Brisbane Markets short-changed in WA venture

Who's getting the rough end of the pineapple here? Questions are being asked about the logic of takeover target Brisbane Markets borrowing $25 million to take a 45 per cent stake in Perth Markets and then being content with having only one board seat out of 10.

Who's getting the rough end of the pineapple here? Questions are being asked about the logic of takeover target Brisbane Markets borrowing $25 million to take a 45 per cent stake in Perth Markets and then being content with having only one board seat out of 10.

Hedge fund VGI Partners has been stalking Morgans-advised Brisbane Markets, which handles 550,000 tonnes of produce each year through Queensland's largest distribution centre for fruit and vegetables, in a takeover battle full of bumps and bruises which shows no sign of ending amicably.

The chief executive of Brisbane Markets, Andrew Young, who picks up two separate salaries as both the boss of Brisbane Markets and one from Brismark - the industry body and largest shareholder in Brisbane Markets - is headed for the boardroom at Perth Markets. But the 45 per cent stake gives Brisbane Markets Markets 10 per cent of the board seats.

Borrowing to pay for almost half of the Perth Markets business but without getting any control over the asset may seem to some like a takeover strategy straight out of the M&A playbook. Sometimes getting bigger is the best form of defence. Whether it's the smartest move when it comes to return on investment for the shareholders in the unlisted public company is another question.

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Westpac's fintech firm Reinventure to raise new fund

The biggest fish in Australian fintech, Westpac Banking Corp-backed venture capital fund Reinventure Group, is set to become even bigger.

The biggest fish in Australian fintech, Westpac Banking Corp-backed venture capital fund Reinventure Group, is set to become even bigger.

Street Talk understands Reinventure is preparing to raise its second fund in only two years - a $100 million offering which would triple the firm's funds under management. 

Sources said Reinventure has kicked off conversations with Westpac about finalising a new fund this year. 

While it is too early to measure Reinventure's success with all of its investments less than two years old, the money manager run by co-founders Simon Cant and Danny Gilligan has certainly made a splash. 

Reinventure declined to comment. 

The fund manager started with a stake in peer-to-peer lender SocietyOne two years ago and has also invested in social media platform Nabo, data business Zetaris, payments platform PromisePay and bitcoin transaction exchange Coinbase, among others. 

It'll be interesting to see where Reinventure finds its support and whether the new fund would be open to investors outside of the first fund. Westpac is the largest investor in the first fund. 

The new fund is expected to come as Westpac's rivals are also topping up their venture capital funds, such as National Australia Bank's NAB Ventures, which started last year and is said to be close to its first major deal. 

It's also a trend among banks globally. BBVA Ventures, owned by Spanish banking giant BBVA, last month announced it would put another $150 million into a new VC firm called Propel Venture Partners based in San Francisco and London. 

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Moelis deal to acquire Redcape Hotel Group falls over, sources say

Investment bank Moelis & Co and well-known pub investor Nelson Meers' negotiations over a potential $650 million deal to acquire Redcape Hotel Group have ground to a halt, sources told Street Talk on Tuesday night.

Investment bank Moelis & Co and well-known pub investor Nelson Meers' negotiations over a potential $650 million deal to acquire Redcape Hotel Group have ground to a halt, sources told Street Talk on Tuesday night.

It is understood Redcape's private equity owners walked away from talks after Moelis and Nelson Meers played hard-ball over price. While negotiations have not entirely collapsed, Redcape has now put a potential initial public offer back on the table. That scenario was shelved last year due to volatile market conditions.

Hedge funds York Capital and Varde Partners are keen to cash out of Redcape, which has been the subject of long-running negotiations over its future.

Redcape owns a portfolio of 23 pubs in New South Wales.

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Could a rising Star create Kiwi options for Bekier's team?

With The Star Entertainment Group throwing off bundles of cash from its flagship Sydney casino The Star, the gambling giant is fast catching up on arch rival Crown Resorts. Would it consider a move across the Tasman?

Sky City Entertainment Group sum-of-the-parts valuation.
Sky City Entertainment Group sum-of-the-parts valuation.

With The Star Entertainment Group throwing off bundles of cash from its flagship Sydney casino The Star, the gambling giant is fast catching up on arch rival Crown Resorts.

The Star has a chunky pipeline of projects to progress, with the addition of a new tower in Sydney, Brisbane's Queen's Wharf and the expansion of the Jupiters complex on the Gold Coast.

But with its capital commitments on those projects remaining reasonably modest, well placed sources said The Star may consider looking across the Tasman with a bid for SkyCity Entertainment Group.

The business case for a tie-up would have certainly crossed the mind of chief executive Matt Bekier.

The Star could boost its domestic footprint with SkyCity's Adelaide and Darwin facilities. 

But the big prize would be gaining exposure to SkyCity's Auckland and Queenstown casino cash cows which are raking in revenues and luring prized high rollers from Asia.

SkyCity's $2.5 billion market capitalisation is just over half that of The Star's value, but Bekier could conceivably strike a deal. The Star's net debt-to-EBITDA is approaching a modest 1-times and the market expects it could generate $2 billion in cash from its existing operations between 2017 and 2020.

Importantly The Star now has access to two deep pocketed Hong Kong investors who have partnered with it on all three of its existing casinos. Street Talk understands these investors may be open to tipping in additional funds to the developments.

One further wildcard in the pack is Malaysian gaming giant Genting, The Star's second largest shareholder, which has approval to up its stake in the ASX listed operator. With Genting on board, a deal to swallow SkyCity would make a hugely powerful competitor to Crown.

And finally, there is expected to be one fewer research analyst covering Star with Bank of America's gaming analyst Mark Bryan among a handful of job cuts at the bank on Tuesday. 

As Street Talk revealed, sources said BAML had let at least four members of its equity research team go, including Bryan, banks analyst Nicole Mehalski, equities strategist Malcolm Wood and contractors and chemicals analyst Brent Walsh.

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GenesisCare readies private equity pitch: Oceania back on the block

GenesisCare, the country's largest private provider of radiotherapy services, is poised to formally seek a new investment partner to help bankroll its next leg of growth.

GenesisCare, the country's largest private provider of radiotherapy services, is poised to formally seek a new investment partner to help bankroll its next leg of growth. 

GenesisCare chief executive officer Dan Collins and his doctor shareholders, who together own 54 per cent of the company, are expected to launch a process to find an investor to buy-out minority shareholder KKR & Co's position. 

It's the worst kept secret in health and private equity circles. 

Multiple sources told Street Talk a sale process would begin before the middle of the year. 

It's understood Collins and the doctor shareholders are happy with their four-years under KKR ownership, however, they are seeking a new co-investor to help fund the next leg of growth. 

That new investor would likely be another big private equity firm - and preferably one which could help GenesisCare with its European expansion. GenesisCare signalled it was serious about making a serious dent in Europe when it acquired Britain's largest private cancer services network, Cancer Partners UK last July. 

Sources suggest Advent International, which manages more than $US30 billion in assets, would be keen to take a look, along with the usual suspects like Bain Capital, Baring Private Equity and Warburg Pincus which have shown an interest in Australian healthcare companies. 

Street Talk already revealed that UBS has sent a document with high-level information offering an overview of the group, following inbound approaches

No formal process is underway yet, but the market is expecting one to start in weeks rather than months.

GenesisCare has been approached by South Africa's Netcare, but it is understood that the management and doctors who own the remainder of the company are keen to find another strategic partner rather than selling out.

Meanwhile, New Zealand's second largest aged care operator Oceania Healthcare is expected to front potential buyers with Macquarie Capital in tow. 

It's not the first time Oceania's owners have sought a deal.

The company lined up as an IPO-contender in mid 2014 with a mooted $NZ300 million raising through First NZ Capital and Deutsche Craigs.

The Macquarie Group and associates-owned company later switched to a trade process, drawing private equity and trade interest. However, a deal could not be struck and it switched, again, to the IPO route. 

Finally, management of IPO hopeful Scottish Pacific will meet investors for the first time next week. The non-deal roadshow in Sydney, Melbourne and Asia will allow Scottish Pacific to tell its story ahead of a run at the ASX boards in coming months. 
 

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