The Pit - IMI Trust

The flying kangaroo, Qantas is the talk of the investment town with speculation that private equity group, Texas Pacific Group, together with Macquarie Bank, may takeover the Australian icon.  This move would remove the ciompany from the ASX.  There is also talk that Fosters may be off the ASX soon if it is taken over.  The Seven Network and PBL have also been targeted by wealthy US-based private equity companies with deep, deep pockets.  Other blue chip stocks are following suit. 

The pattern for leaving the ASX started early in the year when, Rupert Murdoch’s News Corporation, the then biggest company on the ASX switched stateside.  Large companies in Australia are considered medium-sized (or smaller) to their counterparts on the NYSE and the Nasdaq.  Remuneration for the board of directors at companies like Pfizer for one year, for instance, would be more than the market capitalisation of the majority of Australian listed companies. 

The private equity companies involved like Texas Pacific Group (TPG) and Kohlberg Kravis Roberts (KKR) have nearly endless resources after decades of acquisition and growth.  These are just the big two.  There are literally hundreds of these companies with the ability and inclination to buy Australian growth assets. 

Rebranding Will Be Straightforward As Shown

Is the Australian stock market going to be white elephant in the eyes of global trading giants?  More importantly, are local investors going to be satisifed with the only B-grade or speculative investment opportunities?  

This trend is making life difficult for financial planners and fund managers in Australia.  Many conservative planners and managers rely on big ticket stocks across a variety of industries.  Now, more than ever, Banks and Resources underpin the Australian Stock Exchange but for how much longer. 

Will the up and coming companies succumb to the lure of the greenback and turn the ASX into a Sunday Market or Australian companies going to show some backbone and compete with the big fish in the global economy?