Privatisations failing to fill the black hole

Privatisations fail to fill black hole

Our new PM Malcolm Turnbull might want to have look (through his glasses) at (still) Finance Minister Mathias Cormann’s plans to flog off the ASIC registry business.

Planned privatisations — sorry, asset recycling — to fill the budgetary black hole as conceived by Cormann and (still) Treasurer Joe Hockey haven’t quite panned out as planned.

They’ve shelved the mooted sales of the Australian Mint, Defence Housing Australia and most recently the ARTC, despite having already called for expressions of interest in undertaking a sale scoping study.

The just-distributed registry expression of interest doco sent to the 30-or-so potential buyers of the renovator’s delight is believed to show that it makes a top-line profit (EBITDA) of about $1 million.

That’s a big multiple for the government’s advisers Greenhill to pitch to get to a mooted $6 billion price tag.

Buyers are expected to fork out to upgrade the registry’s antiquated technology, then make money via cost efficiencies they can find and growth opportunities they can dream up.

The buyer would also need to act as revenue collector for the Feds. While the government is believed to be open to the idea of the lucky buyer keeping a portion of revenues in return for a higher upfront price, that’s not the preferred option. Too much like tax farming.

The market is seeing this one more like an IT procurement contract, with some now wondering whether a new (or old) finance minister might have to end up paying whoever takes the fix-up job off their hands.

Hockey swan song?

Hockey delivered what looks his swan song yesterday, a bill to crack down on companies using various tax haven dodges to reduce the amount payable to the commonwealth.

Luckily, the new PM knows plenty about tax havens. After all, many of the investment funds into which he’s pumped some of his squillions live in them.

Margin Call counted six in the Cayman Islands, a Caribbean haven home to Ugland House, a building home to more than 18,000 companies once described by Barack Obama as either “the largest building in the world or the largest tax scam in the world”.

Indeed, two of Mal’s funds — MSD Torchlight and Zebedee Growth Fund — give Ugland House addresses.

Of course, Ugland House says there’s “nothing unusual” about one building serving so many companies and points out Cayman is a leading jurisdiction for running global funds. Meanwhile, back in Australia, while the government is betting on economic success to boost its electoral fortunes, Turnbull’s future personal wealth is at least partly dependent on business failures: one of investments is John Hempton’s Aussie fund Bronte Capital Amalthea Fund, which shorts “highly promoted fads, frauds and failures”.

Fox in the hole

Tense times in Toorak for trucker Lindsay Fox and his wife Paula, with a vacant block of land opposite their humble bolt hole on the corner of Irving and Albany roads poised to be sold.

Expressions of interest for the large parcel of land on Albany, which is next to and appears to be owned by their opposite neighbours Dion and Sandra Abrahams, closed on Tuesday night.

Last year the local council approved plans lodged by the Abrahams to develop the block as part of a broader blueprint for five two-storey homes, each complete with basement car parks and a swimming pool.

That might sully the view from the Fox’s mansion and during an extensive construction phase spoil the amenity of their pool and tennis court. Speculation is that the Foxes will just fork out the mooted $4m-5m price tag for the blank canvas themselves.

That would be small change for the billionaire to give him control of the how the land is developed.

Aitken falls short

Celebrity stock picker Charlie Aitken appears to have caught a bad case of media shyness over the AIM Global High Conviction Fund he was heavily touting a few months ago.

As the headlines had it, this was to be a $300m fund, half of which was to come from richie Kerry Stokes and his family.

Aitken recruited an all-star team including his wife, former Clutz lawyer and fashion designer Ellie, and after shaking the bucket the fund duly started trading in July.

However, a week ago a member of Aitken’s team (not Ellie) told Margin Call that while everyone was happy with the amount raised, it fell short of the $300m sought.

We also wanted to ask if it was true that the Stokeses had actually only committed to match the contributions of others, but all further inquiries were referred to Aitken.

Sadly, he’s yet to return repeated calls.

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