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Multiplex not the only option

WITH the retail component of the Multiplex float likely to open and close on Friday, November 7, there will be a lot of disappointed potential investors around Perth.

Fear not. Other chances to jump into the world of a genuine property king might not be too far away – that is, if you really reckon that now is a good time to be investing in property.

The Sarich family is also contemplating a public float of a slice of its extensive portfolio of plum commercial properties and an eventual offering of some of the properties owned by Stan Perron should not be considered out of the question.

Sarich is the next most likely cab off the rank.  There is no doubt that he has been closely studying the structure chosen by the Roberts family for the Multiplex float, a clever arrangement that brings in outside capital in a tax effective way while allowing the founder, John Roberts, to plan an exit at his leisure – but probably not until he has landed just a few more deals.

The $1.1 billion Multiplex float, which has been snapped up by institutional investors and a few rich friends of the Roberts family, will see the business split into a construction operation and a property trust with payment for shares and units split into two instalments, $3.08 immediately and 97 cents on December 15 next year.

The family, which keeps a 42 per cent stake in the business, does not take much out in the first stage of the sell down, lending $201 million on an interest free basis to the property trust.

No-one is saying when the loan will be repaid but on the day the second instalment on the shares falls due, and Multiplex gets $283.7 million from its new shareholders, it is a fair bet that the Roberts clan will get back its loan.

The beauty of the Multiplex float is that it achieves so many objectives in one move, with the key undoubtedly being succession planning by the 70 year-old doyen of the Roberts family.

Sarich, who is only five years behind Roberts in the age stakes, said in early August that he too was thinking about floating Cape Bouvard Investments, his primary property vehicle, which owns somewhere close to $1 billion worth of assets.

According to one report, Sarich has been talking to the investment bank UBS, the same firm that designed the Multiplex float, an understand-able point of call for Sarich as his requirements, especially succession planning, are similar to those of the Roberts family.

As to the third member of Perth’s property elite, Stan Perron, there is no sign yet of a float of his $1.3 billion in prime properties, though succession planning must feature prominently in meetings of Perron Investments given that the founder clocks up his 80th birthday in November.

With the Roberts family floating, Sarich talking about, and Perron looking in from the sidelines, a wise investor must be asking this simple question, why would anyone be buying when they’re selling?

Briefcase can think of a few answers, including the fact that Multiplex is riding high on the infrastructure construction boom but there is no denying that all three made their fortunes by buying (and selling) at the right time of the business (and interest rate) cycle and if they reckon it’s a good time to sell – then they must be right.

 

THE nickel game, which seems to have run out of puff given the decline in share prices by stocks such as Mincor, Western Areas, Independence and Jubilee, does not signal the end of the commodity price boom that is making the resources sector so interesting.

Copper is staging a great rally on world metal markets, and so too are copper stocks.

Red Metal, the new float from Josh Pitt and Neil Tomkinson, is already trading around 37 cents, 85 per cent higher than its 20 cent float price – and in just four days.

Exco Resources, an almost forgotten copper explorer, has also shaken free from its shackles after reporting an excellent copper assay from drilling on its Mt Margaret prospect near Mt Isa in Queensland.

Over the past four weeks Exco has more than doubled from around 10 cents to 23 cents.

While copper is the latest game to play and other metals will follow as the entire metals complex rises in the current commodity price wave, there are a few interesting observations to be made.

First, what a bargain Xstrata got when it snapped up MIM earlier this year and how close did Western Metals come to surviving?

However, the most interesting is to consider what’s going on at Bougainville Copper.

No copper has been mined at the company’s mine on the island of Bougainville since rebels shot up the site in 1989.

The company today is a listed shell with a pile of cash and the potential to one day do something with the copper left in the ground.

If that is the best that can be said, then why has the share price of Bougainville almost doubled from 13.5 cents as recently as October 9 to 25.5 cents on October 31 – with increasingly heavy trade.

 

AUSDRILL continues to perform strongly since being mentioned in Briefcase two weeks ago, rising from 70 cents to 78 cents, a gain of 11 per cent.

Unfortunately, some readers may have misinterpreted part of that report which was intended to be praise for the way management has won business and grown the company. Sincere apologies to the team at Ausdrill if those words were taken the wrong way.  As shown in the share price, the business is clearly performing strongly.

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