Editor's message (6/8)

Written on the 9 September 2009

CONFIDENCE has the power to influence the outcome of deals across broad platforms, from small business to large corporate transactions and takeovers.

If utilised to effect (sans arrogance) it can positively determine events and outcomes, increase perception and build relationships.
But it can also manipulate the value of things. From stocks to businesses and assets, if sentiment is strong, the market adjusts accordingly. If there’s a good story behind a brand or concept, it pricks the ears of investors.

In this issue, we take a look at some companies that exude that bold assurance. Not content to just hold their own during the downturn, they have embarked on capital raisings to take the business to the next level or break down debt.

With the banks still thawing out lines of credit, equity raisings have been ubiquitous on the ASX – despite a 26 per cent decrease overall in share values at the end of reporting season.

In the case of Gold Coast surf hardware company Billabong, it successfully raised $290 million. According to Allens Arthur Robinson corporate lawyer Alex Ding, it was ‘never going to be problematic’.

Despite a decrease in sky traffic for Virgin Blue in Brisbane, investors also showed confidence in the airline when it raised $231 million. The airline says the institutional components were both ‘well oversubscribed’ with strong demand from new and existing local and international investors. It said about 96 per cent of shares were taken up by existing investors.

At the other end of the spectrum, private companies in the SME landscape and start-ups are seeing a return by venture capital investors. For natural health and beauty company Ellen Jay, bringing an idea to the shelves of its domestic and international outlets involved a lot of confidence in the product. It set a record for funds raised via small offering board ASSOB.

Geared for a potential AIM listing, the company is on the cusp of signing a distributor deal in the UK for 330,000 outlets. Other countries are banging on the door, with China, Lebanon and Thailand also queueing up.

Another sharpshooter whose character is slowly turning his company around is Telstra boss David Thodey. While it could be said that his predecessor Sol Trujillo did little to instill confidence in Telstra shareholders, Thodey exudes an easy charm under duress as he sets out to turn the telco story into one that punters are eager to support.

That determination and self belief is also echoed in the drive behind our Leadership subject, the developer Chiou See Anderson. In 2003, the 41-year-old sold her home and set out to raise sufficient capital to purchase an 11-acre site at Springwood formerly owned by John Paul College for $1.2 million. This month work starts on her grand vision – the $60 million pre-retirement community, Elements Third Age Living @ Springwood.

In this month’s Opinion column, Griffith University professor of finance Michael Drew discusses the global financial crisis and reform. Issues such as integrity, trust and transparency need to be more than mere rhetoric; they must become an integral part of the daily life of the global financial system. Only then will the business community support it with a renewed confidence.
-Jason Oxenbridge


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