There aren’t many occasions when a single deal catapults someone into the billionaire club but The AFR is working hard to convince its audience that John Kinghorn is about to do that through the “$1 billion sale” of his mortgage origination business RAMS.
It’s a shame that other division of Fairfax Business Media, BRW, seems to have little idea about this because Kinghorn, the mentor of Allco’s David Coe, was only valued at the very precise figure of $258 million on the 2006 Rich List.
Paul Keating did some consulting for Kinghorn in the 1990s, and if his billionaire status does indeed come through he should thank the superannuation policies of Labor and the banking policies of the Howard Government.
The massive growth of private debt and superannuation over the past 20 years has spawned a small army of mega-rich paper shufflers and a financial services sector which is now arguably dangerously large and powerful.
That Kinghorn has created $1 billion of RAMS value from a standing start in 1991 says a lot about the outrageous profit margins of the banking cartel. He would have invested a few million at best to get RAMS going and then simply relied on debt-hungry customers sick of being ripped off by the banking cartel.
Mark Bouris and Wizard Home Loans is a similar story, and the biggest of them all is probably Aussie John Symond who is almost certainly a billionaire as well, even through BRW reckons his $20 billion-plus loan book is only worth about $500 million.
The last overnight billionaire created by the sale of a private business was Rosemount in 2000, when Bob Oatley collected $1.5 billion from Southcorp in a failed move that should have seen Coles and Axa chairman Rick Allert booted out of the director’s club.
The AFR also claimed last week that an information memorandum for the sale of Kerr Neilson’s Platinum Asset Management is circulating. We first identified Neilson in last year’s Crikey Revised Wealth (CRW) list and then BRW debuted him last May at the very precise figure of $443 million.
Platinum manages more than $20 billion and paid dividends of $160 million last year so clearly its founder and largest shareholder is a billionaire who BRW should “fully discover” in its 2007 Rich List.
After all, if GE was prepared to pay $510 million for Wizard’s $18 billion loan book in 2004, Platinum is worth far more given that debt portfolios are more expensive and risky to run than a funds management business.