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Australia’s ‘bond king’ has one last win for investors before he passes
The Australian Corporate Bond Company, which introduced single-issue liquid, exchange-traded, corporate bonds for Australian retail investors from its formation in 2013, is now expecting to take off having finally received an unrestricted license from ASIC. The full license was a battle which took place concurrently with the four-year battle against cancer by the company’s founder, John McNiven. He won the corporate battle but, sadly, not the one for his life.
John McNiven, sometimes referred to over his successful business career as ‘The Bond King’, was in semi-retirement back in his home town of Sydney in 2013 when he tried to buy a liquid Telstra bond on the market, as an individual investor – albeit a very wealthy one – and couldn’t, even though he could readily buy Telstra shares. He thought this was not good for Australia’s capital markets and talked Richard Murphy, now the chief executive, and Ian Martin, now chief investment officer, into joining him as co-founders of the business. John was non-executive chair.
Murphy recalled last week, after the funeral on August 20 – a week after McNiven’s death, age 63 – that he was so pleased to be able to inform John prior to his death, that the full licence from ASIC had not only come through, but there were two big issuers ready to join up to a market in which they had previously struggled to participate. It was a win for both big companies and small investors.
John McNiven had had many previous encounters against entrenched positions over his business career. This time, though, he was taking on a regulator, ASIC (the Australian Securities and Investment Commission). Murphy says the founders got opposition from ASIC and lethargy from the Treasurer at the time, Kelly O’Dwyer. ASIC issued a limited licence. John McNiven was not interested in anything that was limited.
After Josh Frydenberg, the current Treasurer, gained his position, McNiven renewed his efforts, notwithstanding what he was going through personally. They met with Frydenberg’s staff, Murphy recalls, who “got it straight away”. This was good for the country. The Treasurer’s office referred it to the Department of Treasury which confirmed that they had previously seen the new business to be a good thing which should be supported. Kelly O’Dwyer had been distracted by politics at the time. The full licence was issued a few months ago and, now, “watch this space”, Murphy said last week.
Perhaps McNiven’s greatest achievement in the development of capital markets, however, was to oversee the first Australia and New Zealand-denominated bonds in the Eurozone. In a sense, he was the most instrumental person, when he worked for Merrill Lynch in London, in helping Australia’s participation in the 1980s in what was then a nascent global bond market.
Conrad (Connie) Voldstad, one of McNiven’s mentors at Merrills in the heady days of the 1980s, who is now retired in Florida, recalled in his message for the funeral: “The Eurobond and derivatives markets had grown enormously in the 1980s and several European and US banks and securities companies dominated the market. Competition for business was fierce to say the least. John’s job was to manage Merrill’s debt capital markets business in Europe. That meant arranging bond issues for the most prestigious borrowers in the world as well as related swaps and other products that such borrowers required. John recruited new staff and worked himself on the most demanding clients. From virtually nowhere, John made Merrill Lynch the number one underwriter of Eurobonds in a few short years. “{John’s] clients ran from governments – finance ministers and even a Prime Minister or two – to corporations and large retail financial institutions. John was a pioneer in developing global bond issues… These transactions typically would be for billions of dollars. John was also expert in advising clients in their inaugural bond issues. In that regard, his work with Lebanon stands out where he worked with the Prime Minister to develop a strategy for the country’s first issued bonds.” Connie said: “He dealt with the most prestigious borrowers in the world and his clients loved him.”
For a John McNiven’s obituary and full account of his career, go to ‘Inside Investor’s’ sister publication, ‘Investor Strategy News’, at: https://ioandc.com/bond-king-john-mcnivens-story-about-business-and-love/
