Offering Australia - to Australia !

There is no doubt that self funded retirees in Australia are struggling.  The interest rates offering for term deposits are at an all time low and the Reserve bank is warning that a further cut is possible. In some parts of the world, bank interest is now in negative territory.

The big danger is that people watching their nest egg erode will be tempted to try their luck in risky ventures that promise a much better return, and that can deliver catastrophe for the unwise.   Sheer necessity will drive some families away from the safety of interest bearing term deposits and into the hands of charlatans selling " get rich quick " schemes.   It is in the government's interest to maintain reliable returns for self funded retirees because if they dissipate their superannuation they will join the Centrelink queue and apply for the aged pension.

Recently, the New South Wales government collected a mammoth $ 10.3 billion dollars from the sale of Transgrid.  This huge injection of new funds is financing a decent road system in Sydney and the provision of new rail services.   This money came from an IPO - an Institutional Public Offering - which was taken up by institutional investors in other countries.   Obviously, they would not have offered their money unless they were convinced that owning " poles and wires " in New South Wales was a safe investment that would deliver a good return.

Now the state is proposing to sell a 50.4% stake in both Ausgrid and Endeavour Energy and it is likely that this will also proceed by way of an IPO.   Surely it would make more sense to offer this investment to the Mums and Dads of Australia and let the self funded retirees have a chance to get a decent return on their investment money rather than see it going into foreign hands ?

From a government point of view, an IPO is less messy.  Consortium's put money together for a consolidated bid whereas making an offer to the public to invest runs to a far longer timetable.  The public need to be wooed with a prospectus and like all investments what risks exist need to be spelled out clearly - and any shortfall can be offered on the international market.

There was a recent degree of uproar when Australia's biggest dairy company changed hands and became the property of a foreign buyer.  Strangely, it was owned by New Zealand interests, but the fact that it is now Chinese owned means that the final destination of the milk it produces will be decided in a foreign board room - and may not serve Australian interests.   In fact, it may result in a domestic milk shortage in this country.

The government keeps an eye on our strategic interests from a military point of view but many people believe that investment in land and services is best held in Australian hands and when a sale is proposed, it should at least be offered in the Australian money market.  Any portion not taken up could then be put to international offer.

This sale of Ausgrid and Endeavour Energy has yet to be finalised.   There is definitely a wealth of investment money in private hands - looking for a decent return - and it is likely that if these investments go to an IPO they will be snapped up quickly by foreign institutional investors.
The government would be wise to open this investment opportunity to the Australian public before even thinking of a foreign IPO !