Sydney view: Son of Holmes a Court is back

By GILES PARKINSON

At about 11am (Australian time) next Friday, the name Holmes a Court will return to the boards of the Australian Stock Exchange.

But boards of directors in Australia and New Zealand need not panic just yet.

Peter Holmes a Court, the 29-year-old son of the late corporate raider, Robert, shows no sign of following in his feared father's footsteps, although those looking for signs of the pedigree can find similarities.

Peter Holmes a Court cut his entrepreneurial teeth as the head of his own New York production company. He also spent some time with investment bankers James D Wolfensohn in the same city.

The man who thrust him into his new role as chief executive of Australian Agricultural Co, and who will finance his $A15 million ($NZ18 million) investment in the company, is Alan Newman, Robert's right-hand man in the 1980s and now head of Futuris Corp.

There is another delicious irony, too. The younger Holmes a Court is heading a cattle company, continuing the long affinity his family has had with the land. His father launched his first bid for BHP as the head of a small tractor firm.

Peter Holmes a Court has, indeed, expressed his desire to grow through acquisition, and the opportunities seem endless.

But Holmes a Court, for now, has limited his aim to cattle - nearly a million of them - as he seeks to treble the size of the country's second biggest cattle producer over 5 years.

His presence has sparked rumours of mergers and a possible buyout of his family's own cattle business - Peter has sold his $30 million interest in Heytesbury Holdings. But his first goal is to try to deliver on his promise of a 20 per cent lift in profits.

That will be important, because the Australian investment market is being careful about the stocks it is buying and the prices it is paying.

The AAC float, which raised around $A126 million, was heavily oversubscribed, but only after institutional investors forced Futuris, the parent company, to lower its take to below 10 times forecast net earnings.

That's a particularly modest multiple, even in the present market, and represents a rather healthy proposed dividend yield of around 6 per cent, double that of Futuris itself.

But investment offerings, as Australian Magnesium Corp found this month, need proof of earnings.

AMC launched the biggest capital raising of the year to finance development of its $A1 billion magnesium plant, the so-called light metal of the future.

But the $A800 million raising did not get past first base. Despite the enticement of a Ford contract, Australian institutions baulked at the prospect of no returns for five years.

When they did not take up their allotment of $A350 million, the international investment community showed no interest at all, and the underwriters are now seeking a formula that can entice the investors to part with their cash.