Top Business News Stories of 4 June 2024

Life360 Fast-Tracks Nasdaq IPO with Ambitious Dual-Listing

Life360, the popular family-tracking app maker, is gearing up for a dual-listing on the Nasdaq. The San Francisco-based, ASX-listed company launched its initial public offering (IPO) on Monday.

Led by Goldman Sachs, Life360 is offering 5.75 million shares with an additional 862,500 shares over-allotment option (greenshoe). The IPO is set to price on 5 June. Evercore and UBS are active bookrunners, while Canaccord Genuity, Citizens JMP Securities, and Loop Capital Markets are co-managers.

"The net proceeds from this offering will go towards general corporate purposes, including working capital, operating expenses, and capital expenditures," according to the term sheet.

Life360, valued at $3.2 billion on the ASX, aims to raise $US100 million ($150 million) via the Nasdaq listing. CEO Chris Hulls stated that listing in the US aligns with the company's growth, enhancing exposure to major investors.

The company has had a volatile ride since its ASX debut in May 2019 at $4.79. Share prices dipped to $1.76 during the pandemic but rebounded to $15.30 recently.

QVG Capital's Chris Prunty expressed doubt over the dual-listing's benefit in a crowded US market. "If they expect a valuation uplift, they're mistaken," he said.

Conversely, Chris Smith, deputy head of equities research, believes US investors will better value Life360's growth, including its emerging advertising revenue. “The IPO makes sense if Australian shareholders undervalue the growth opportunities,” Smith told the Financial Review.

Locally, over 1.7 million Australians use Life360, which introduced a three-tiered membership earlier this year. With this Nasdaq IPO, Life360 is taking a bold step to bolster its market presence and attract global investment.

Genetic Signatures Secures $30M in Equity Raising

Genetic Signatures, a leading name in molecular diagnostics, has successfully secured interest for a $30 million equity raise by Monday evening. The raising, facilitated by Bell Potter and Taylor Collison, is set to price shares at 75¢ each—2.7% above its last traded price. This is notable as it's rare for microcap companies to raise funds at a premium.

Genetic Signatures' recent successes have likely contributed to this positive response. The company recently received FDA approval and appointed a new CEO to replace long-serving John Melki. Additionally, the stock has surged 78% year-to-date.

High-profile investors are showing strong support. Funds management veteran and Maple-Brown Abbott co-founder holds 22.79% of the company, while Perennial Value Management owns 12.5%.

Earlier this month, Genetic Signatures discontinued development of its EasyScreen Essentials Respiratory Detection Kit for the US market. The kit was based on their innovative 3base technology, which simplifies genetic codes to improve infection detection in molecular tests.

Originally spun out of CSIRO in 2001 for early-stage cancer detection, Genetic Signatures shifted focus in 2006 to develop its 3base technology. Dr. Melki, who joined in 2003, has been instrumental in expanding the company’s product line to include tests for respiratory diseases, sexually transmitted infections, and COVID-19.

In the first half of the year, COVID-19 testing contributed 14% to revenue. The company has informed shareholders that syndromic and multi-pathogen respiratory tests are showing strong sales and are expected to be a long-term market.

Genetic Signatures' strategic moves and market positioning demonstrate its resilience and potential for continued growth.

Fair Work Commission Increases Minimum Wage by 3.75%

The Fair Work Commission (FWC) has announced a 3.75% increase in minimum award wages. This decision, led by FWC President Adam Hatcher, raises the weekly minimum wage by $33 to $916.

Minimum Wage Vs. Inflation

Despite a 14% hike in minimum wages over the past three years, wages have not kept up with rising consumer prices since the pandemic. The FWC claims the latest increase aligns with efforts to bring inflation back to the Reserve Bank's target by 2025. However, with core inflation stuck at 4% as of early 2024, this hinges on a productivity boost.

Impact on Labour Productivity

Labour productivity currently lags behind 2019 levels, presenting a challenge for real wage growth. The FWC acknowledged it has limited power to address the decline in real wages over the past five years without productivity gains.

Broader Workforce Implications

This wage increase affects more than just minimum wage earners. Approximately 25% of the workforce, including those earning up to $150,000 annually under award wages, will see impacts.

Call for Improved Labour Market Regulations

Many believe that rather than setting pay rises centrally, the labour market regulations should enable employers and employees to negotiate agreements that benefit both parties. This approach could foster higher wages in competitive industries.

Criticism of Government Policies

There is criticism that the current and previous Labor governments' policies have undermined enterprise bargaining systems. Critics argue that better regulations and mechanisms, similar to the Accord of the 1980s, are needed to manage inflation and wage growth effectively.

Boosting Australia's Workforce: Fast-Tracking Partner Visas

Getting skilled foreign-born partners of migrants into jobs can help close Australia's workforce gaps, experts say. Many secondary skilled migrants face long waits for visa processing and access to services like Medicare. Speeding up their access to work rights could boost the economy without increasing population pressure.

The 2023 migration review is reconsidering family and partner visas. The Labor government is also revising the points test to better target successful migrants.

The Parkinson review found that secondary skilled migrants and their partners often perform as well as or better than the Australian average in employment. Australia’s permanent migration program, capped at 185,000 for 2024-25, includes a family stream. Since the late 1990s, 70% of visas have gone to skilled migrants, while 30% have gone to family migrants, according to Alan Gamlen, director of the Australian National University Migration Hub.

Legal experts claim these caps violate international laws on family rights. During the pandemic, the government cleared a significant backlog of partner visas.

Currently, half of partner visas take 12 months to process, with 10 percent taking up to 4.5 years, according to Home Affairs Department data. These delays slow the entry of skilled workers into the economy. Research shows secondary applicants on skilled visas start with lower incomes but quickly improve, earning above-average salaries within 20 years.

"A key focus is targeting family migrants with attributes that predict success and reducing barriers for them," Professor Gamlen said.

Former Immigration Department deputy secretary Abul Rizvi noted that partner visa applicants are usually young and skilled, performing well in the labour market. He mentioned that new resources and ministerial direction should reduce processing backlogs to nine months.

Barrenjoey Capital Partners Sets Up Offshore Trading Unit in Abu Dhabi

Sydney-based advisory firm, Barrenjoey Capital Partners, has chosen Abu Dhabi over London and New York for its offshore fixed-income trading unit. On Monday, Barrenjoey announced the launch of its fixed-income sales and trading services in the Abu Dhabi Global Markets (ADGM), an economic free zone in the UAE's capital.

Barrenjoey CEO Brian Benari highlighted the importance of having a northern hemisphere presence, stating, “A large chunk of Australian dollar bonds are owned by offshore investors, particularly government-issued debt.”

By setting up in ADGM, Barrenjoey becomes the first sales and trading unit in the zone, enabling it to cover Australian and New Zealand bonds during European and US time zones. ADGM has been successful in attracting top asset managers by offering a compliance regime that incorporates home-country rules and applies English common law. This environment has drawn hedge funds and traditional equity managers to set up operations in Abu Dhabi.

Recently, ADGM representatives engaged with over 100 investment and wealth management firms across Europe. Abu Dhabi is also home to the Abu Dhabi Investment Authority, managing nearly $US1 trillion ($1.5 trillion) in assets. Mr Benari pointed out that Abu Dhabi’s proximity to major cities, comparable housing costs to Australia, and lower taxes made it an attractive location for staff. He expressed delight with the unit’s performance, noting its involvement in Commonwealth and state government bond raisings and corporate issuances.

“It’s about flow, liquidity, and relevance. The business has really built up its turnover, creating opportunities for clients,” Benari added. With these strategic moves, Barrenjoey positions itself as a key player in the global fixed-income market, leveraging Abu Dhabi's growing financial hub.

Iress Loses Key Executive Amid Cyber Threats and Acquisition Interest

Paul Giles, divisional CEO at Iress, has resigned, amid acquisition interest and cybersecurity challenges. Giles, who reported to group CEO Marcus Price, will leave the $1.49 billion financial services software company at the end of June. His departure was internally announced last week, just a year after he joined the leadership team.

Rebecca Harrison, Iress's head of corporate operations, has been appointed as interim CEO while an external search for a permanent replacement is conducted. An Iress spokesperson declined to comment.

This executive shake-up follows a ransomware incident that Iress disclosed to shareholders on May 15. Hackers stole credentials to access the company's OneVue production environment, affecting client data. Just before the breach, Iress upgraded its EBITDA guidance for the 2024 financial year to a range of $122 million to $132 million.

Iress shares have dropped 24% in the past year and over 39% in five years, sparking shareholder discontent. At the recent AGM, 19.16% of votes opposed the remuneration report.

San Francisco-based private equity firm T. Rowe Price, advised by Jarden Australia, is reportedly considering a bid for Iress, with Goldman Sachs serving as the defence advisor. In a strategic move to simplify potential acquisitions, Iress has restructured into separate units and sold non-core assets. The company has already offloaded its OneVue platform to ASX-listed Praemium and its UK mortgages business to Bain Capital. This turbulent period for Iress comes as it balances internal changes, cybersecurity threats, and external acquisition interest.

Jekara Bets Big on Queensland Start-Ups

Venture capital firm Jekara, founded by early investors in Tritium, is doubling down on Queensland tech start-ups. They're on the hunt for the next global energy disruptor in the Sunshine State. Tidal Ventures, based in Sydney, is moving senior investment associate Fee Lal to Brisbane. Fee Lal, an Atlassian alumnus, will scout for the smartest AI and software entrepreneurs in Queensland.

Both Jekara and Tidal Ventures are set to receive part of a new $130 million fund. This fund, the Queensland Venture Capital Development Fund (QVCDF), aims to boost investment in state start-ups. Managed by QIC’s private equity team, the fund also includes backing for healthcare and biotech investor Brandon Capital and Brisbane-based Sprint Ventures. Another four firms are expected to receive funding soon.

Jekara, started by Jeff Phillips, Kara Frederick, and Tritium co-founder David Finn, is raising a $100 million fund. They aim to invest in companies speeding up the energy transition, with Mr. Finn leading the search for potential deals in Queensland.

"Queensland is a natural spot for energy innovators," said Ms Frederick, citing the state’s strong financial base and business-friendly environment as key factors. Under QVCDF, selected VC funds get up to $20 million in matched funding. This requires them to set up or expand operations in Queensland and invest 1.25 times the allocated amount in local start-ups. So far, $8.7 million has been injected into seven Queensland start-ups.

Georgie Turner, a partner at Tidal Ventures, expressed eagerness to establish a Queensland base. "Great technology companies like these spark an ecosystem that drives more innovation," she said. Queensland Treasurer Cameron Dick welcomed the new wave of venture investment. “This will close the early-stage funding gap, allowing businesses to scale globally from Queensland,” he said.

The state recently committed $470 million to establish the Asia-Pacific headquarters of a major player in Brisbane, further boosting the local start-up scene.

Owner-Occupiers to Dominate Industrial Property Market in 2024

Owner-occupier buyers will have the upper hand over investors in the industrial property market for the next 12 months, according to property valuer Opteon. Unlike investors, owner-occupiers aren't reliant on rental returns, which often fail to cover rising loan servicing costs.

E-commerce Drives Demand

The surge in Australia's e-commerce sector has fuelled a 16% increase in industrial asset values within the sub-$40 million market. Business owners requiring more space are outbidding investors, who struggle with stagnant rental yields and higher borrowing costs.

"Owner-occupiers can pay more because they base their spending on business fundamentals, not just investment metrics," said Ross Turner, General Manager at Opteon. "Investment metrics are holding back long-term investors."

Market Outlook

As interest rates stabilise, commercial real estate assets – including industrial, retail, and office properties – will become more attractive. However, owner-occupiers will continue to have an advantage until investors can align rental rates with market conditions.

Case Studies: Sydney's Industrial Property Market

In southern Sydney’s Alexandria, a vacant industrial property sold for $10.3 million to an owner-occupier in October 2022. Meanwhile, a smaller nearby property with a five-year lease fetched $6.7 million from an investor. This highlights the current gap between owner-occupier and investor valuations.

Office Market Uncertainty

The office sector remains uncertain despite return-to-office mandates. Office values dipped by 5.5% in 2023, with NSW and Victoria showing the weakest performance.

"Office yields and occupancy rates are still under pressure," Turner noted, forecasting continued challenges for the office market.

Investment Opportunities

Some investors are seizing the opportunity presented by current conditions. Brisbane-based Exceed Capital has acquired three office buildings from ASX-listed trusts, anticipating future market recovery and value addition.

Retail Sector Trends

Retail property values are expected to improve as interest rates drop. Healthcare-aligned retail assets, such as doctor's suites, are performing well due to stable demand. Conversely, high street retail, particularly those tied to office workers like dry cleaners and coffee shops, continues to struggle.

Perth's retail vacancies remain higher than the national average, exacerbated by increasing hybrid work practices.

Jim Chalmers Orders Chinese Firms to Divest from Australian Rare Earths Project

Jim Chalmers, Australia's Treasurer, has commanded five international companies tied to China to sell their shares in Northern Minerals Limited. This order follows advice from the Foreign Investment Review Board (FIRB) due to concerns over share trading among Chinese-linked shareholders.

Key Developments

Northern Minerals aims to be Australia's first substantial producer of dysprosium. This rare earth element is crucial for electric vehicles and modern military technology.

Details of the Order:

• The order affects five companies, including Yuxiao Fund.
• These firms must divest shares totalling 10.4% of Northern Minerals’ issued capital.
• Browns Range mine in Western Australia's East Kimberley is the focus.

Chalmers stated the decision was to "protect our national interest." He affirmed Australia's commitment to a robust, non-discriminatory foreign investment framework.

Background

Previously, Chalmers blocked Yuxiao Fund from increasing its stake in Northern Minerals due to connections with Chinese national Yuxiao Wu, who owns rare earth miners in Mozambique.

Implications

Rare earths, including dysprosium, play a key role in electric vehicles and military technology. Northern Minerals plans to publish a feasibility study soon, revealing a projected $300 million cost for a new dysprosium processing plant.