James Thomson Editor

James Thomson is the editor of BRW. Previously he was editor and publisher of SmartCompany and a senior editor at Business Spectator. He writes regularly on Australia's wealthiest entrepreneurs and has deep expertise in small business and the mid market.

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When the rich move, it pays to watch: rush of floats show they’re putting growth back on the agenda

Published 27 September 2013 10:16, Updated 30 September 2013 09:40

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When the rich move, it pays to watch: rush of floats show they’re putting growth back on the agenda

Mark Rowsthorn is looking to raise $155 million when he floats McAleese Transport. Photo: James Davies

Here’s a good basic rule for entrepreneurs and even investors: it pays to watch the rich.

When the rich start selling assets en masse, it’s generally a sign that the top of the market is approaching.

When a number of wealthy entrepreneurs start buying assets in a particular market or sector, it’s a sign that the market has bottomed.

And when the rich start taking their companies public, it’s a good sign that growth is well and truly on the agenda.

The last week has seen a spate of wealthy entrepreneurs take steps towards floating their companies, including:

  • Young Rich member Matt Barrie, who is heading towards an ASX float after a rejecting a $430 million bid for his online jobs board business, Freelancer.
  • Wealthy bankers Matt Gilmour and Gary Lord, who will list their foreign exchange group OzForex in mid-October, taking more than $40 million off the table in the process.
  • Young Rich member Paddy Coughlan, who is on track to list his Australian Pub Fund later in the year; the business is backed by Rich 200 member John Singleton and wealthy investors including former Qantas boss Geoff Dixon and Mark Carnegie.
  • Rich 200 veteran Mark Rowsthorn is also moving towards an IPO. The former executive and major shareholder of transport giant Toll and ports group Asciano is the chairman and driving force behind McAleese Transport, which will seek to raise $155 million in a listing that will value the company at $480 million.

Overseas, the floats of Chinese e-commerce giant Alibaba and Twitter will also mint billionaires.

There are a few reasons for this rush of floats. After a relatively weak period on IPO markets over the last 18 months, low interest rates have investors chasing returns – and they are more prepared to take a punt on a new listing. Private equity firms, which have found it difficult to engineer IPO exits in the past few years, are clearly pleased the door has opened.

But the preparedness of these wealthy entrepreneurs to tap the market for growth capital is a good sign.

While the wider economy is waiting to see if the post-election spike in consumer and business confidence can be sustained, the rich are putting their growth plans into action, looking to expand while asset prices remain low and some competitors are weak.

It’s not exactly proof that the good times are here, but this spate of floats backed by wealth entrepreneurs shouldn’t be ignored.

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