Investors hurt as McGrath IPO fails

Wizards make value disappear

Enter real estate agent John McGrath’s name in the list of great IPO escapes, right alongside that of deadset Sydney legend John Kinghorn.

In his second foray into listed territory, McGrath’s eponymous agency chain IPOed in December at $2.10, netting the Shark Tank TV star and other owners $64.2 million.

Shares immediately tanked, and yesterday tumbled another 30 per cent after McGrath warned that listings — and Chinese buyers — have dried up in Sydney’s northwestern burbs.

McGrath trousered about $37m by selling just before the real estate bubble burst.

That’s a much better outcome than last time he got involved with an ASX-listed venture and ended up in court with Run, chaired by former NAB boss Frank Cicutto, into which he’d tipped his rent roll (it was bought out last year by former Toll boss Paul Little).

But it’s well short of the standard set by Kinghorn, who floated his RAMS home loan empire in 2007 and walked away with $600m just weeks before global credit markets froze and smashed the company.

McGrath has also taken a $43.5m paper loss on the 27 per cent of the chain he still holds.

Sadly, they’re escrowed until the middle of next year, when McGrath releases its 2017 financial results. McGrath’s showing his faith in a recovery, scooping up another $430,000 worth of stock last month.

At least the lawyers and investment bankers who worked on the deal, including JPMorgan, Bell Potter and Simon Mordant’s Luminis, won’t go hungry. They pocketed a collective $10.1m.

Also getting paid were Shane Smollen and other owners of McGrath franchisee Smollen Group, who got $31.5m for rolling their shops into McGrath as part of the IPO.

Enter them also in the great escape hall of fame: singled out as weak in yesterday’s profit warning was the “Smollen area”.

Hooker hopes fade

McGrath’s tumbling share price is bad news for Janusz Hooker and his big-name backers at LJ Hooker, who have been eyeing an IPO of their own for a couple of years now.

With help from Citi, Hooker and co-owners including Myer family money man Peter Yates and MTV founder Robert Pittman were looking for some $400m to bring the storied LJ Hooker name back to the bourse. But with the current now against them, now seems not the time for former Olympic rower Hooker to paddle out for a float.

ASIC to the rescue

Former Goldman Sachs banker Malcolm Turnbull is doing his best to fend off Bill Shorten’s call for a royal commission into Ian Narev’s CBA, Shayne Elliott’s ANZ, Brian Hartzer’s Westpac and Andrew Thorburn’s NAB.

But PM T and Treasurer Scott Morrison face a backbench revolt and white-hot community anger towards the sector, so talk in Canberra has turned to a possible compromise: getting newly re-energised ASIC boss Greg Medcraft to have a squiz.

Under the ASIC Act there are two ways for ScoMo to do this. Using Section 12, he can tell ASIC to focus on a particular area. But this doesn’t engage ASIC’s hard-core powers, like dragging people off the street for a secret interrogation or taking all their documents.

For that, the Treasurer needs Section 14, flagged by Margin Call last week, which enables him to direct an investigation in the public interest.

All may become clear today (or not).

Mormon or Mammon

But is there iron ore on Kolob?

Fortescue executive director Peter Meurs has stepped down from Andrew “Twiggy” Forrest’s miner towards a full-time role inside the Church of Latter-Day Saints, aka the Mormons.

A former exec at John Grill’s WorleyParsons, Meurs has been freshly elevated to a powerful role within the Mormon hierarchy, this month becoming a General Authority Seventy, just three slots down from the top of the Church tree.

Why they’re called Seventies when there are 89 of them is a mystery of Mormonism, along with the planet Kolob.

In Mormon cosmology, Kolob is the planet closest to the throne of God. Think Fortescue CEO Nev Power’s relationship with Twiggy, perhaps?

In abandoning his $1.4m-a-year gig at Fortescue, Meurs joins a very short list of big biz execs to turn their back on Mammon in favour of full-time religion.

There’s also the Archbishop of Canterbury, Justin Wellby, formerly in the oil business at Elf Aquitane and, er, that’s it.

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