Hi Carl,
Two very topical situations here which we’re sure will interest a number of subscribers:
Metrics Income Trust (MOT/MXT): We touched on Metrics and private credit in an afternoon note last week,
- Ratings agency Lonsec downgraded three of Metrics credit funds, pointing out concerns about related party transactions and internal lending.
- Further, Macquarie Wrap’s investment platform then told clients to halt new investments into four funds managed by Metrics.
It all seemed to be prompted by a transaction that was the transfer of ownership in two companies – automotive financier Taurus Finance and diversified financial services group BC Investment – from a Metrics-run fund to the fund manager. In return for the stake, the fund manager issued shares in itself, resulting in the fund that it runs holding a position in its own management company.
We did previously hold MXT (from the IPO) in the Income Portfolio, and our rationale for exiting the holding is largely still relevant, and can be read here.
Santos (STO): Abu Dhabi National Oil Company (ADNOC) walked away from their bid for STO citing disagreements over a few points although valuation appeared to be front and centre. The main specific mention to tax liabilities, environmental risks and regulatory hurdles. In essence it appears that their initial “back of the envelope” calculations were too bullish, and STO isn’t worth $8.89 to them. We think there remains value in Santos, but the fact so many suitors over the years have walked prior to consummating a deal, leaves us wondering whether it’s just all too hard.
