Foreign ownership of our resources and businesses.

[Hawkear]

Just thought I'd start a thread about Australia losing control of its important resources and businesses to foreign ownership.
Today's news is that one of our biggest Energy companies Origin energy has received an offer to sell out to a Canadian company. The directors of Origin are recommending the takeover probably because it is good value for the undervalued origin share price or maybe because they just can't be bothered fighting all the obstacles that our own government seems to put in the way of businesses here.
Of note is, that the Canadian company, Brookfield, is the same one that earlier tried unsuccessfully to gain control of AGL when its price was down and shut down one of our most important coal fired power stations that would have left us seriously underprepared to meet demand peaks.

 

[Mackka]

Alinta owned by Hong Kong family with ties to China, understandably.

 

[Dave's Office]

I've got my power supplied by Origin and I've got what I consider a pretty good deal in the current market, I'll be a bit uneasy if the takeover happens.

 

[Hawkear]

I've got my power supplied by Origin and I've got what I consider a pretty good deal in the current market, I'll be a bit uneasy if the takeover happens.

The Canadian company is here to make money for its owners not necessarily provide any loyalty to aussies.
I’m also with Origin and will be looking hard to see how many Australian owned choices are left in the energy industry.

 

[user 4386]

It is the owners (shareholders) of a company who decide what the company does, and who receive the profits from the company. One needs to consider what is meant by an "Australian" company. The term is usually used for a company that is listed on the Australian stock exchange. That is not the same as "Australian-owned". For example, Origin Energy is already owned by "shareholders across the globe".



So although listed on the Australian Stock Exchange, at present Origin seems to have the Vanguard Group companies as its largest shareholders (more than 50%).

https://www.msn.com/en-au/money/stockdetails/ownership/asx-org/fi-aa8f8m
"The Vanguard Group, Inc. is an American registered investment advisor based in Malvern, Pennsylvania, with about $7 trillion in global assets under management, as of January 13, 2021. It is the largest provider of mutual funds and the second-largest provider of exchange-traded funds (ETFs) in the world after BlackRock 's iShares".

Of course the assets of the Vanguard Group are shareholdings in companies around the globe.

One can put a lot of effort into not necessarily achieving anything - it takes a lot of effort to track down ownership except with small local companies. The reason being (as I have mentioned elsewhere) we do not have enough capital in Australia to back major companies and investments with Australian money.

 

[Dave79]

I've got my power supplied by Origin and I've got what I consider a pretty good deal in the current market, I'll be a bit uneasy if the takeover happens.

I'd be more worried about energy rationing than how much your bill is, just sayin

 

[Hawkear]

It is the owners (shareholders) of a company who decide what the company does, and who receive the profits from the company. One needs to consider what is meant by an "Australian" company. The term is usually used for a company that is listed on the Australian stock exchange. That is not the same as "Australian-owned". For example, Origin Energy is already owned by "shareholders across the globe".

View attachment 5793

So although listed on the Australian Stock Exchange, at present Origin seems to have the Vanguard Group companies as its largest shareholders (more than 50%).

https://www.msn.com/en-au/money/stockdetails/ownership/asx-org/fi-aa8f8m
"The Vanguard Group, Inc. is an American registered investment advisor based in Malvern, Pennsylvania, with about $7 trillion in global assets under management, as of January 13, 2021. It is the largest provider of mutual funds and the second-largest provider of exchange-traded funds (ETFs) in the world after BlackRock 's iShares".

Of course the assets of the Vanguard Group are shareholdings in companies around the globe.

One can put a lot of effort into not necessarily achieving anything - it takes a lot of effort to track down ownership except with small local companies. The reason being (as I have mentioned elsewhere) we do not have enough capital in Australia to back major companies and investments with Australian money.

I take your point there Goldierocks, but have to say that we own a significant holding of shares in Vanguards top 300 Australian ASX listed companies index fund (VAS) for our superannuation.
The way that fund works is to just buy shares in all the top 300 Australian companies in a proportion to their market capitalization.
The fund does not seek to takeover a company nor is even a majority shareholding ever likely. Furthermore many of the Vanguard shareholders like us would probably be Australians expressing confidence in and seeking to invest in a broad spectrum of our own ASX listed companies.
This is a very different scenario to that of a foreign equity company like Brookfield seeking a full takeover of an Australian company. In that case the future direction of that company would be determined by a foreign board in the interests of their shareholders rather than a board elected under Australian regulations and environment.
It also gives great opportunity for the Australian tax system to be ripped off as has been the general history with multinationals.

 

[davent]

Well I think most people don't really understand about "our assets ".
After the Mabo decision, any resources on land belonging to indigenous people, belong to the traditional owners.
Royalties are negotiated between who ever wants to mine them, and the TOs.
This why mining taxes are not really practical. If a mining company has to pay Royalties, it's not going to pay a mining tax as well, it's one or the other.
Groote Eylandt is a classic example of this, over $600 million paid in Royalties so far.....with lots of it unaccountable....I know of one case where $34 million went missing, but when you add it up, it's way more...

 

[user 4386]

I take your point there Goldierocks, but have to say that we own a significant holding of shares in Vanguards top 300 Australian ASX listed companies index fund (VAS) for our superannuation.
The way that fund works is to just buy shares in all the top 300 Australian companies in a proportion to their market capitalization.
The fund does not seek to takeover a company nor is even a majority shareholding ever likely. Furthermore many of the Vanguard shareholders like us would probably be Australians expressing confidence in and seeking to invest in a broad spectrum of our own ASX listed companies.
This is a very different scenario to that of a foreign equity company like Brookfield seeking a full takeover of an Australian company. In that case the future direction of that company would be determined by a foreign board in the interests of their shareholders rather than a board elected under Australian regulations and environment.
It also gives great opportunity for the Australian tax system to be ripped off as has been the general history with multinationals.

Investment funds are slightly different but I think it is an assumption that the majority of Vanguard investors are Australian - firstly my understanding is that Vanguards top 300 Australian ASX listed companies index fund (VAS) simply invests only in Australian companies, not that the investors are Australian (it is open to anyone worldwide to invest in). And other Vanguard companies own a greater share of Origin than that particular Vanguard fund holds (I seem to have forgotten to post the complete breakdown of their holdings as I intended to, and cannot now find that site - sorry).. As the Vanguard Australia site says "We're proud to be a trusted partner of over 30 million investors on the journey towards financial freedom, managing over A$10 trillion of assets". There are not 30 million Australians and they don't have trillions. And it makes them the owners in Origin (a full past takeover so far as I can see) - it gives you no say as an investor I can see (you can only choose whether or not to invest in Vanguard), only Vanguard can vote at Origin board meetings not you I would think. And in the end Vanguard is an American company whose board decides what it does and how it votes. It would have to be registered in Australia as a fund and obey Australian laws re its sale and purchases of Australian stocks, but that is not really any great control - I don't think it runs its board in any way differently than Brookfield (Brookfield would also have to be registered to have a subsidiary operating here (probably still Origin, just controlled by Brookfield) - its decisions are still ultimately made overseas. Obviously neither Vanguard or Brookfield are likely to interfere closely in the daily running of Origin, but that running still has to be done in favour of the interests of Vanguard shareholders. Either can fire the Origin board in the time it takes to hold a meeting and vote. There is no reason to suppose Australians would have any power in those decisions.

But my point was more to be aware of the difference between "Australian" (registered) as distinct from "Australian" (owned) and was more a general comment than one specifically about Origin. Comments others have made elsewhere on this site suggests a lack of appreciation of the difference.

 

[user 4386]

If you consider Vanguard, Australian Shares Index Fund and Vanguard International Stock Index Fund hold equal top ownership above all other investment funds, Vanguard Development Markets Index Fund hold half as much as them, and smaller percentages are held by Vanguard FTSE All-world ex-US Index Fund and Vanguard Pacific Ex-Japan Stock Index Fund hold smaller percentages of Origin, The names have nothing to do with the nationality of those who are invested in each of these funds, it is just Vanguards way of giving you the option to focus on receiving dividends dominantly from different regions of the world.

HOWEVER, I realise now that that was just the ownership by investment funds - I had a hunt and the holdings by investment funds is not quite as big as institutional investor holdings. I don't have details but I know AustralianSuper (ACTU and AiGroup) is a major institutional investor in Origin, so your comments re Origin ownership being Australian at present may be correct (they might have the controlling interest).

But I think it illustrates the difficulties in knowing what is an "Australian" company.

 

[Hawkear]

Another consideration would be to define only privately owned companies as being defined by their country of origin such as Huawei (China) IKEA (Sweden) ALDI & BOSCH (Germany).
In Oz our large privately owned companies like Visy recycling, Hancock prospecting, Cotton On etc are dwarfed on the world stage. Our publicly listed companies like BHP, CBA, CSL etc fare somewhat better.
Whilst the ownership identity of these ASX listed companies can be smudged by having overseas shareholders on their books, the company must comply with Australian common and company law, ASX listing rules, pay its required taxes, and have its books and much of its operations open to public scrutiny.
With the ability of foreign interests to become ASX company shareholders the definition of what makes a company ”Australian” may always be a moot point. There is no denying however that a small shareholder in an ASX listed company can have his or her say in the running of that company through mandatory meetings. For a small shareholder that might not be much of a say, but then probably in reality better than a person has in the running of Australia through their single vote.

 

[user 4386]

You say "Whilst the ownership identity of these ASX listed companies can be smudged by having overseas shareholders on their books" Both BHP and CBA have Vanguard not only as their largest fund investors but in these cases also have Vanguard as their dominant institutional investors. There is little Australian ownership of either of those companies so far as I know. Don't have time to check CSL but they say "Headquartered in Montreal, Quebec, we are a Canadian-based, privately-owned shipping company with commercial operations around the world. Our regional offices are located in Halifax, St. Catharines, Winnipeg and Vancouver (Canada), Boston (USA), London (UK), Bergen (Norway), and Sydney, Whyalla, Perth and Karratha (Australia)". The fact that a company is listed on the ASX only means that they can be bought and sold here, almost entirely because they operate a subsidiary or two here.. It doesn't really give any significant local control other than that they have to comply with Australian law (but Australian law has little to do with who gets the money or owns the company).

I don't know the answers - all you can do is look at companies on the ASX, then hunt their shareholdings and see if they are dominantly local companies (which you also need to check the shareholdings of). You will find negligible large companies that qualify (Transurban might be one - there are some). It is depressing I know. In the end it means foreigners own our industries because they have invested their money in them - we get employment, taxes and infrastructure from them but after-tax profits are distributed in most cases to overseas shareholders. But so far as I can see we are better off with them than without them, since the alternative is not having those industries because we cannot afford to own them. If they go broke, it is mostly people overseas who lose their money.

After-tax profits are only a small percentage of their total turnover - most goes into employing (and our government taxes employees not just companies), local buildings, local machinery etc..

Coming back to Origin, I am a bit surprised that ACTU are happy to sell it to a Canadian company.

 

[grubstake]

Don't have time to check CSL but they say "Headquartered in Montreal, Quebec, we are a Canadian-based, privately-owned shipping company with commercial operations around the world. Our regional offices are located in Halifax, St. Catharines, Winnipeg and Vancouver (Canada), Boston (USA), London (UK), Bergen (Norway), and Sydney, Whyalla, Perth and Karratha (Australia)".

I think you're talking about a different company. This is CSL (which used to be the government-owned Commonwealth Serum Laboratories):
https://en.wikipedia.org/wiki/CSL_Limited

 

[user 4386]

I think you're talking about a different company. This is CSL (which used to be the government-owned Commonwealth Serum Laboratories):
https://en.wikipedia.org/wiki/CSL_Limited

Yes I thought you meant the shipping company CSL Australia.

Looking at the former serum laboratories, "Looking at our data, we can see that the largest shareholder is BlackRock, Inc. with 6.0% of shares outstanding. With 5.1% and 1.2% of the shares outstanding respectively, The Vanguard Group, Inc. and Norges Bank Investment Management are the second and third largest shareholders. A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than 50% of the register, suggesting a large group of small holders where no one share holder has a majority".

So no way of knowing who holds the more than 50%, but when it comes to voting on decisions the large shareholders would probably carry the day, although in theory many small groups could band together to do so (unlikely). . Interesting that Vanguard Group, BlackRock and Norges Bank are largest (all 3 appear major with BHP and CBA that we discussed).

I had never even heard of Vanguard Group before!

 

[Capertee gold]

It is so wrong in so many ways that foreign own companies can benefit from Australia's natural resources 'and a totally different example is Sydney's desalination plant a kurrnel .own by Canadian company and even though we have an abundance of water in our dams at the moment the plant is still operating at 100% ,where it was only to be used when it was needed ,so who's also filling there pockets out of it .Australia has one of the most corrupt governments in the world at the moment and that was a quote from a current serving MP

 

[grubstake]

It is so wrong in so many ways that foreign own companies can benefit from Australia's natural resources 'and a totally different example is Sydney's desalination plant a kurrnel .own by Canadian company and even though we have an abundance of water in our dams at the moment the plant is still operating at 100% ,where it was only to be used when it was needed ,so who's also filling there pockets out of it

That's fake news, mate - please check your sources before posting:

 

[user 4386]

My understanding is that the plant is currently operating at 20% capacity because of the poor quality of flood waters (mud). "a professor at the University of NSW’s School of Civil & Environmental Engineering, said the desalination plant would remain operational out of concerns for water quality".

Normally it only ticks over until dams are only 60% full when it kicks in (if dams drop to 50% Sydney goes onto water restrictions).

Yes, it is 60% Canadian and 40% Australian owned. Same problem as usual - we don't have the capital to do it ourselves

It doesn't really use our natural resources if you mean water - it is Pacific Ocean water (which we share with Canada), and it gets its power from wind.

 

[Capertee gold]

My understanding is that the plant is currently operating at 20% capacity because of the poor quality of flood waters (mud). "a professor at the University of NSW’s School of Civil & Environmental Engineering, said the desalination plant would remain operational out of concerns for water quality".

Normally it only ticks over until dams are only 60% full when it kicks in (if dams drop to 50% Sydney goes onto water restrictions).

Yes, it is 60% Canadian and 40% Australian owned. Same problem as usual - we don't have the capital to do it ourselves

It doesn't really use our natural resources if you mean water - it is Pacific Ocean water (which we share with Canada), and it gets its power from wind.

Don't see any wind turbines out here that power it ,it's on the same grid as everyone else here in Sydney

 

[user 4386]

I was going on this - "The plant uses reverse osmosis filtration membranes to remove salt from seawater and is powered using renewable energy, supplied to the national power grid from the Infigen Energy –owned Capital Wind Farm located at Bungendore."

and

Part of the Sydney Desalination Plan's cost was the construction of a wind farm to offset the energy usage of the plant with 100% renewable energy. The 67–turbine Capital Wind Farm at Bungendore was built for this purpose and produces approximately 340 gigawatt-hours (1,200 TJ) per year. The generating/nameplate capacity is 140 megawatts (190,000 hp).[34]

The wind farm has been designed to produce more than enough energy to operate the desalination plant to cover the days when there is less wind. It will increase the supply of wind energy in NSW by over 700%. It is a massive boost to the renewable energy sector and an environmentally sensible way to offset the power needs of the desalination plant.
— Sydney Water: chapter 5 of the 2010 Metropolitan Water Plan

I have plenty of issues with resources and foreign investment - just feel the focus should be on the real stuffups and things that we can change, The issue of our exporting gas and driving the price of domestic gas sky-high as a result is a sore polint with me. That needs correcting.

 

[user 4386]

Yes I thought you meant the shipping company CSL Australia.

Looking at the former serum laboratories, "Looking at our data, we can see that the largest shareholder is BlackRock, Inc. with 6.0% of shares outstanding. With 5.1% and 1.2% of the shares outstanding respectively, The Vanguard Group, Inc. and Norges Bank Investment Management are the second and third largest shareholders. A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than 50% of the register, suggesting a large group of small holders where no one share holder has a majority".

So no way of knowing who holds the more than 50%, but when it comes to voting on decisions the large shareholders would probably carry the day, although in theory many small groups could band together to do so (unlikely). . Interesting that Vanguard Group, BlackRock and Norges Bank are largest (all 3 appear major with BHP and CBA that we discussed).

I had never even heard of Vanguard Group before!

I get disillusioned when I look at ownership of even some small companies that are primarily based in Australia. Minelab is a subsidiary of Codan - so who owns Codan? Looks like Vanguard and the other same Norwegian crew are the largest shareholders (both mutual fund and institutional).

https://www.msn.com/en-au/money/stockdetails/ownership/fi-aa5f6h