Lyn Brazil launches challenge to AVJennings board

The housing developer with a former Wallaby captain at the helm needs fresh blood on the board to turn it around, a prominent Queensland investor says.

NSW Retail Development Site in AVJennings Master Planned Community in Warnervale for sale

Prominent Queensland investor Lyn Brazil is looking to shake up the board of property developer AVJennings — as it also faces a separate takeover play from a consortium of US investors — due to unhappiness with the well-known company’s under performance during the housing boom.

Mr Brazil is backing the election of one of his advisers, Brad Newcomb, as a director, as well as the election of Queensland lawyer Rachel Brown, to the AVJennings board, despite its recommendation that shareholders vote against both candidates.

The experienced investor, and father of prominent former Macquarie investment banker and FitzWater Capital co-founder Ben Brazil, also has sizeable holdings in resources companies, including Aurelia, and was an activist shareholder in property developer Devine.

In the last financial year, AVJennings’ net profit after tax slumped to $1m after it terminated an option in relation to its Rocksberg project in Caboolture, Queensland, at a total expense of $17.8m.

The company’s chief executive is Wallaby legend Phil Kearns who has been a director of AVJennings since early 2019. He was appointed in January 2022.

The company came under pressure as it underperformed rivals, including Cedar Woods and Peet. A controversial $30.4m capital raising at a heavily discounted price last year heightened concerns.

AVJennings’ largest shareholder, Singapore-based SC Global Developments, which has a stake of about 54 per cent, backed the raising and took up its entitlement. Proceeds were to be used to accelerate built-form housing on AVJennings lots to meet the growth in demand for AVJ Turnkey homes. But the deep discount to AVJennings’ then net tangible asset backing sparked concerns about its dilutive impact and that the company had overextended on buying development sites.

Mr Brazil has a holding of about 6 per cent and is seeking to get the two directors to the board at the annual meeting this Thursday. The existing board recommended against the appointments, partly due to the connection to Mr Brazil and also on the basis of their skills.

The company got a first strike against its pay practices last year, with 49.54 per cent of votes cast against it, and it faces the prospect of being hit with a second strike and subsequent board spill motion.