M2 Group has taken the unusual step of requesting a trading halt as the company and its advisers prepare to present its scheme of arrangement to the court. 

It's understood M2 requested the halt to prevent the market trading on any information that is expected to be unveiled as part of the first court date. 

The explanatory booklet presented to the court by M2 - and its merger partner Vocus Communications - is expected to reveal the size of a dividend available to shareholders of both companies. 

The two companies announced the tie-up in September, which would see M2 shareholders receive 1.625 Vocus shares for each M2 share. 

M2 investors are due to vote on the deal early in the new year. 

Vocus shares also went into a trading halt on Friday morning. 

 

 

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Goldman Sachs is expected to hire only a handful of Commonwealth Bank of Australia's 50 institutional equities and research staff following the newly minted partnership, which didn't involve money changing hands. 

The agreement includes exclusivity arrangements for the distribution of equity products, and not research, but the terms are unclear around products such as hybrids. Live mandates also need to be considered.

With research sitting outside the provisions it means Goldman, in theory, may continue to allow JBWere access to its research for an extended period. Goldman continues to own almost 20 per cent of National Australia Bank's JBWere.  

JBWere appears to be the jilted partner in its now vexed relationship with Goldman. But Street Talk can reveal that as JBWere and Goldman's three-year arrangement changed to a rolling monthly agreement around September, pending renegotiation, JBWere is understood to have expressed concerns about the value being generated from the tie-up. This came around the time Goldman pulled the pin and relocated its New Zealand-based market trading activities to Sydney.

There were also concerns from the JBWere camp around the universe of local equities research coverage and initial public offering origination under the deal. It will be interesting to see what JBWere's next move is, which is likely to come in 2016.

Street Talk understands CBA's chief Ian Narev informed his Goldman counterpart Simon Rothery on Sunday that his firm was the bank's preferred partner, ahead of an announcement on Monday.

Separate questions were raised this week about what exclusivity between Goldman and CBA entailed and whether retail arm Commsec would have access to floats outside of the alliance. After asking repeatedly for clarity, a CBA spokesman said the bank: "provided Goldman Sachs with exclusivity over the CommSec and Commonwealth Private channels as it relates to equity products."

But he also said CBA expected the arrangement to provide "even greater" deal flow to CBA's customers. Perhaps the finer details are still being nutted out. 
 

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Here's some food for thought for those hedge funds and day traders pulling their hair out after another shocking day for market debutants. 

Contrary to popular opinion, private equity-backed floats, and particularly those at the smaller end of the market, have fared well for punters this year.

New numbers from Deloitte show private equity's Appen, BWX, Eclipx Group, Gateway Lifestyle, Traditional Therapy Clinics, Costa Group, Link and Adairs have all posted gains for investors while only Advent Private Capital-backed Integral Diagnostics and Bain's MYOB drifted into negative territory. 

Taking a slightly longer-term view - and considering notable and much-talked about misses like Dick Smith Holdings and Spotless Group - the 34 private equity-backed floats since the initial public offering window opened two years ago have gained 25.3 per cent on a weighted average basis, and 55.8 per cent on a simple average basis. 

That includes IPOs from all the major houses; Quadrant Private Equity, Pacific Equity Partners, CHAMP Private Equity and Ironbridge. 

Perhaps surprisingly, the best performed is Anacacia Capital-backed Appen, now worth $180 million, which listed through Bell Potter in January. Three profit upgrades and a bunch of new institutions joining the shareholder register have seen it gain more than 240 per cent. 

Bell Potter could use the brownie points. Fundies were reeling on Thursday when the Bell Potter-backed Temple & Webster dropped 18 per cent on its first day as a listed company. It comes as another Bells float - McGrath Estate Agents - has also had a bad first week on the ASX boards. 

Elsewhere, New-York based alternative investment management Highbridge Capital Management is understood to have quietly set up in Sydney.

The local operations will be run by vice-president of principal strategies Raymond Lam and focus on senior direct lending, junior capital and credit opportunities. Highbridge, owned by JPMorgan Asset Management, joins the likes of Babson Capital and Intermediate Capital Group which also have a local presence. 

 

 

 

 

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The Foreign Investment Review Board is expected to take another two months to determine ownership and governance rules for the second leg of New South Wales power transmission and distribution privatisation program; Ausgrid.

Multiple sources told Street Talk that infrastructure funds and utilities companies lining up for the auction were told it would be February before they received clarity around the all-important FIRB approval process, which would play a big role in the make-up of bidding groups. 

The February decision date has created confusion and uncertainty among bidders as they register their interest in the auction ahead of the December 14 deadline and prepare to receive preliminary diligence materials. 

Bidders are waiting to see whether FIRB takes a prescriptive and detailed approach to laying out ground rules, as it did in the earlier auction of TransGrid. 

Under the TransGrid rules, no bidding group was allowed to have more than 50 per cent of committed equity from state owned enterprises, targeting the likes of State Grid Corporation of China and China Southern Power Grid. 

While Ausgrid's auction is for a 50.4 per cent stake in the government-owned company - and not a 100 per cent share as was the case for TransGrid - expectations are similar rules will apply. 

Elsewhere, possibly the only thing Chinese buyers love more than Aussie utilities and agriculture is healthcare assets.

This week China's Luye Medical Group snapped up private hospital operator Healthe Care for $938 million, which followed hot on the heels of Biostime International's $1.7 billion takeover of local vitamin outfit Swisse Wellness and Jangho's $198 million all-cash bid for the Vision Eye Institute. 

Street Talk understands there is a Chinese player working up a tilt at an ASX-listed healthcare company. Sources told this column the deal would involve the acquirer taking a non-controlling stake and that "very early-stage" discussions had taken place between the two parties.

One name that springs to mind is Primary Health Care which has been sold off heavily after repeated earnings disappointments. The company clearly has break-up potential and has attracted tyre-kickers this year. 

But sources told Street Talk to rule Primary out noting that would-be buyers don't have the stomach for Primary given the problems the company has with the doctor community.

Then there's IVF companies Virtus Health and Monash IVF which have bombed-out share prices and open registers. Analysts reckon it could make sense for a Chinese company to swoop in an effort to import Australian medical expertise into its home market. 

Medical landlord Generation Healthcare REIT was also mentioned as a potential target, given its rental streams underpinned by stable tenants such as medical services providers. 

 

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It's the most wonderful time of the year for investment bankers; "comp season". 

Investment banking heads at the big firms are flying back to head office this week and next, seeking to win a bigger slice of the global compensation pool for themselves and their charges. 

Early expectations across the street are it will be a "flat-to-down" bonus season in Australia - which means marginal compensation increases for junior bankers and flat or slightly lower payouts for executive directors and managing directors. Importantly, not too many bankers are expected to be faced with a dreaded doughnut in coming weeks. 

As always, bonuses at the top end will be lumpy with those at the better performed banks expected to fare the best. 

Recruiters and investment bank bosses reckon bankers at the US banks are best placed for a positive surprise, given the currency kick that will come into play.

Global compensation pools at the likes of Citi, Goldman Sachs and Morgan Stanley are carved up in US dollar terms - and the dollar is trading 15 per cent stronger against the Aussie compared to the same time last year. 

While the banking chiefs negotiate pool sizes this month - bankers will have to wait another month to receive their envelopes. The US banks will get bonus season underway in mid-January. 

Spare a thought for Deutsche Bank-ers who, despite a strong year in Australia, cannot forget their global boss's words about bankers being overpaid. It was only three weeks ago that Deutsche Bank co-chief executive officer John Cryan said bankers still earn too much money and shouldn't be paid like entrepreneurs.

Announced Australian M&A hit $US124.9 billion in the year-to-date, which is up 80 per cent on last year according to Dealogic data. Meanwhile, equity capital markets volumes are running at the highest levels since 2009 - which bankers say was also the best year in recent memory for compensation - with $US42.2 billion of equity raised. 

 

 

 

 

 

 

 

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