Ray White patriarch says the company’s not for listing

First published in The Australian, 9 January 2017

DAMON KITNEY
Victorian Business Editor

Photo credit: The Australian, John Feder

 

The patriarch of the nation’s biggest real estate group is adamant the $40 billion group will never be listed on the Australian Securities Exchange and says he could not bear the thought of “living on a cushion of air” after monetising his family’s stake in the company.

Ray White Real Estate is now run day-to-day by chairman Brian White’s sons and he said he would “rather chop off both my hands” than ever take the company ­public.

“I said to someone the other day who asked me about that, ‘if you see me one day walking around with no hands, then you would think Brian is getting close to selling his company’,” he told The Australian.

“People say, ‘wouldn’t it be good if you could chalk up some big number and suddenly never have to work again?’ But in all my peer group, no one relates to that. I like the day-to-day challenges. I couldn’t bear the thought you were living on a cushion of air … Our three sons are so ambitious themselves. The number of ­projects we have on is greater than ever. You know they will take this play to a far greater ­degree than I ever did.”

His comments come after the float of rival real estate group ­McGrath’s has been a disappointment for investors.

Bell Potter and JPMorgan were joint lead managers on the initial public offering launched in December 2015, which had an offer price of $2.10, but the shares are now trading at 90c.

Last month Bell Potter cut its earnings forecasts and price ­target for the stock for the third time since its listing.

Its founder and former chief executive John McGrath, who is known as “Mr Sydney Real ­Estate”, holds 27 per cent of the share register. He stepped down from the CEO role last August to be replaced by former recruitment industry executive Cameron Judson.

Mr White declined to comment directly on the McGrath float.

But asked as part of a wide­ranging interview what was his biggest weakness, he replied: “It may be a weakness that I have not been a better self-promoter.

“McGrath a year ago going out and saying ‘I am going to be No 1’; I am 180 degrees from that sort of stuff,” he said.

“When we became No 1 in Australia, we had to ask ourselves ‘is that real, did it actually ­happen?’ ”

The LJ Hooker real estate business last year abandoned its plans to float on the ASX after ­Janusz Hooker, the grandson of founder Sir Leslie Hooker, had earlier cemented his control of the business.

Former shareholders Greg Paramor, former Leighton chief Wal King, developer and yachtsman Syd Fischer and RAMS founder, John Kinghorn all sold out. In October 2015 there was a pre-initial public offering raising of about $20 million, but the IPO is now on ice.

Ray White now has more than 13,000 staff across four continents but one of its longest-serving ­executives, Ray White Surfers Paradise principal Andrew Bell, said Brian White had the “common sense” to keep the company ­private.

“Brian has the common sense and maturity to know a successful real estate company is not a public company,” Mr Bell said. “It needs enormous connection from human beings to human beings. You can’t drive companies like this governed by the demands of institutional investors and outside experts. It is very much a gut-feeling type business.

“And the family doesn’t need the money — this is not the way to make their family fortune. There is every reason not to do it.”

Ray White’s long-serving chief financial officer Andrew Jamson said Mr White wanted to see the business carry onto the fifth ­generation in private ownership.

“Brian has seen himself as a holder of the business for the new generation and going public is something that would conflict with that,” he said. He claimed lack of access to capital was not an issue for the firm, which he said had a very strong balance sheet.

“It has not held the company back at all. We would have been as aggressive if not more aggressive than our competitors over the years in making acquisitions and providing and broadening services. We have arguably had more access to capital than some competitors, including some listed ones,” he said.