APA’s $750m raise | Mackay dumps Mage llan stake | JRR on the block

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Good morning,

Thursday

August 24, 2023

Street Talk

First Look

Good morning,

What’s $100 million between friends?

Troubled SkyCity Entertainment yesterday revealed a net profit of just $NZ8 million ($7.4 million), hurt by poor earnings at its Adelaide casino.

Last week, it announced it would set aside $45 million for a penalty if it is convicted of breaches of anti-money laundering and counterterrorism laws. But analysts at New Zealand equity research firm Forsyth Barr reckon there’s a lot more to come.

The head of research at the investment advisory, Andy Bowley, estimates the dual-listed casino operator will be up for a whopping $150 million in penalties by the end of this financial year – a $100 million settlement with financial crimes watchdog AUSTRAC plus a $50 million fine from the South Australian government. This is Bowley’s base case scenario, which he compares to actions brought against larger rivals like Crown and Star Entertainment. Worst case, SkyCity could be staring down a $250 million penalty, he told clients.

“We expect AUSTRAC will wish to make an example out of SkyCity, though mitigating factors such as the scale of SkyCity’s VIP/International Business operation, the size of Adelaide Casino and the level of wrongdoing are likely to be considered, resulting in a smaller fine than its casino peers.”

And SkyCity has another headache as its ongoing dispute withMacquarie over a 2019 car park deal lands in the Auckland High Court. All this will be something for the $1.5 billion company’s largest shareholders – Allan Gray, Sumitomo Mitsui and Australian Super – to chew over.

In other news, Airlie Funds Management made the most of a 12 per cent bounce in Premier Investments′ shares on Monday following Solomon Lew’s strategic review. The Magellan-owned fund manager sold half-a-million securities on Monday, taking its shareholding just below the substantial threshold.

And spotted: ANZ chief executive Shane Elliott at trendy Sydney steak and seafood restaurant Clam Bar ahead of the Business Council’s annual dinner tonight. Down the road, Morgan Stanley investment banking chief Tim Church and Australian Unity chairwoman Lisa Chung (separately) dining at Mediterranean grill Le Foot. As was Sydney artist Ken Done.

Happy reading,

Emma Rapaport

Co-editor, Street Talk

From the column

Pipeline owner APA Group rules off the institutional leg of $750 million raise for its big M&A bet.Local venture capital firm Blackbird is backing a New Zealand subletting platform with Big Apple dreams.Former Equity Trustees boss Harvey Kalman is shuffling his board positions as he prepares to take over as the exec chairman of troubled fund manager PAC Capital.Top regional waste management business JR Richards & Sons is putting itself on the market.Block trade! Magellan Financial co-founder Chris Mackay sold his 6.6 per cent stake in the global equity manager after the market close on Wednesday.Wednesday shaped up as a big day in the bond market, with a range of deals coming to market.

The chart

Up for sale waste management business JR Richards & Sons pulled in revenue of $203 million and EBITDA of $24.8 million in FY23. Its revenue is projected to grow to $218 million this financial year.

In other news

Rules making it harder for large companies to buy smaller competitors will be considered as part of a broad review of competition laws announced by Treasurer Jim Chalmers, writes The Australian Financial Review’s Ronald Mizen.Shares in Vietnamese electric vehicle maker Vinfast rocketed 109 per cent on Wednesday, making its paper value much larger than General Motors and Ford Motor, Bloomberg reports.PwC breakaway Scyne Advisory is targeting 1500 more PwC staff after nabbing 117 partners, writes AFR’s Edmund Tadros.More than 40 banks have piled into data centre operator AirTrunk’s $4.6 billion novel debt deal, writes AFR’s Aaron Weinman.