Legendary Bennelong pairs trader Richard Fish's long/short strategy is being marketed to retail investors through a new $75 million listed investment company called Absolutely Equity Performance. 

Absolute Equity Performance has hired Ord Minnett, Morgans and Bell Potter to lead the initial public offering and lodged a prospectus with the Australian Securities and Investments Commission. 

Bennelong's Fish, who runs the Bennelong Long Short Equity Fund, will manage the money on behalf of Absolute Equity Performance using a similar strategy to his existing long/short fund. 

Fish, and his senior portfolio manager Sam Shepherd, are highly regarded in the Australian funds management community for their unique pairs trading style, where long positions are matched with a short position in a similar security. 

According to the prospectus, his fund has returned 19.4 per cent a year over the past 10-years, while the S&P/ASX 200 accumulation index has gained 5.3 per cent. 

A $10,000 investment when Fish started the strategy in February 2002 would now be worth almost $100,000. 

Hong Kong-based Marc Fisher, an executive at alternative asset manager Gottex Fund Management, will oversee the LIC as chairman, while fellow directors include former Commonwealth Bank of Australia capital markets boss Graham Hand and director at financial adviser NW Advice Pty Ltd, Andrew Reeve-Parker. 

Absolute Equity Performance is seeking to raise $75 million at $1.10 a share, with the ability to take up to another $25 million in oversubscriptions. If successful, it expects to be listed on December 16 according to the prospectus. 

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Citi has promoted James Arnold and Ian Campbell to head its Australian and New Zealand debt capital markets team, following the appointment of Alex Hayes-Griffin to a posting in London. 

Hayes-Griffin, who joined Citi from HSBC in 2011 as head of Australian and NZ debt capital markets, has been appointed as Citi's head of European cross border debt capital markets team based in London. 

He was credited with taking Citi to top spot among banks managing offshore debt issuance by Australian financial institutions and corporates. 

Arnold will step up as head of debt capital markets syndication, while Campbell will head debt capital markets origination. 

Both will report to Sydney-based capital markets boss John McLean. 

 

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A $2.5 billion rights issue, $500 million placement and an asset sale means Santos' balance sheet is now fixed. 

That's the view of Credit Suisse analysts, who have been an outspoken critic of Santos and its balance sheet all year as the company's market value sank with the oil price. 

"The scale of the raising and the ~35% discount should come as no surprise," the analysts told clients on Tuesday morning. 

"Hony's placement is a 15% premium to the previous close, but post take up of their entitlement an average entry price of ~$5.71/sh (10% premium to $5.15/sh TERP) – that said raising capital at any premium is a great result.

"On our numbers FFO/debt now sits at 34% in FY17 and net debt/EBITDA at 2.3x.

"If Santos lowered its oil deck US$15/bbl, which would still be above the futures curve, we estimate the guided ~A$3bn post-tax impairment would see gearing of >45% in F16.

"Whilst credit rating fears are gone, in our view, little headroom exists for growth." 

The analysts said Santos would have less than $2 billion for growth capital in the next three to four years if they want to keep debt below less than 30 per cent of funds from operations. 

Credit Suisse trimmed its 12-month target price to $5, from $5.60, but admits the oil and gas company's fate sits largely with the oil price. 

Goldman Sachs' oil and gas team upgraded the stock to "neutral" from "sell" on the back of the equity raising and raised its 12-month sum of the parts target price 24 per cent to $4.95 a share.  

The comments come as Santos' brokers Citi, Deutsche and UBS prepare seek acceptances for the institutional component of the company's $2.5 billion rights issue. Institutional acceptances are due at 11am on Tuesday. 

Santos announced the capital measures on Monday. 

 

 

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GE Capital has sold its Australian commercial assets to Sankaty Advisors, the independently managed credit affiliate of Bain Capital, for $1.9 billion including debt, as revealed by Street Talk Online on Monday.

The deal was funded by Deutsche Bank, JPMorgan and National Australia Bank. Sankaty's consortium was advised by Ashurst while Morgan Stanley and King & Wood Mallesons acted for GE. 

Sankaty will subsume the bulk of the portfolio although Deutsche, as the junior partner in the consortium, will pick up a portion of the loans. As previously noted by this column, Next Capital's debtor finance group Scottish Pacific is keen to purchase the debtor financing business that contains loans worth between $300 million and $400 million.

The GE Capital acquisition follows Sankaty's purchase of a portfolio of loans and other securities from JPMorgan's Global Special Opportunities Group in July 2014. The portfolio contained mezzanine loans in North America and Europe, as well as loans and related special situations investments in Australia and across Asia, with an aggregate value of approximately $1.3 billion.

It also caps a solid run for Sankaty in Australia.

The team led the recapitalisation of drilling services company Imdex in September and also contributed to the funding for Brookfield's $8.9 billion Asciano takeover bid; KKR & Co's $8.2 billion purchase of GE's local consumer finance business; Anchorage Capital Partners' $212 million buy-out of Affinity Education; and Quadrant Private Equity's $410 million acquisition of VIP Pet Foods.

Sankaty has about $25.9 billion in assets under management globally and invests across the full spectrum of credit strategies.

Street Talk revealed last week that Sankaty had been named as preferred buyer for the GE portfolio which has exposure to five different asset pools including debtor finance, aviation finance and asset-backed lending.   

For GE, the sale come as part of a global cleanout of its portfolio, which will see it focus on high-value industrial businesses.

Elsewhere, and as also revealed by this column, Stuart Blieschke, a former director at Pacific Alliance Group, has been hired by global private equity giant KKR & Co.

Hong Kong-based Blieschke will join KKR's Niraj Javeri-led credit and special situations team, covering Asia including Australia.

Sources also told Street Talk that Ian Curry, a vice president at TPG Special Situations Partners in London, is relocating back to Australia

Curry will be based in Melbourne and lead the special situations team in Australia.

 

 

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