether brothers Sam and Andrew Buckeridge would take control of the company, or whether the torch would be passed to their stepbrother Julian Ambrose, who has held executive roles at the company for many years.

BGC has always been a unique player in WA construction, with its considerable residential construction arm supported by some of the state’s biggest building products and construction materials manufacturers.

The empire, which holds a pipeline of work valued at more than $2.7 billion, also spans across mining contracting, trucking and logistics, property management and apartments – and it’s all up for sale.

BGC Residential’s status as WA’s biggest homebuilder will certainly garner interest from some of the big national names in housing construction, but the scale and breadth of BGC, as well as its vertically integrated nature, makes any attempt to separate its divisions into individual assets a challenging proposition.

Property asset sales are under way, with the Aloft Perth hotel in Rivervale the first domino to fall, sold to Singapore’s Hiap Hoe early last month for $100 million.

BGC’s 368-room The Westin Perth remains on the market, with the sales campaign being managed by commercial agency JLL.

Mark Creasy

Estimated total wealth:                $689m

Shareholding value:       $404.9m

While prolific prospector Mark Creasy was reportedly starting to wind back his investments in 2018, he also helped add a new player to the ASX in cobalt explorer Galileo Mining.

Galileo captured the imagination of investors on its ASX debut, with its shares soaring 90 per cent to 38 cents in the company’s first hour on the bourse after raising $15 million from a heavily oversubscribed initial public offering.

While Galileo’s stock has come back to trade around 2 cents under its issue price of 20 cents in recent weeks, its highly prospective tenements near Norseman have it well placed to capitalise on an expected uptick in global demand for cobalt – a key ingredient in the manufacture of lithium-ion batteries.

Fluctuations in the share price of Mr Creasy’s holdings in Independence Group and a 20:1 share consolidation by Azure Minerals resulted in the total value of his ASX investments falling to around $404 million, from $530 million in early December last year.

Chris Ellison

Estimated total wealth: $783m

Shareholding value: $315.1m

Chris Ellison has positioned Mineral Resources to become a major player in WA’s burgeoning lithium sector through a $1.6 billion Pilbara joint venture with US industrial chemicals giant Albemarle.

The diversified resources player sold a 50 per cent stake in its Wodgina lithium project in WA’s north west to Albemarle for $1.6 billion, with the mining operation to also feature a lithium hydroxide processing facility, which will allow MinRes to move up the lithium value chain.

While that deal resulted in a healthy uptick in the company’s share price when announced in late November, the value of Mr Ellison’s MinRes shareholding fell to $315 million over the past 12 months, from around $397 million last year.

Rod Jones

Estimated total wealth: $450m

Shareholding value: $330.4m

Less than six months after stepping down as Navitas chief executive, co-founder Rod Jones featured in a near-$2 billion takeover bid for the education services provider.

Mr Jones, who remained active in international education following his retirement from Navitas as chairman of StudyPerth, is part of a consortium that also includes Melbourne-based BGH Capital and Australian Super.

The consortium offered $5.50 cash per Navitas share in October, valuing the target at $1.97 billion, but the Navitas board of directors rejected the proposal in early November, arguing it was not fair value.

The Navitas standoff was not the only M&A action Mr Jones was involved in in 2018, with two ASX-listed technology plays in which he appeared among the top 20 shareholders, Spookfish and Updater, subject to takeover deals.

Overall, the value of Mr Jones’ total ASX shareholdings remained largely static at around $330 million.


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