Asian group grabs 20% of NZ's Brierley
Asian group grabs 20% of NZ's Brierley
WELLINGTON (Reuter): An Asian consortium snatched a 20 percent stake yesterday in Australasia's largest listed investment company, Brierley Investments Ltd (BIL).
The raid on the New Zealand firm at NZ$1.40 (US$0.96) a share, NZ$680 million in total, was all over in minutes with investors queuing to unload stock at a price 11 percent above the prevailing level.
Most analysts believe the consortium comprising Hong Leong Group, Malaysia; Hong Leong Group, Singapore; Salim Group, Indonesia; Sembawang Corporation Ltd, Singapore; and Haw Par Brothers of Singapore, paid a high price, if not too high.
"I'm stunned that they would want to go and pay NZ$1.40, I could understand NZ$1.30," said one.
He believed the group had taken a very optimistic view of BIL's British hotel chain, Thistle Hotels, which comprises nearly half of BIL's NZ$9 billion of assets.
The raid was welcomed by BIL as giving the investment company and sometime corporate raider a cornerstone shareholder. It immediately offered a place to the group on its board.
"We are delighted," Chief Executive Paul Collins told Reuters. "We are also delighted to have a strong anchor shareholder."
He said many of BIL 128,000 shareholders were discretionary investors. "To develop a relationship with a strong anchor shareholder over time provides a much stronger foundation for us to grow from."
He said it was a strong recognition of the value within BIL today and value that could be created in Australia and Asia in the future.
Analysts and Collins agreed the consortium's investment was recognition of BIL's increasing involvement in Asia. Already the Singapore government's investment arm, Temasek Holdings, is a major shareholder, with a six percent stake bought in 1991.
David Copley of Cavill White said the consortium could have picked up the stake cheaper but said it have wanted to buy in hurry. He viewed the move positively.
"It indicates that there is value in the stock and others have recognized that. It confirms the positive trend since the U.K. hotel market picked up," he said.
Analysts noted links in the hotel industry between BIL and Singapore's Hong Leong group which controls CDL Hotels International.
"With the Hong Leong group in there, you would have to think there is some possibility of doing something with Thistle," Copley said.
BIL has made no secret over recent years that it wants to reduce its exposure to Thistle, but Collins said that links between CDL and Thistle were not the driving force behind the group's investment.
"The key thing we see with these guys is the growth in value over time," Collins said.
Collins disagreed with some analysts' estimates that BIL is now around 65 percent foreign-controlled, saying the true figure was about half. He said much of the 20 percent bought came from foreign holders.
He rejected a suggestion that the Asian group had invested in BIL as a defensive play, and that the investment company was now operating more as a fund manager. "That's certainly not the way the company is managed. We are managed for growth," he said.