Chris Judd’s podcast Masters of the Market

Click below to listen to Chris Judd’s podcast Masters of the Market, with a special mention of David Williams’ investment journey.

“In this episode I head to Perth to catch up with the Managing Director of the Merchant Group Andrew Chapman. With almost 20 years of experience in the industry, Andrew walks us through his experiences in investing in biotech stocks, medical marijuana and other micro caps.”

Investment in Australian Agriculture Drying Up

Investment banker and chief executive and founder of Kidder Williams, David Williams in his Melbourne office.

The party is over and those mouthing “nine billion to feed by 2050” look like dinosaurs.

The wall of money from countries we have rarely seen before to invest in Australian food and agriculture is slowing. Some money came from family offices and pension funds escaping the crisis in the eurozone. Some of it was chasing the new understanding of the growth prospects in food to feed the growing middle class in Asia. And some came from North American pension funds and universities chasing low-risk horticulture.

Australia is attractive to all as we produce high quality product, have reliable infrastructure and low sovereign risk. Interest in our assets and our products will to continue but at a much slower pace as alternatives in South America, Asia and Eastern Europe sometimes don’t offer these qualities in one package.

There have been hiccups along the way with respect to government policy on foreign investment. But now the gravy train is slowing. Some of this is because it is getting harder to get money out of China and other countries and some because it is getting harder to get money to Australia. Investors who did come have fully invested and gone home, probably never to return for 10 years.

Demand for food processing assets has also been strong from foreign trade buyers, and from foreign and domestic PE firms. That has also slowed to a trickle with fewer buyers. A number of businesses bought in recent years for heady prices are now coming back on the market

and will be sold at discounts. There will be lots of opportunities for Australian trade buyers previously outbid.

Water continue to put uncertainty on cotton, nuts, horticulture and dairy. Recent fish kills exacerbate the situation by pressuring for more environmental flows. This will force water prices up and push horticulture to new regions and new types of crop.

While all this sounds pessimistic, if we pull our heads out of the China clouds there is an exciting future and much to do in all food companies. If I were preparing the board pack for a food company for next week, my agenda might look like this:

  • How can we improve our and our farmer suppliers’ water efficiency by adopting technologies, to lessen our reliance, improve our yield or change government policy?
  • What opportunities are there for us if UK leaves the EU without a deal and reverts to “most favoured nation tariffs”?
  • How are we reacting in our product development to the blurring of traditional meal times by snacking throughout the day?
  • We can’t wait around for large acquisitions and the old innovation model is not working, so what can we do to invest in start-ups to get new products to market quickly and more often?
  • What are we doing in our product development in ‘‘gut health’’ and the crossover between food, nutraceuticals, pharmaceuticals and personalised foods, that match DNA?
  • How can we turn our off-spec products, by-products and waste into valuable products?
  • How can we go direct to consumer with our products and change our logistics model?

David Williams Founder & Chairman of Kidder Williams

We were delighted to have lunch recently at Graduate House with Mr David Williams, the Founder and Chairman of Kidder Williams. David was born in Melbourne after his father, originally from Glasgow, Scotland, moved to Australia following the war and settled in Ferntree Gully. David, therefore, went to Ferntree Gully Primary. “Then when I was finishing Grade 5,” David said, “they built a new primary school right next to where we lived called Fairhills Primary… and so I was in the first class.” David then went to Boronia High (1966–1970) and Wattle Park High (1971–1972) for his secondary school education. He undertook his Master of Economics (1972–1978) at La Trobe University and his PhD research in finance at The University of Sydney (1982–1984) on the topic of co-operatives and their capital structure. That research led him to agricultural cooperatives, which in turn led him to the food industry. Today, David is the Chairman of Kidder Williams, Australia’s leading corporate advisor to the food, agriculture and beverage industries, with 34 years of experience in mergers and acquisitions, capital raising and corporate advisory services. Revisiting Ferntree Gully Primary and Boronia High years later, David remembered how surprised he was to see open fields where the schools used to be. “So… I have no alumni,” he concluded. Having no alumni, he, nevertheless, stresses the importance and necessity of building an alumni.

During his period at the University of Sydney where he taught Finance, the program conducted a survey at the end of each year, asking students about “the number one thing” that they got out of their MBA course. Most students ranked the alumni — the relationships and the networks they built — as the most important part of their course. For MBA programs, David recognises the lack of emphasis in this area: “We all know this but universities and their employees probably don’t do as much to foster it as we should.” Students turn up for their courses, and “we turn up for our job to lecture. That’s it. We give them case studies where they work together, and that’s how you breed a little bit of familiarity.

But we don’t do anything more than that as far as I can see in most of the MBA programs, or for that matter in most jobs.” David agreed with The Graduate Union CEO/Head of College, Dr Kerry Bennett, about the importance of places like Graduate House, where students have a live-in experience, allowing them to build networks they can call on throughout their post degree careers and professional lives while living with other graduates and professionals from all disciplines. “We’ve got to optimise it,” David noted, “and I think the older and the more postgrad people are, the more you need to do it; and the reason is because it is at that level you start to think about how what I’m learning can be applied across disciplines.” Professionally, David made headlines over the years for his role as corporate advisor to many Australian and international businesses, particularly for his role in the Bega Cheese acquisition of the culturallysignificant brand Vegemite from Mondelez International. The success, David noted, came from hard work, something that, he thinks, is sometimes missing among graduates and young professionals. “We’ve got kids that need instant gratification… there is no instant gratification, you’ve got to actually work for things.”

Remembering the early years of his career, David said, “I was the longest working, the hardest-working person in my group. I had a co-worker who had a rigid regime: ‘I leave exactly at 6 o’clock at night in order to catch the 6:15 train’… [so one day] I turned up at 6 and said… I need you to read this… and he said ‘Oh David, ten minutes to 6 — I can’t do it until tomorrow’.”

To David, this sounded like something he might say himself after he had become highly successful. “Well, now, I’m still one of the first in and still one of the last out.” David expands: “What comes through is that it’s not about intelligence — it’s about how much work you put in. It’s about being passionate about something and building your interest from the ground up.” In terms of future endeavors, David is keen to expand his horizons to corporate purchases. In a mergers and acquisitions business, “you see a lot of deals and sometimes my clients have no interest. If so, I can buy them myself and I do. So I have a business that is an advisor company but I also have a business that owns companies… So those things are as much part of my life as ever.” One of the big deals for which David made headlines was buying the Tasmanian Salmon Farmer Tassal Group out of receivership in his own name after which the company’s production soared. Referring to this success, David said, “it went into receivership 12 years ago and I bought it personally out of receivership for 42 million dollars.” The company “was doing six thousand tons of salmon when I bought it, now it’s doing circa 30 thousand tons. Salmon is bigger than every other aquaculture species you can think of: prawns, abalone, barramundi, put them all together, they’ll be doing 10 thousand tons.” David has recently started expanding his expertise in the pharmaceutical area.

He is currently the Chairman of Medical Developments International. Its key product is the Green Whistle which is manufactured with some CSIRO technology and is a medical device which releases the analgesic drug Penthrox when the user inhales. Early last year, the company received positive feedback from the Medicine and Healthcare products Regulatory Agency (MHRA) to sell its product in the United Kingdom, France, Belgium, Ireland and the rest of the European Union. David would like to take the Green Whistle, with the help of the Gates Foundation and the World Health Organization (WHO), to people in the Third World where operations are sometimes performed without pain relief. Another medical company David is Chairman of is PolyNovo, a tissue regeneration company which uses NovoSorb Technology for the treatment of burns and surgical wounds. The only competitors for the product in the market are organic products. But “the problem is,” David said, “when you put a biologic on a wound, it sometimes gets complications… We are available at a significantly lower price and with significantly better efficacy.”

No wonder hospitals and surgeons have been very keen to try the product. The company, David excitedly reported, has already supplied its product to “dozens of hospitals in the US and by end of January, it probably should be 60.” The company is also expanding its market around the world and is now supplying South Africa, India, Malaysia, New Zealand and Saudi Arabia. Information technology has not escaped him and he is the largest shareholder of RateMy Agent. This is a real estate agent ranking site now released in the United States, New Zealand and Australia. It was an honour to spend time with David and to learn from this innovative, inspirational and yes, very hard-working business leader who has clearly earned his success. We are very much looking forward to learning more!

Vying for Vegemite and IPO deals

James Kirby

Investment banker David Williams, of Kidder Williams, has been behind a string of very successful sharemarket floats. He’s also made the headlines for his role in ‘bringing Vegemite back to Australia.’

You like to claim you brought Vegemite back to Australia … what actually happened there? We were a small cog in the Bega Cheese team under chairman Barry Irvin. The trick was to find a way to buy Vegemite when it was not on the market at a value-enhancing price. (Bega bought Vegemite back into Australian ownership in a wider $460 million deal with food multinational Mondelez.) How this was done while potential competitors were sleeping … well, I’m afraid it is too soon after the event to reveal. This was an example of Investment Banking IOI and where clients get value out of an adviser. I will discuss it in a year or so but in the meantime think 007, Get Smart and international espionage!

Your specialisation is food: We never seem to create the great Australian food company though many have tried … why can nobody get it going on a global scale? Companies like Bega have done a fabulous job building a great Australian food company with substantial domestic exports. However, some of the best of foreign food companies have had the historical benefit of government support in terms of tariffs, subsidies and antitrust concessions. These have created an uneven playing field for Australian companies trying to be big on the world stage.

You’ve been in oyster farms and salmon and almonds … what’s the next big thing? For me the next big thing is in the crossover between food and nutraceutica1s (products derived from food sources with extra health benefits) and pharmaceuticals. Using new technology to improve gut health will, in many cases, also help companies use waste and by-products. There are many “next big things” in aquaculture other than salmon and trees in species other than almonds, especially in areas where land and water are cheaper.

You’re also active in financing medical companies such as the skin specialist PolyNovo – how do you select these high-risk! high -reward companies? I choose first by gut feeling and whether I believe the story, followed by significant due diligence. PolyNovo is already becoming a great Australian medical company. It has been a great performer for shareholders but better still it is changing people’s lives. People will see breathtaking advances in the way in which bums, wounds, hernia and breast implants are treated.

Are you concerned the IPO market may close up with this market volatility … we’ve seen a string of floats get cancelled such as Pexa and Firetrail? I have no concerns. The IPO window will shut for a couple of months while the dust settles. However, even now companies, like PolyNovo, with significant growth potential and diversified foreign earnings, can still raise institutional funds of good prices.

RateMyAgent was a very different float for you – how did you get involved there? The three founders (Mark Armstrong, Xavier Perronnet and Ed Van Roosendaal) came to me for seed funding and to act as a mentor and chairman, In a short period of time more than 80 per cent of Australian real estate agents are on the platform and RMA Global (the ASX-listed parent company) receives a review of agent performance for more than one in every three properties sold in Australia. There are over 29,000 agents and 500,000 reviews on the platform. The company has expanded to the US and New Zealand. [n the US, the company has agents in every state increasing in number every week. All this with 60 staff sitting in an office in Richmond, Victoria.

These monied families in Melbourne such as the Smorgons et al you have as clients … do you tell them about the best ideas or do they tell you? I know and have enormous respect for all the family offices but I only share information with those we have an advisory relationship with … Ervin Vidor in Sydney, for example, is a standout (Vidor is linked with Adina and Medina hotels.) The position of family offices has changed significantly over the last 20 years when “cash was king” and those offices could pick the eyes out of the best deals. Now money is a commodity and deal flow is king … family offices are seeing many deals once they have been used up and picked over by others. They have a tougher task than 20 years ago.

Investment bankers look like hipsters these days – when will we see you in chinos? I am slightly offended by the question [laughing]. I still see a 30year-old in the mirror – I am reinforcing my delusion by using a 25-year-old photo on Linkedln.

What was your best personal investment so far? Tassal (the salmon producer), PolyNovo and Medical Developments have been excellent financial investments. RateMyAgent will (hopefully) be my most attractive investment from a financial perspective.

What was your worst? I don’t have a worst “child” … all have been enormously satisfying, but my time will come.…/282394105483650

Investment Banker Williams Buys The Farm, No Bull

Australian agribusiness’ Mr Everywhere, investment banker David Williams, has splashed out with a big purchase of his own. It is understood the long-time Bega Cheese and Tassal Group adviser has picked up the Fairfield cattle property on Melbourne’s fringe, in a deal worth about $20 million. Fairfield is a 3700 acre farm located 25 kilometres north of the city’s Tullamarine Airport. It was owned by Charles Bright-a well known executive in listed Australian agriculture, and someone Williams would have come across plenty of times in deals over the years. Bright is a former senior executive at Elders, Tassal and Webster, among others.

The farm is now used by David Blackmore, founder of Blackmore Wagyu which makes one of the most premium wagyu products in the world, who runs about 4000 head of cattle on it. Street Talk is not sure what to make of the purchase, other than that it is proof that being “the Bega guy” can be lucrative work. Williams is founder of corporate adviser and investment banking services firm Kidder Williams, which has carved out a niche in the food, agriculture and beverage industries. Williams most recently popped up as adviser to Bega Capilano Honey. Bega snapped up an 11.2 per cent stake in Capilano last month, soon after the company signed an agreed takeover with a private equity suitor.

Bega Cheese Abuzz for Takeover of Capilano Honey

Eli Green Blat

Bega Cheese executive chairman Barry Irvin has bought himself a seat at the table with billionaire Kerry Stokes and agriculture investor Albert Tse over the future of honey producer Capilano after the dairy group ratcheted up its stake to 8.4 per cent in preparation for a takeover battle.

Mr Irvin, whose Bega Cheese last year secured the local Mondelez food business for $460 million to gain control of its Vegemite and peanut butter brands, said honey was a natural fit with his company’s spreads and Bega had the infrastructure to operate supply chains from farmer to retailer.

He said he was not put off by reports that Capilano could be unwittingly selling “fake honey” to consumers, along with other producers allegedly using adulterated honey, arguing this was precisely the type of food security issue that Bega was focused on.

“What that news demonstrates is what we talk about a lot in terms of the strategy of Bega — that people are increasingly worrying about where their food comes from, who is producing it, how it’s produced, sustainability, who is handling it and delivering it to them,’’ Mr Irvin told The Australia n. “And again, I would say that news is what we are very tuned into.

“What those (honey) articles have demonstrated is the path we are trying to take all of our businesses on, what we see increasingly customers want both here and around the world.’’

Bega dealt itself a hand at any battle for Capilano after grabbing a stake in the listed honey producer last week. It was prompted into action last month when a joint bid by two private equity groups — Australian-Chinese private equity fund Wattle Hill, led by Mr Tse, and ROC Partners investment fund, backed by Australian superannuation groups — launched a $20.06-a-share bid for Capilano, valuing it at more than $190m. The well-connected Mr Tse is married to former prime minister Kevin Rudd’s daughter, Jessica, an entrepreneur and investor in her own right.

Capilano’s largest shareholder is Mr Stokes’s family office investment vehicle Australian Capital Equity, which owns a 20.6 per cent stake, and the media mogul’s investment arm has indicated it would not sell its shares into the offer but retain scrip in a new private honey company, and take a board seat.

“We have expressed for a while that we are into natural products that are delivered to the consumer and really what we would call our stock in trade,” Mr Irvin said.

“Around that we have supply chains that go right back to the farmer or grower and we control that supply chain as much as possible right through to the end customer. (Capilano Honey) is a product that fits with our  strategic approach.”

Leading the charge into Capilano’s share registry was corporate adviser David Williams and his Melbourne-based firm Kidder Williams, which has deep roots in the agricultural sector and has handled a number of high-profile deals recently.

Bottler Coca-Cola Amatil last month appointed Kidder Williams to advise it on the future of its struggling fruit cannery business SPC. It also advised on the $185m float of agricultural property investment group Vitalharvest.

Mr Williams has a long association with Bega, having advised on its sharemarket float in 2011 and last year’s $460m acquisition of the Mondelez food business.

Kidder Williams also spearheaded Bega’s grab of a strategic stake in then ASX-listed Warrnambool Cheese & Butter more than four years ago, with Bega  sitting through the ensuing takeover battle and, although losing out to successful bidder Saputo, Bega sold its shares for a $100m profit, which Mr Williams has  described as “not a bad consolation prize’’.

Mr Williams began buying shares in Capilano on behalf of Bega a few months ago, picking up stock for as low as $15.50 each and last Friday emerged with a stake of almost 6 per cent. Further buying has lifted Bega’s stake to 8.4 per cent this week.

The merchant banker secured the shares from fund managers who were happy to part with some of their holdings in the honey producer on the hopes it would give Bega enough momentum to trigger a takeover battle. However, Kidder Williams has made no promises in terms of Bega actually launching a takeover bid.

Mr Irvin said the takeover offer last month for Capilano pushed Bega to act and secure  itself a say in the future of the group. “A way of being involved in the conversation is to take a shareholding and that is what we have done,” he said.

“At this stage we haven’t made any decisions around making a bid or anything like that. We would … say we are happy to be able to have accumulated a bit of a shareholding but haven’t made decisions beyond that.’’…&FORM=EDGCTX&refig=c105aae130ad4bfabc3d7ea02461a799

ASX Release: Coca Cola Amatil | To Explore New Options for SPC

Coca-Cola Amatil has today announced the commencement of a strategic review of growth options for SPC – Australia’s leading processor of packaged fruit and vegetables.

Group Managing Director of Coca-Cola Amatil, Ms Alison Watkins, said the review coincides with completion of a four-year, $100 million co-investment in SPC in conjunction with the Victorian Government. Investment under this agreement was completed in June 2018 and included $22 million by the Victorian Government and $78 million by Coca-Cola Amatil.

“As we said at the time, without this investment the future of Australia’s best-loved packaged fruit and vegetable brands were in question,” Ms Watkins said.

“With this investment we kept SPC operating, invested in modernising the plant and created new business opportunities.

“These included new tomato and high-speed snack lines, a new aseptic fruit processing system and new export opportunities including China, all of which will support ongoing growth.

“The co-investment is complete, and now is the right time to consider options for the business.

“We believe there are many opportunities for growth in SPC, including new products and markets, further efficiency improvements, and technology and intellectual property. The review will look at how this growth could be unlocked, potentially through a change in ownership, alliances or mergers.

“Importantly, there are no plans to close SPC. We see a positive future for SPC as it continues to transform its operations.”

SPC is recognised as one of Australia’s most-loved brands, and is a household name in fruit, vegetables, baked beans and spaghetti. More recently, SPC expanded its range into specialised age-care products and premium sales in export markets.

Since acquiring SPC in 2005, Coca-Cola Amatil has invested around $250 million of capital in the business, including in technology and equipment.

Coca-Cola Amatil has engaged consultancy Kidder Williams to assist with the strategic review.

The review of SPC does not affect an ongoing sale process relating to Taylors and IXL brands, which was announced by SPC in early 2018.


Market doesn’t rate ‘Rate My Agent’ float

Myriam Robin

It was a disappointing ASX debut for David Williams-backed agent comparison website Rate My Agent whose $92 million ASX listing was worth just $75.4 million by close-of-trade.

Though Williams is still well in the money. He was one of the company’s earliest investors, having lobbed in $1 million in 2014, and now owns 27.6 per cent worth of some $20.8 million (around $5 million less than what it was valued at the start of trade).

Williams’ firm Kidder Williams received a fee of $800k for conducting the IPO, half paid in shares. Kidder Williams had also advised the company on a $5 million capital raise in 2016, and was paid in shares then too. The company as a whole was valued at $20 million at that point, so Williams’ stake has appreciated at least four-fold since 2016, even with today’s fall.

Not letting the disappointing first day’s trade dampen their spirits were the lawyers at MinterElIison, who advised on the float. ”This is a big step for RMA, with the IPO receiving overwhelming support from investors,” said MinterEllison lead partner Bart Oude-Vrielink in a congratulatory press release. Which is one way of framing an 18 per cent fall.

Other early investors in the company include stockbroker Dean Smorgon, scion of the Smorgon dynasty, and online entrepreneur Gabby Leibovich.

Investors Eye Costa Farms

Andrew Marshall

Investment fund managers are anticipating horticulture’s Costa family to list its farming properties in a $285 million real estate investment trust.

The farms supply the Australian Securities Exchange-listed Costa Group with raspberries, blueberries, blackberries, mandarins and oranges and are valued at about $285 million.

Costa family office chief executive officer Liza Whitmore and agribusiness investment adviser, David Williams, from Kidder Williams, reportedly met fund managers in Hong Kong last week to promote the REIT.

A product disclosure statement is expected to be lodged this week.