It was the kind of incident you don’t easily forget even though it happened a couple decades back.
Leading City of London investment analyst Michael Coulson, then employed by Nedcor Securities, wrote a critical commentary on a major South African group. Unfortunately for Coulson, the group happened to be one of Nedbank’s major clients back home in Johannesburg.
His bosses hardly missed a beat. Coulson immediately became surplus to requirements and within days life was back to normal. Except for the independent-minded analyst of course. Not that he missed much – Coulson moved across to head the global mining team at PNB Paribas.
Fortunately, there is no similar fate in store for similarly independently minded Michael Power, a long-time member of the Investec Asset Management team. which says much about improved tolerance levels. Or maybe the premium we put on independence.
Yesterday, Power ripped into Investec’s party line. It wasn’t off the cuff either. Power knew ahead of our interview that we wanted to touch on Bidvest’s bid for Adcock Ingram. A bid in which Investec is closely involved as the main advisor.
At the end of our CNBC Power Lunch interview, the question came. Power did not hold back: “Two things strike me,“ he said. “Firstly, in any company where there’s just 35% being bid for, there’s a risk you’re selling control of the company without getting a control premium. So I think (shareholders) have to ask Bidvest exactly what they’re getting and why they’re getting into it.”
Not what Bidvest’s Brian Joffe would be expecting from a top executive at his long-time financial services ally, the one friend he might have believed he could rely upon.
After all, it was Investec which provided much of the seed capital that launched Bidvest launch a quarter century ago. It remains his closest advisor with CEO Stephen Koseff having served on the Bidvest board from 1997 until earlier this year. Heavens, Bidvest’s investment presentations are even held at Investec’s head office. But that kind of stuff either doesn’t register with the independent minded Michael Power.
That he definitely didn’t receive the memo is evident in the follow up where he added: “Secondly, I detect a very unpleasant whiff of economic nationalism on the part of South Africa towards the Chileans here – and I think we need to be a little bit more open-minded in our view. Just as many South African companies have gone abroad and done very successfully by doing so, so too, when a foreign company comes into South Africa I think we need to accord them the same acceptance that, by and large, the South African companies have been afforded when they’ve moved abroad.”
Eisch. Talk about a Power Blow. As any astute observer of the transaction is well aware, the outcome of the Chilean bid will be determined by the Public Investment Company. And the PIC is a key instrument in the ANC’s Development State ideals. The success of Joffe’s bid relies a great deal on the precise thing Investec’s Power cautions against.
Bravo Michael Power. Joffe won’t like it. Neither will Koseff and, doubtless, his well remunerated corporate finance team. But it does prove Investec’s Chinese Walls work. Perhaps too well.
On the mention of astute observation, I am guilty on NOT being doing so yesterday. Three people accompanied CFR’s Daniel Salvadori to the CNBC studio, including former broadcasting colleague Amelia Soares. Amelia, a class act, works for College Hill. Not, as I thought, rival Investor Relations consultancy Brunswick.
For me it was so unusual to see Brunswick and College Hill with the CFR boss that I made mention of it in the context accompanying the transcript to the interview. And included it in the headline. Both have now been fixed.
I learnt a long time ago that when you are wrong, promptly admit it. In my line, mistakes happen a lot more often than you’d believe. So my humblest apologies. Especially to Brunswick’s Marina Bidoli – another class act, why does journalism lose its best? – who has enough on her plate representing Adcock. Thanks for pointing it out Marina. More importantly, though, when are you coming back from the Dark Side? – AH
