It hasn’t been a good first year for
MacBank cash box, Macquarie Capital Alliance Group, but it’s been worse for
investors who subscribed for the IPO and worst for the poor mug last week who
seems to have not read the fine print about what he or she was getting into.

MCAG has been a dog since it floated last
April. The Millionaire Factory IPO was offered for an initial $2 down with
another $2 to be paid in a year’s time ie next month. It finished its first
day on the ASX at $1.86 and got worse, closing at $1.55 last Tuesday – the last
chance investors had to sell the thing before becoming liable for the next $2
payment.

That fall occurred while the overall stock
market was going through the roof. You can have a look here at what MCAG has been up to. I tried to, but being a MacBank stapled structured
financially engineered thingy, I soon had a headache and had to have a little
lie down. That was just after seeing the MacBank team had turned the punters’
original $2 into a security with net asset backing of $3.70 but net tangible
asset backing of $1.65 at 31 December while the stock market thought it was
worth less than that.

On a second attempt, I could see they lost
$20 million on revenue of $166 million in the six months. Apparently they
expect to keep reporting losses for a number of years but still have positive cash flow. They’ve bought
a bunch of nursing homes and retirement villages from the likes of the Salvos
and Moran Health Care, a hunk of a European telephone directories business,
something called Creative Broadcast Services from the BBC and a television
captioning business. More recently they’ve written off $1.7 million as their
share of MacBank’s failed London Stock Exchange bid.

By
this stage the headache was worse and I needed another lie down, but I’m sure
my pain wasn’t as bad as the anonymous investor who sold his MCAG securities on
Wednesday morning for $3.01. After they closed at $1.55 on Tuesday, presumably
the punter thought he (let’s assume he’s
a he) had suddenly got lucky. Too bad he still has to kick in another $2 on
each security.

While the market has been discounting MCAG,
it hasn’t been that bad. The $2 cash has gone straight into the market’s
valuation and they’re trading up to $3.60. Double ouch.

Peter Fray

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