Forum Archive Index - May 2000

[Nigel McCarter <n.mccarter@clear.net.nz>]

One of the intriguing points of this article is the size and scope of the
merger. There are seventeen different companies and databases involved.
Although collectively RMG may currently hold a significant proportion of
the total australasian market, the management, databases cultures etc will
be highly fragmented.

Therein lies a substantial reservation on the prospects for a new RMG
group.  Amalgamation is difficult at the best of times. Dozens of other
companies with strong, competent management experience struggle when they
try and merge disparate culture and technique, witness NPX.  It takes time,
determination and sometimes a lot of luck.

That is not to say that RMG won't succeed, on the contrary I think those
currently holding FRO will do very well thank you.  But I don't think it
realistic to expect RMG to be up and challenging BCH in the short to medium
term.  

The current BCH price of around $10 is a reflection of growth over the last
three years and the expectation that that growth will continue.  The
RMG/FRO merger does not substantially change that expectation.  BCH will
obviously lose some business in both Aus and NZ, Pacific Retail for one,
but overall, is BCH growth really going to slow over the next two years
because its present fragmented competitors have responded to good
performance by BCH by banding together?

Last, the drop in BCH was on small volume relative to the last few weeks.
I wish I had held of buying BCH until yesterday, but the prospects for the
company over the next two years have not changed one bit.




At 05:34 AM 5/2/00 NZST, you wrote:
>New boy on collection block
>
>02.05.2000 - By GEOFF SENESCALL
>
>Australian Paul Cooney vows that his new company, Receivables Management 
>Group, will be a vigorous competitor to Baycorp.
>
>"One of the problems in New Zealand is there has not been any choice," he 
>said.
>
>An indication that the market was taking seriously this new entrant -- which 
>has the backing of Auckland entrepreneur Eric Watson -- saw Baycorp's share 
>price tumble 61c yesterday to 979c.
>
>However, while Baycorp dominates the local debt collection and information 
>services business, it was its move into the Australian market midway through 
>last year that provoked Mr Cooney's initiative.
>
>Through a joint venture with the Australian company Data Advantage, Baycorp 
>has established a company across the Tasman called Alliance Recoveries.
>
>"What I saw was the risk that a company coming into the receivables market 
>in Australia, with access to capital and nominal access to the credit 
>information database of Data Advantage, would have a strategic
>advantage," Mr Cooney said.
>
>"If we allowed them to get a foothold in the Australian market, then the 
>market share -- which was spread around lots of other companies -- would 
>come under threat."
>
>Mr Cooney, who has been involved in the debt collection business in 
>Australian for 30 years and is president of the Australian Collectors 
>Association, said he had been toying for the past 12 months with the idea of 
>bringing together a collection of companies and listing them in Australia. 
>The idea took hold when he was invited to talk to analysts in Australia 
>about the Baycorp Data Advantage joint venture, because "most of them were 
>totally unfamiliar that the receivables sector existed.
>
>"That gave me an opportunity to talk to a number of players and explain the 
>nature of the industry and our own business against the aspirations that Bay 
>and Data Advantage had for the Australian market. Having spoken to them I 
>took comfort that there was an opportunity for
>us to do an IPO [initial public offering].
>
>"I began working with some brokers in Australia ... and negotiated with a 
>number of companies, which basically form the core of what we have today." 
>This includes six New Zealand companies and 10 Australian.
>

Nigel McCarter
Safety Management and Information Services Ltd
Box 23 019 Hamilton
Phone 64 7 858 2429 Fax 64 858 2689
Mobile 02 212 4901

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