The clock is ticking on Grocon's effort to win investment into its stake in the $2 billion Barangaroo Central project.

Most of Sydney has been watching what transpires at the heart of the new downtown district carved out of the waterfront, and none will have more interest in proceedings than Grocon's consortium partners, Scentre and Chinese-backed developer Aqualand. 

Headed by property scion Daniel Grollo, Grocon is under pressure to secure major investors for its portion of the project - an office tower of up to 50,000 square metres - before its own line of credit runs out in September.

The bidding, run by JLL and Macquarie Capital, was opened late last month, taking interest from local players including Charter Hall and Investa, along with offshore investors.

Keenly watching on is Aqualand which Street Talk can reveal is also running its own numbers on Grocon's position in the consortium. A buy-out of Grocon's stake by its own consortium partner is under consideration, sources said. 

Together with Scentre and Aqualand, Grocon was finally awarded the right to develop the jewel in the Barangaroo crown after a drawn-out and highly political process last November. 

By December, after one financing deal unexpectedly fell over, Grocon had tied up a $40 million loan with a non-bank lender, understood to be MaxCap. 

Those deals don't come cheap. Grocon is on the hook to pay back $51 million on September 22. Annualised, the interest rate on that comes out at near 37 per cent. That's looking sharp, even for someone as smartly attired as the former PM. 

Street Talk can't help recalling a report two years ago of Aqualand's managing director "Jim" Shangjin Lin looking to secure his own harbourside mansion for around $52 million. That's enough to buy out Grocon's MaxCap debt and then some.

That loan must be causing a fair bit of heartburn to Grollo, with Grocon's financial statements already bleeding red.    

The parent company, Grocon Group Holdings, reported a $27.5 million loss in its 2017 financial year accounts, not lodged until February this year after the consortium was awarded the Barangaroo project.

Grocon's accounts prompted its auditors to warn that "a material uncertainty exists that may cast significant doubt on the group's ability to continue as a going concern".

The accounts noted that Grocon's viability hinged on "successfully achieving its initiatives to sell the development rights to a development project".

Although the project was not specified, the sell-down must be completed by June 22 under the terms of the financing agreement .

The accounts also reveal that Grocon's hard-charging financier has taken security over "the rights and interests to the development fees from a major development project", again unspecified.

So the clock ticks and the pressure builds.

In late April, a subsidiary company, Grocon Constructors, lodged its 2017 financial year accounts with a $77.1 million loss after booking a $76.6 million impairment for a related party loan.

Correction

An earlier version of this story reported that former Prime Minister Paul Keating was on the board of financier MaxCap. This was incorrect. Mr Keating is not on the board nor has he ever been on the board. He has no association with the financing of the Grocon project at Barangaroo.

 

   

 

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If good things come to those who wait, then Glencore and Yancoal are due something very good indeed.

Street Talk believes that good thing could arrive within the next week, in the form of final approval for the two miners to carve up the Hunter Valley coal assets that once belonged to Rio Tinto.

Highly geared and ASX-listed Yancoal paid $US2.69 billion ($3.6 billion) for the assets last year, but swiftly struck a deal to on-sell 49 per cent of the HVO mine to Glencore, which had long carried a torch for the Rio Tinto assets.

Glencore agreed to fork out $US1.1 billion for that 49 per cent stake in July, but closure of the deal has taken much longer than anyone expected.

Few thought Japanese regulators would take their sweet time evaluating whether the deal would give Glencore too much control over the market for certain types of coal that come out of HVO.

But that wait appears to be almost over, with formal approval expected imminently, in a sign the Japanese power utilities may have gotten over their concerns about the Swiss miner's market power.

After a busy three years in which close to 20 Australian coal mines have changed hands, the run of deals looks to be slowing. Rio Tinto - the biggest and most successful of the sellers - has cleared its portfolio having snaffled the best part of $US8 billion. 

But sources reckon there are a few more to sell before this once in a generation turnover of assets is complete.

With EMR Capital taking the reins at Kestrel - another former Rio Tinto coal mine - surely BHP will try again to offload its adjacent Gregory Crinum mines. It has made a number of attempts to test buyer appetite in recent years. 

Most also expect Wesfarmers' stake in Bengalla, worth about $1 billion, to end up with New Hope - and sooner rather than later.

Street Talk also won't be surprised if the owner of the Dartbrook mine, Australian Pacific Coal, ends up in some sort of "conscious coupling" with unlisted Mach Energy, which owns the nearby Mt Pleasant development project. 

Listed equities investors will also get a close look at a piece of the action next week, when US-based Coronado Coal fronts fund managers in a non-deal roadshow. The coal player is considering about a $1 billion initial public offering, in a deal which would value its portfolio at more than twice that amount. 

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It's only round one in National Australia Bank's plan to divest wealth manager MLC, but you can already hear the spin coming from equities desks. 

As investment banks bang on Andrew Thorburn and his team's door with sale ideas, equity capital markets teams will be fighting their financial institutions group colleagues for a piece of the action. 

They reckon there would be decent listed markets bid for MLC which, as it stands, would likely be worth about $3.5 billion or 17-times profit as a separately listed company.  

And, at a time when we know domestic institutions are often reluctant to buy businesses of their own, who would buy it?

Offshore funds. 

Royal Commission issues aside - and that in itself is potentially a big stumbling block - equities desks reckons big global investors would look at MLC in the hope of grabbing a bargain.

In their eyes, having announced plans to divest the business National Australia Bank is probably more worried about a smooth deal rather than squeezing a P/E-point or two out of incoming investors. It would leave some margin for safety, and a business standing on its own two feet for the first time and management team that wants to prove itself. 

Commonwealth Bank of Australia and its bankers would likely hope the same logic stands up for Colonial First State Global Asset Management's slated $5 billion float, expected later this year. 

Domestic fund managers will likely scoff at the theory, which makes for some interesting and potentially tense moments in Australian equity capital markets in the coming year. It could well be an Aurizon-style stand off. 

Banks have been preparing for a potential NAB wealth float for months, and are expected to pitch for roles shortly. NAB is assessing a float up against a demerger and trade sale. 

NAB said on Thursday that MLC had more than 1200 financial advisers, ran the largest retail superannuation fund in the country, had $199 billion in assets under management and 3300 staff. It made a $102 million cash profit in the six months to March 31. 

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Confectionery start-up Candy Club will be hoping its capital raising will be more chocolate than boiled lollies, as it seeks investors to join Young Rich list member Adam Schwab, James Baillieu, of the well-known Baillieu family, and the Coors family of America. 

Street Talk can reveal Candy Club, which launched in 2014 and sells lollies via a subscription model and to corporate clients, is rattling the tin for up to $US3 million, at a pre-money valuation of $8 million.

The backers of the Los Angeles-based business have $1.5 million of commitments in place and are eyeing a potential ASX listing in late 2018.

Advisory and portfolio management company Peak Asset Management is overseeing the mooted deal and will kick off an institutional roadshow in Melbourne and Sydney next week.

According to a pitch deck sent to investors and seen by this column, Candy Club made over $US9 million revenue in the 2017 calendar year, has more than 20,000 active members and a $10 million revenue run rate. It expects to become profitable by the fourth quarter of 2018.

The company expects the United States $US36 billion confectionary market to grow at 6 per cent a year, compounded, to $US44 billion by 2021, and tells potential investors the industry is ripe for disruption.

Part of the pitch is founder and chief executive Keith Cohn's track record. The serial entrepreneur has created a fortune twice with previous investments Bardon Advisors and Vendare Media.

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The senior leaders at PPB Advisory must have been really keen to sell.

That's one way to interpret the price tag of about $90 million that insiders say PwC paid for an insolvency firm that did $93 million in revenue last year.

About $30 million of that was for the management consultancy firm Litmus Group which PPB picked up in 2016 for around the same amount.

The remaining amount, about $60 million, was for the main insolvency and forensics business with much of that amount effectively offset by liabilities including an ANZ loan worth about $20 million, landlord leasing contracts, employment entitlements and other ongoing liabilities.

Spokespeople from PwC and PPB declined to comment. 

It seems that far from walking away with a big cheque, the 33-strong PPB partnership are really just getting their liabilities covered by the sale.

The deal, which is happening amid a flat insolvency market, has raised eyebrows in marketplace. 

Joel Barolsky, a strategy consultant to law and accounting firms, reckons the deal only makes sense if PwC paid a bargain basement price.

The majority of the PPB partnership voted in favour of the deal at midday on Tuesday. No one voted against, but a handful abstained. 

PwC voted last week to go ahead with the deal.

PPB chairman Ian Carson has earlier said the "vast majority" of PPB partners are being offered roles as partners in PwC and most of the firm's 300-strong staff were expected to move over to the big four firm.

PPB partners were told that three-quarters of their number, or about 25, were offered partnership roles at PwC.

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