Fortescue restructure delivers dividends direct to Nicola Forrest

Nicola Forrest’s independent shareholding of Fortescue shares will deliver an income stream worth more than $77m this financial year.

Nicola Forrest’s independent shareholding of Fortescue Metals Group shares will deliver an income stream worth more than $77m this financial year, according to analyst estimates, as Australia’s second-richest woman forges a new life apart from her husband of 31 years.

The key change in the restructuring of the Forrest family’s ownership of Fortescue shares in June was the establishment of a new company, Coaxial Ventures, which holds 50 million Fortescue shares. The disclosure documents say the company is the trustee for the Coaxial Ventures Discretionary Trust.

The company’s 10 shares on issue are beneficially owned by Mrs Forrest, according to documents filed with the Australian ­Securities & Investments Commission. The couple’s three children – Grace, Sophia and Sydney – are directors of the company, but do not own shares in it.

Registered in June, just days before the broader restructuring of their interest in Fortescue, the paid-up value of the shares was $10, ASIC records show.

The establishment of Coaxial tipped the balance of shares owned in Fortescue by the former couple in favour of Mrs Forrest. With the exception of a handful of shares held by Andrew Forrest directly, the rest are held in companies jointly owned by both, or within their Minderoo charity.

The Fortescue shareholding means Mrs Forrest’s wealth is estimated at $15.46bn – which would be enough for seventh position on The List – Australia’s Richest 250 if it were recalculated now – about $1.1bn higher than Andrew Forrest’s $14.35bn tally.

But it also delivers Mrs Forrest a direct income stream beyond the shares held their privately owned Tattarang investment group, which contains the bulk of the former couple’s Fortescue shares as well as the rest of the family’s business holdings – including newly minted nickel miner Wyloo Metals, the Forrest family’s vast agricultural empire, extensive com­mercial property holdings, and clothing company RM Williams.

Like the rest of the family business empire, Coaxial will be paid dividends directly by Fortescue. Although slowing iron ore prices suggest this will be lower in future years than the bumper $2.3bn paid to their jointly-held shares in 2022, the tally is still likely to be ­substantial.

In a research note issued on Thursday, Macquarie analysts estimated that Fortescue will pay out about $4.74bn in dividends in the current financial year – about $1.54 a share.

That equates to payments of about $1.54 a share for the full fiscal year, or about $77m to Coaxial.

That cash would then be available for distribution by the company’s directors, either through the trust, or directly by paying its own dividends to Mrs Forrest.

It could also allow Mrs Forrest, and the children, access to a cash stream to branch out their philanthropic efforts beyond the Minderoo structure.

That means Mrs Forrest would have access to a substantial income stream in her own right, and would not be reliant on the payment of dividends from other parts of the jointly owned Tattarang Group – which ASIC records suggest have not generally paid out profits to their owners in recent years.

At the time Coaxial was founded, Mr Forrest also registered a second subsidiary company, Coaxial Private, which could also be used as a separate investment vehicle in the future. All three of the Forrest children – but not Andrew Forrest – are directors of the ­subsidiary.

The amicable nature of the split means that the former couple count as “associates” under the Corporations Act, and their total holding of 36.7 per cent of Fortescue shares is not considered separately by Fortescue, or by regulators.

That includes Coaxial, despite the fact that Dr Forrest does not own a stake in the company, and is not a director – although Australia’s corporate laws do not require any public filings on the structure or holdings in the trust vehicle that sits behind the company, and it is not possible to tell what involvement the Fortescue founder may have in the Coaxial Ventures Discretionary Trust.

But its existence is likely to ease concerns the separation could lead to wrangling over money that could lead to a more significant asset split – one that could lead to a sell-down of the family holdings and risk Dr Forrest’s control over Fortescue.

The market delivered an early sign that major investors are not concerned about the separation on Thursday, with Fortescue shares closing up 29c, or 1.3 per cent, to $22.48.