Australia has a woeful record when it comes to foreign ownership as you can see from this list on the Crikey website. There are more than 200 foreign firms generating at least $200 million a year in the Australian market and only about 40 Australian-owned companies generating more than $200 million a year offshore.
Renewable energy company Pacific Hydro was edging slowly towards achieving $200 million a year in offshore revenue with some aggressive growth in Chile, but now it has been taken over by Spanish giant Acciona in an $870 million deal that was announced yesterday.
Foreign investors have on balance been unhappy with their experience in Australia’s piecemeal energy sector largely because the $30 billion they collectively paid the Kennett government for Victoria’s state-owned gas and electricity assets in the 1990s was too much. Check out Crikey’s world famous energy privatisation list to see all the winners and losers here.
Acciona look like they have gone over the top with Pacific Hydro but all the investors who backed the company must be delighted and there are certainly plenty of Labor-friendly types who the Howard Government went out of its way not to help with a series of hostile policy decisions in recent years.
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Former Carlton premiership captain Mike Fitzpatrick has worked in lock-step with the union-backed industry funds over the past decade and his take out from the Acciona will be a very handy $12 million on 2.7 million shares. As you can see here, The Age did Fitzpatrick over in 2003 alleging conflicts of interest in his Pacific Hydro dealings but the lad has been a long-term backer of the company.
Fitzpatrick sold his Hastings Funds Management vehicle to Westpac a couple of years back in a two-stage deal that will deliver him more than $50 million. Hastings would never have got off the ground without the early backing of the industry funds, which will collectively walk away with a $200 million-plus profit on their 32 per cent stake in Pacific Hydro.
Gary Weaven, the controversial former ACTU heavy who has driven the industry funds over a decade, has once again dodged the brickbats to create a lot of value for his members. Weaven is close to former ACTU secretary Bill Kelty, who sits on the AFL board alongside Mike Fitzpatrick.
Critics complain that the AFL runs a socialist regime and Alan Kohler famously declared two years ago that “the socialists have won” when he reported that industry funds had out-performered their for-profit competitors by 17 per cent over a decade.
Low fees was the biggest factor but successful investments in alternative asset classes is next on the list and the Pacific Hydro pay day looks like being one of the best examples.