The Japanese banking group that agreed last week to back ailing biotech company Chemeq has an old Perth connection. Mark Beyer reports.
IN the mid 1980s, when foreign banks were chasing Australian banking licences, the Industrial Bank of Japan agreed to set up its Australian head office in Perth.
IBJ Bank Australia opened in St Georges Terrace with great fanfare and high hopes that it would provide a new source of capital for Western Australian businesses.
It never lived up to these hopes, with most of its staff operating from Sydney where other foreign banks had congregated.
IBJ eventually closed its Perth office and the name IBJ subsequently disappeared in a wave of Japanese banking mergers.
It is now part of the giant Mizuho Financial Group, the same group that has become the saviour of two battling Perth companies.
Mizuho bankrolled last year’s restructuring of Pinjarra drilling contactor Brandrill, which recently relisted on the Australian Stock Exchange with Mizuho holding a 70 per cent stake.
And last week Chemeq announced that Mizuho would invest up to $60 million to help the biotech company continue its global commercialisation plans.
Mizuho also played a key role in last year’s restructuring of Gympie Gold, teaming up with Robert de Crespigney’s Buka Minerals to buy the Eldorado gold mine in Queensland.
Mizuho is one of the world’s biggest banks and its investments in Brandrill and Chemeq have been managed by its London-based Global Special Situations Group, established in 2002.
Patrick Collins and Suresh Withana, who helped establish the London group, joined the board of Brandrill last month and may be contenders to join Chemeq’s board of directors.
The Chemeq deal is Mizuho’s largest investment in an Australian company and provides a major fillip for Chemeq, which suffered a succession of operational and financial setbacks last year.
Mizuho has subscribed for $40 million of convertible notes, which convert to ordinary shares at $1.10 per share or the prevailing market price, whichever is lower, and agreed to underwrite a further $20 million capital raising.
Chemeq chairman Graham Melrose said the most likely outcome was that Mizuho would emerge with a 35 per cent shareholding.
In return for its investment it will get two board positions, has right of veto over the selection of Chemeq’s chief executive and chief financial officer, and has nominated an unnamed management team of up to three people to join Chemeq this month.
The deal is subject to Chemeq obtaining final regulatory approvals for its Rockingham manufacturing plant, which produces its innovative polymeric antimicrobial designed to replace antibiotics in intensive pig and poultry production.
Dr Melrose told WA Business News the Rockingham plant was currently operating at 15 per cent of its nameplate capacity of 20 tonnes a year.
