Money
pp. 28-35 · Read in the full issue
men look to the north
There is nothing more ex citing for a fast bowler than a hard-grained wicket. It’s bound to bring out his best and instil fear in opposing batsmen.
Similarly, fast moneymen Rene Rivkin and Kerry Packer thrive in an economy that is diversified and ready for a great leap into the 21st century.
Papua New Guinea is but a stone’s throw away from be coming one of the world’s most important gold producers. With such developments in the offing, there’s no shortage of interested investors.
Messrs Rivkin and Packer, however, have made an early start with the establishment of a
merchant bank in Port Mores by. The wholly PNG-owned finance company Credit Corporation at once became the subject of the duo’s intense interest.
Rivkin, who owns 35 per cent of Dylup Investment Corporation (formerly Dylup Plantations Ltd, largely owned by the Middleton family) through his company Oilmet Resources NL and Mr Packer, with a 15 per cent stake, wanted to merge Dylup with the Credit Corporation to be come the country’s second merchant bank.
The plan would double the number of merchant banks in
Continued on page 35
Rene Rivkin The Sydney stock broker has been among the first financiers to see the possibilities among Australia’s nearest neighbours. Photo: Keith Barlow, The Bulletin.
PNG. Resource Investment Fin ance Ltd, jointly owned by the PNG Banking Corporation (a government-owned commer cial bank), the Commonwealth Bank of Australia and the Hon gkong and Shanghai Bank, set up as a merchant bank in 1982.
The reason for the Credit Corporation play was that Dylup Investments, while classi fied as an investment bank, could perform only as a passive investor in established com panies.
The company like its plantation forefather oper ates in PNG but is listed on the Sydney exchange from where it derives a strong capital base.
So, from being a “mere” investment banker, the com pany wanted to see itself in the more diversified world of mer chant banking.
Dylup’s first major acquisition PNG Associated Industries (September PIM P 6) — after talks with other possible suitors had all fallen through, was seen as a natural precursor to a Dylup-Credit Corporation mar riage.
PNGAI is a $5O million dollar a year operation which has the nationwide franchise for Mazda and Suzuki motor vehicles, an acoholic drinks distribution company and an air condition ing and refigeration company.
Credit Corporation has oper ated since 1978 and has been competing in the lease finance market with three others PNGBC-owned Nambawan Finance, Westpac-controlled AGC Pacific and the Bums Philp-Indosuez Bank joint ven ture, Indoniu Finance.
In terms of size, Credit Corporation ranks second with assets of K 13.8 million (A 522.6 million). The largest is Namba wan with K2l million (As 43 million). AGC is third with K 13.7 million (A 522.3 million).
Smallest is Indoniu with K 6.9 million (A 511.2 million).
Politically, Credit Corpora tion would be a good partner for Dylup, being a totally PNG owned company. The Dylup proposal of a 45 per cent stake in Credit Corporation in ex change for a similar holding in
Dylup was put to the Credit Corporation board by Rivkin the day after he signed the PNGAI deal.
Dylup’s managing director True Nguyen told PIM at the time: “If they don’t want to come to us, it will be up to us to set up a competing organisation which we don’t want to do.
“In the meantime, I’m pushing for a merchant banking licence and I’m confident of finding a local partner if the corporation doesn’t want to come forward.
“As you know from the ex perience in Australia, small fin ance companies which try to start up fall to the established large ones.
“We have a large network and sophisticated training facili ties,” said Nguyen. He added that Credit Corporation was well managed, with founding managing director Mr Garth Mdlwaine still at the helm.
He agreed that a merger with Dylup would present the corporation with a ready-made market in vehicle financing through Dylup’s ownership of Mazda agents, PNG Motors,
which is estimated to have about 30 per cent of the passenger vehicle market.
Dylup, meanwhile, continues to study its PNG portfolio with an eye to further acquisitions and investments.
With As3s million to spend, the company is in a happy position.
Further down the track for Dylup, the plan to launch a PNG stock exchange (May PIM P 32) is certain to be a big attraction. The Placer Pacific float highlighted the potential
when 3,000 people in this comparatively small nation bought shares, with many others losing out as the issue was heavily oversubscribed.
In fact, finance minister Sir Julius Chan mentioned the need for share trading in Port Moresby when addressing the local chamber of commerce.
Sir Julius has been keen on the idea for some time (May PIM P 32) and the advent of Dylup Investments will give him further encouragement. Bill Chakrauarti.
Sir Julius Chan: Keen to see a stock exchange.