The very busy chairman who is ‘as Australian as they come’

The $3.3 billion listed investment company Milton Corp recently acquired a small unlisted investment company by issuing $4.7 million worth of new shares. The target company was chicken feed to a fund of Milton’s size. So why the purchase?

“We don’t go chasing people, they come to us,” explains Robert Millner, chairman of Milton Corp.

Investment doyen Robert Millner is not ready to retire. Credit: Wolter Peeters

“What they are able to do, is for an amount of money, we issue Milton shares and that is capital gains tax free. And they then become Milton shareholders and the family then hopes those individual shareholders will live off the fully franked dividends that come to them.”

“There is no tax until someone sells those Milton shares that they inherit,” he explains, citing the rollover relief clause. Milton Corp has absorbed about 23 unlisted funds using this method in the past two decades. It’s one of many hints that Mr Millner is part of something older and grander than just one listed investment company.

He is currently chairman of four companies and a director at two others after stepping down from the board of chemist-chain owner Australian Pharmaceutical Industries (API) last year. He has been chairman of investment conglomerate Washington H Soul Pattinson (WHSP) for 22 years after taking over from his uncle Jim Millner, who took over from his uncle William Frederick Pattinson, who was the eldest son of founder Lewy Pattinson. Robert Millner’s own son Tom is on the board of WHSP and portfolio manager at BKI.

Robert Millner’s interests reach across mining, construction, telecommunications, pharmaceuticals, and stock picking. For Millner, longevity is the name of the game.

Take internet and mobile company TPG as an example. Mr Millner has been entwined with that telco since the early 2000s, when former TPG chief executive David Teoh approached him looking to purchase what was then Soul Pattinson Telemedia. WHSP has held a large stake in TPG ever since and enjoyed its acquisitive growth and recent merger with Vodafone.

TPG founder David Teoh, resigned suddenly in March. Credit: Eddie Jim

And now Mr Millner has outlasted Mr Teoh, who resigned suddenly in late March along with his son Shane Teoh.

“He didn’t have to go, it was his decision,” says Mr Millner about Mr Teoh.

“The company had merged – it’s not 100 per cent bedded down but it’s well on the way to being bedded down - and Inaki (Boerreta) is a good manager, he has got a good team with him. David (Teoh) obviously thought it was a good time for him to stand back.”

And despite Teoh’s departure, WHSP remains invested with 12.5 per cent of stock. Mr Millner took advantage of a recent share price dip to add 100,000 shares to his personal investment even though he knew earnings have been hit by international border closures.

“We are down $100 million EBITDA on previous period because of lack of sales of SIM cards to overseas tourists and foreign students,” he said.

“We are having the same thing in Singapore with the foreign workers not coming into Singapore like they usually do. That just goes to show you what this COVID slow down is doing to business. If that’s costing Vodafone $100 million, you can imagine what it’s costing other industries.”

TPG’s now chief executive Iñaki Berroeta says Mr Millner is “as Australian as they come”.

“He is warm, genuine and greets you with a firm handshake” he explained.

“Robert has a very sharp business mind. He understands the competitive landscape and knows where the market opportunities lie. He’s a details man and outcomes focused. He’ll ask lots of questions and have his say, but he’s also the first to congratulate people on a job well done.”

Mr Millner was still angry that the competition regulator held up the Vodafone-TPG merger by taking the matter to court, saying it gave Telstra and Optus a two-year head start on their 5G networks. TPG has faced other hurdles too.

“We were further advanced than anybody in rolling out 5G equipment with Huawei, and then the government put a ban on us. We had spent $100-$120 million and then the government knocked us on the head with that and then the ACCC knocked us on the head,” Mr Millner said.

‘Spitting out cash’

Mr Millner also sits on the board of coal miner New Hope, which owns Round Oak Minerals. It was the coal assets that prompted WHSP to donate $952,000 to the Liberal party between 2010 and the 2013 election, although this largesse was unlikely to be repeated.

New Hope’s New Acland coal mine washplant in Queensland’s Darling Downs.

“There was quite a bit of anti-coal mining and threats of closing down coal mining and those sorts of things, ” Mr Millner explains.

“At that time we thought it was appropriate to do what we did, but at the moment we have got no inkling to be donating any money to anybody in the political arena.″⁣

The mines were “spitting out an incredible amount of cash at the moment” thanks to soaring commodity prices. New Hope’s Bengalla coal mine was purchased because the company wanted something that would “make money in the depths of the depression” and it turns a profit when coal sells for half as much as it costs now.

Also doing well was WHSP’s 43.9 per cent stake in Brickworks, which had a “very very positive” outlook despite the timber shortage thanks to stimulus programs encouraging house building and renovations.

“Detached housing is going to continue to do very well for 18 months to 2 years which is going to compensate for a lot of the commercial work that is going to slow down,” Mr Millner said.

“It’s sort of a tale of two cycles. Detached housing is very strong and the commercial side will have to slow down...It’s so unique, none of us have experienced any of this. It’s very difficult to read what’s happening and what’s going to happen.”

Mr Millner says he has never seen market conditions like they are now with interest rates so low and prices high. Unlike some funds, Milton Corp did not make any big changes to its blue-chip portfolio in 2020, largely because stocks did not fall far enough.

“We didn’t do a lot, but we did buy a few things when it was down in June and July there, but obviously in hindsight not as much as we probably should have done. I think a lot of us for a while thought it was going to get worse and we were caught out.”