The investment banking scene is a dog-eat-dog world at the best of times. So the rockets have really being going off after Finance Minister Nick Minchin yesterday made this announcement that UBS and Caliburn will be preparing the T3 scoping study. For instance, the anonymous Crikey tips box received this baseless missive from an obviously aggrieved losing bidder:
UBS has been appointed to undertake the scoping study whilst the boutique adviser, Caliburn, has been engaged to provide independent advice, presumably to keep UBS honest. The public servants seem to not have been aware that Caliburn is not as independent as it purports. It is well known around town that Caliburn has an informal arrangement with UBS such that UBS is used by Caliburn when it requires market information, advice and execution and that there are other close arrangements between the two.
We have had this relationship presented to us by Caliburn as ensuring that we receive independent advice but with the support of market intelligence etc. The recommendations on how to sell the rest of Telstra will be sure to be made keeping an eye on how to best embed UBS’s role in the sale and maximise their fees.
We put this scenario to Caliburn and received an emphatic denial which we accept after looking at the evidence. It sounds like nothing more than mischief making on behalf of a losing rival. That said, it’s interesting that UBS and Caliburn did operate as an advisory duo for AMP during the huge losses and subsequent demerger of 2003, although they were separately appointed.
They also simultaneously advised Coles Myer on restructuring proposals in 2002, as you can see from this Rafael Epstein story on The World Today at the time. But once again, they were separate appointments.
Similarly, this story from The SMH points out that Caliburn and UBS made the advisory team for Stockland CEO Matthew Quinn as he battled unsuccessfully to buy Lend Lease. In this case it was a joint gig.
However, there have also been numerous occasions when Caliburn has not favoured UBS when performing an advisory role. For instance, Caliburn advised British Airways on its departure from the Qantas register last year and it was Citigroup which got to handle the block sale that yielded a good price and kept costs down. Then you have the the $540 million float of the Tishman Speyer Office Fund only last December. Caliburn was the adviser and they gave the underwriting gig to Deutsche Bank.
We all look forward to watching how the estimated $300 million privatisation fee gravy train from T3 gets carved up and if Caliburn can track down the aggrieved party spreadying these falsehoods, that particularly investment bank might find itself shut out of some of the action.