Telco investor dodges the dotcom hype to list

By Aimee McClinchy

Friday 12th May 2000

A telecommunications investment company making a dual listing on the Australian stock exchange and the NZSE in June said its plans were never jeopardised by April's dotcom-led sharemarket rollercoaster.

TComWorld chairman Peter O'Connell said the company, trying to raise $A75 million to invest in the telecommunications sector, planned to focus on global multimillion-dollar telcos.

Twenty per cent of the money will be directed toward Australasian start-ups.

Because TComWorld planned to be fully invested on listing, its startup portfolio would initially involve waiting for clear valuations and opportunities to arise out of the dotcom volatility, Mr O'Connell said.

"The small listed stocks are part of the sizzle but this is a product in a proven sector outside of the internet," Mr O'Connell said.

He is also chief executive of Ten Ventures, a subsidiary of Channel Ten, and an ex-director of Optus.

Telcos were valued on old-style valuations based on capital growth, return on investments and income rather than the dotcom's projections.

"Investors can have their capital and income locked away in the big global corporates, with 20% looking for quick opportunities in the local market."

Mr O'Connell said the company, which is to list in late June, had been tracking potential investments for some months.

It chose to list rather than act as a simple trust "because trusts are being wound down and will start to look like companies anyway.

"We didn't see any tax advantages for Australians or New Zealanders [in staying as a trust]," he said.

TComWorld was conceived by broking firm Intersuisse but its funds will be overseen by the inventor of the first mutual fund, Massachusetts Financial Services (MFS), and Sovereign Asset Management.

Sovereign, headed by Paul Jennings, formerly Axa's head of equities in Australia and board member for Optus Communications, will search for startups in which to invest between $A1-$A2.5 million, with equity stakes of between 5-10%. TComWorld would look to place board members in pre-IPO companies in order to drive growth, Mr O'Connell said.

MFS will manage listed companies with market capitalisations over $US150 million. It claims its existing global telco fund returned 118% last year.

The telco sector is forecast to grow at over double the rate of world gross domestic product between 1998 and 2010 on the back of breakthrough technology in developed markets and deregulation.

TComWorld is issuing 75 million shares at $1 with attached one for two options.

A total of 25 million shares have been reserved for institutional investors, with 50 million underwritten by Intersuisse.

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