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The Magellan Financial Group Ltd (ASX: MFG) share price has been flat after announcing a 40% stake in new investment bank, Barrenjoey. Regardless, the company has managed to secure some top flight talent to run the fledgling investment bank.

This includes outgoing chairman of Australia and New Zealand Banking GrpLtd (ASX: ANZ), David Gonski. He has been appointed as the independent chairman of the new investment bank.

Magellan has also secured many top investment bank deal makers of UBS Group AG (SWX: UBSG) in Australia, and can boast ex-CEO of BHP Group Ltd (ASX: BHP) Ken McKenzie as a strategic advisor.

But despite Magellan’s moving and shaking, the financial news has been filled with the investment banking activity of Macquarie Group Ltd (ASX: MQG). Furthermore, the Macquarie share price has risen steadily by 5% over the past month.

Investment banks act as intermediaries between companies and capital markets. For example, companies could engage an investment banker for assistance with an initial public offering (IPO), a capital raising, or a refinancing strategy. 

What’s fueling the Macquarie share price?

In recent weeks, Macquarie Capital has been named a key player in many major ASX events. For instance, just last week the Australian Financial Review disclosed that Macquarie had secured an IPO funding pipeline for local services marketplace, Air Tasker. Moreover, the investment bank is running the Nuix IPO, likely to be either the largest or second largest IPO this year.

Nuix has developed technology that extracts meaningful information from unstructured data. It finalised IPO details last week, settling on a listing worth $975.3 million. When combined with the shares the company owns, it values the company at $1.8117 billion.

Other companies seeking to float in the near future include legal company HWL Ebsworth, with an estimated value of $917 million; Fantastic Furniture, planning to raise up to $669 million; and Sapura Energy, which is potentially a US$2 billion float.  

The Magellan-backed challenger

Magellan holds a 40% stake, and a 4.99% voting interest, in new investment bank and full-service brokerage, Barrenjoey. The bank plans to provide corporate and strategic advisory services, equity and debt capital market underwritings, cash equites, research, prime brokerage and fixed income trading. However, Magellan’s investment in Barrenjoey has received mixed reviews. In fact, the Magellan share price fell 5% on the day of the announcement.

As a rule of thumb metric, investment banks are often valued at 1 to 1.5 times revenue . Given that Magellan has paid $155 million for 40% of Barrenjoey, the full valuation would be just under $400 million. Meaning, the start-up bank has to be earning $400 to $600 million to justify this price.

Foolish takeaway

Macquarie Capital is regularly among the top three investment banks nationally every year. Something that is reflected in its ASX share price.

With the current pipeline of IPOs under way, it may repeat that again this year. However, despite being a start-up in a competitive sector, Barrenjoey has plenty of talent at the helm.

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• Macquarie (ASX:MQG) picks best ASX stocks to buy for 2021 post-COVID recovery
• Aussie companies blast ‘knee-jerk’ COVID-19 border closures

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The BlueScope Steel Limited (ASX: BSL) share price is rocketing higher this morning after the company released a trading update. At the time of writing, the BlueScope share price is up 6.0% to $17.83 after reaching a new, multi-year high of $18.24 during the opening minutes of trade.

Upgraded guidance

According to this morning’s release, BlueScope reported strong demand for its steel products. Although most of the heavy lifting came from its Australian segment, BlueScope upgraded its forecasts for the first half of FY21.

Underlying earnings before interest and tax (EBIT) is projected to be around $475 million. BlueScope noted that this includes the contribution made from the industrial warehouse property sale that was executed recently. The new guidance represents a rise of 80% over the second half of FY20.

What are the key drivers for the BlueScope share price?

The BlueScope share price is on the move today after the company advised its Australian segment is on track to deliver a substantially better result than the prior period. BlueScope reported that demand for domestic construction and distribution remains strong, particularly for coated and painted products. Furthermore, export coke levels are expected to be above what was attained at the end of the last financial year.

In the United States, North Star, owned by BlueScope, continues to ship steel at full capacity. A major scheduled maintenance outage was completed in the backdrop. Since the end of the second half of FY20, there has been a significant increase in Midwest hot rolled coil prices and other raw materials costs. BlueScope acknowledged that, as there is a general lag between market price and sales, underlying EBIT for North Star is predicted to be lower than the second half of FY20.

The building products segment in Asia and North America is anticipated to produce a better performance than the last results recorded. In ASEAN (Association of Southeast Asian Nations) alone, EBIT is predicted to be at least double that of the second half of FY20. The North America business is matching current estimates similar to the prior period.

Moving to the Buildings North America division, the engineering business has been growing consistently. This was supported by the $40 million property sale conducted earlier this month.

New Zealand and Pacific Island’s performance has been gaining traction in the second-half due to operations resuming post COVID-19. The company stated that it is still continuing to implement a restructure of the business. Depreciation and amortisation is expected to be roughly $15 million to $20 million lower compared to the second half of FY20.

What did management say?

BlueScope managing director and CEO, Mr Mark Vassella, commented on the performance achieved so far. He said:

All operating segments are performing well and momentum has continued to build as we approach the end of 1H FY2021. Residential alterations and additions activity, demand for detached new housing, and growth in demand for e-commerce warehouse and logistics facilities are all robust and US automotive industry demand is recovering strongly.

Demand strength, particularly in the Australian market, has continued to outpace our expectations. We now expect that Australian construction and manufacturing activity will remain strong, driving elevated domestic steel despatches for the balance of 1H FY2021.

Benchmark steel spreads in East Asia and the Midwest US are currently above longer-term averages as the beginning of 2H FY2021 approaches. Nonetheless there remains uncertainty around spreads and volumes given the risks of the evolving impact of COVID-19 which could disrupt demand, supply chains and operations, and broader macroeconomic activity.

BlueScope share price summary

The BlueScope share price is making a stunning comeback since falling to as low as $8.03 in March. Shares in the steel making company reached a new multi-year high yesterday of $17.26 before surging again to a fresh high following today’s release.

Based on the current BlueScope share price, the company has a market capitalisation of $8.5 billion and a price-to-earnings (P/E) ratio of 89.

More reading

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The 5G Networks Ltd (ASX: 5GN) share price is charging higher on Thursday after announcing a new acquisition.

At the time of writing, the data network provider’s shares are up 4% to $1.63.

What did 5G Networks announce?

This morning 5G Networks announced that it has entered into a lease agreement for the ex-Pipe Networks Data Centre in Fortitude Valley.

According to the release, the company has agreed an all-cash consideration of $1.1 million, which includes all operating infrastructure at the facility.

Management advised that the acquisition will be funded from existing cash reserves, with a generous rent-free period on a 10-year lease.

It expects the facility to be operational January 2021, with the inclusion of the latest power redundancy equipment and cooling systems. Management notes that the data centre has the capacity to support 250 racks and access to 3MW of power on dual power grid, which offers the highest level of redundancy.

This acquisition means the company now operates data centres in each state on the east coast of Australia.

Why acquire this data centre?

Management advised that this strategic investment will allow 5GN customers to connect directly to the data centre via 5GN dark fibre once the new rollout is complete.

It notes that cross selling of infrastructure aligns with the company’s focused acquisition and growth strategy. It will also accelerate the continued execution of the 5GN wholesale channel strategy for infrastructure and data centre services.

5G Networks’s Managing Director, Joe Demase, commented: “We are really excited to be exploiting our advantage of being a DC operator and fibre network owner, I haven’t seen rack space and dark fibre product bundling from one provider before, but this is what our customers are asking for. It allows our partners to grow with a fixed cost model which also includes easy migration as a result of our 6-month rack offer.”

That offer will see rental charges waived and a complementary dark fibre cross connect to any data centre in Brisbane.

More reading

• Why 5G Networks, Cedar Woods, SEEK, & Tyro shares tumbled lower today

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends 5G NETWORK FPO. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Trading was suspended on Insurance Australia Group Ltd (ASX: IAG) shares on Thursday morning after a court ruling that could have dire consequences for the insurance giant.

On Wednesday, the New South Wales Court of Appeal ruled that rejecting business interruption insurance claims on the basis of COVID-19 losses is invalid.

The decision was a shock for the industry, which thought that including COVID-19 as a “quarantinable disease” as defined in the now-repealed Quarantine Act would be sufficient to decline claims.

The Insurance Council of Australia (ICA) argued that regardless of wording, the spirit of the policies were meant to exclude pandemics.

QBE Insurance Group Ltd (ASX: QBE), which was also represented by the council in the court case, did not suspend trading of its shares.

The company stated to the ASX that business customers still must jump through other hoops to make a successful claim.

“Notwithstanding the ruling, QBE notes that the particular wording of QBE business interruption policies require a number of policy triggers to be met in order for policyholders to be entitled to indemnity for business interruption.”

Business disruption claims were expected to be capped at $5 million per occurrence, QBE added.

ICA has stated it’s considering an appeal to the High Court.

IAG and QBE have not disclosed how much this decision could impact their bottom line. But Suncorp Group Ltd (ASX: SUN) earlier this week set aside an extra $125 million to cover themselves for COVID-19 claims.

Suncorp stated to the market that, overall, it has $195 million allocated for potential claims.

“While the group continues to review the judgment, the test case outcome is not expected to affect the total business interruption provision.”

Both IAG and QBE shares have climbed more than 12% in the past month. Suncorp has risen about 8%.

The court case specifically referred to a claim made by a business customer to its insurer, HDI. But it acted as a test case for the entire industry since most insurers use similar wording in their policies.

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• Why the Downer (ASX:DOW) share price is outperforming today
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Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Agrochemicals company Nufarm Limited (ASX:NUF) today reported a significant year-on-year revenue growth of 23% in the 2 months to the end of September. This growth was driven primarily by stronger sales in Australia and Europe.

At the time of writing, the Nufarm share price is trading up 1.45% at $4.21.

What else did Nufarm announce?

The company’s gross profit increased 9% on prior comparative period, while underlying earnings before interest, tax, depreciation, and ammortisation (EBITDA) was up by 18%.

In terms of geographical results, revenues in Australia and New Zealand increased 37%, with improved weather conditions in Australia driving good demand for herbicides. Meanwhile, revenues in Europe also lifted significantly by 38%. North America was up by just 4% after storms and bushfires impacted sales.

Nufarm says the sales momentum has continued in all regions through October, providing the company with a good to start to FY21. 

What does Nufarm do?

With origins dating back more than 100 years, Nufarm is a global manufacturer of crop protection solutions and seeds. Nufarm’s products are designed to protect commercial crops from a variety of pests, weeds, and diseases, thereby maximising crop yields.  It first listed on the ASX in 1988. 

Nufarm share price performance this year

The Nufarm share price has lost almost 30% in 2020. The company recorded a statutory net loss after tax of $362 million. This was attributed to weak seasonal conditions faced in the first 6 months and the effects of COVID-19. The company has continued to suspend all dividends until further notice.  The board said it would revisit this decision in future based on the prevailing market conditions.

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Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Oil producer Oil Search Limited (ASX: OSH) today announced a significant 33% increase in contingent resources in its Pikka oil field in Alaska. This takes its total gross Alaskan North Slope 2C resources within Oil Search’s portfolio from 728 million barrels of oil to 968 million barrels of oil, a 93% increase from its original estimate in 2018. 

The Oil Search share price is down by 2.36% at the open of trade today to $3.73 amidst a broader fall in the ASX.

More details on the find

Oil Search told an investor conference this morning that the Pikka project was now well positioned for its Phase-1 single drill site in early 2021. The development will use a capital efficient approach that will deliver a breakeven cost of less than US$40/barrel, with gross capital costs of under US$3 billion.

Production from Phase-1 will support the funding for Phase-2, which will comprise the full field development incorporating two additional well pads. It expects first oil from this project in 2025.

Other news from the briefing

Oil Search said the COVID-19 pandemic had helped the company become more resilient as it made efforts to reduce its cost base.

Speaking at the conference this morning, Oil Search managing director Dr Keiran Wulff told investors:

The challenges posed by the pandemic and oil price downturn, combined with global trends and societal expectations, have been the catalyst for us to review our past performance and make sustained improvements to position Oil Search for long term success.

Mr Wulff said the company strategy included three disciplined phases: driving sustained low costs of its PNG operations, commercialising the Pikka development at a breakeven cost of less than US$40/bbl, and considering targeted complementary energy investments.

About the Oil Search share price in 2020

The Oil Search share price is a top performer over the past month, beating the overall energy sector’s performance on the back of coronavirus vaccine news. However, like all energy producers, it has not had a year to remember. In October, the company delivered disappointing third-quarter results, and said that it did not expect LNG demand to fully recover until 2027.

The Oil Search share price has lost 45% of its value this year. At today’s price of $3.73, it commands a market cap of $7.7 billion.

More reading

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Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Starpharma Holdings Limited (ASX: SPL) share price has been a very positive performer on Thursday.

At the time of writing, the dendrimer products developer’s shares are up 6% to $1.40.

Why is the Starpharma share price racing higher?

Investors have been buying Starpharma’s shares today after it released an update on its antiviral nasal spray active (SPL7013).

According to the release, additional testing has been undertaken and shows the potent antiviral activity of SPL7013 against human respiratory syncytial virus (RSV).

RSV is a common and very contagious virus that affects the lungs and airways. It is most problematic in the young and the elderly and those with weakened immune systems, or chronic heart and lung disease, including asthma. It is also one of the viruses responsible for the common cold.

The company notes that more than 177,000 adults are hospitalised and 14,000 of them die each year in the United States due to RSV infection.

Despite its prevalence and extensive efforts by pharmaceutical companies over the years, there are few strategies available to prevent or treat RSV infection. There are no vaccines and few therapeutics available to treat the infection. Furthermore, like influenza, RSV frequently mutates making vaccine development challenging.

This latest data further expands the antiviral spectrum of SPL7013 in respiratory viruses, which already includes SARS-CoV-2 (COVID-19) and H1N1 influenza.

Starpharma is also testing SPL7013 against other respiratory viruses with the intention to add these to the product claims as data becomes available.

Starpharma’s CEO, Dr Jackie Fairley, commented: “We are pleased to announce the expanded use of SPL7013 in RSV. RSV is a common virus which has significant morbidity and mortality for the elderly and those with chronic disease.”

“What these results confirm, is that SPL7013 has broad spectrum antiviral activity, and that VIRALEZE could play an important role for future pandemic preparedness. The rapid development and commercialisation of SPL7013 as VIRALEZE antiviral nasal spray is on track, with the product set to be available in some markets as early as 1H CY2021,” she added.

More reading

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Starpharma Holdings Limited. The Motley Fool Australia has recommended Starpharma Holdings Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Vocus Group Ltd (ASX: VOC) share price has dropped lower on Thursday following the release of a major announcement.

At the time of writing, the telco provider’s shares are down slightly to $4.22.

What did Vocus announce?

When Vocus released its full year results in August, management mentioned that it would soon consider its capital allocation and longer-term corporate structure.

It commented: “The accelerating momentum of the core VNS business, together with the strong performance of New Zealand and well-progressed turnaround of Retail Consumer, means we are now in a strong position to strategically consider our options regarding capital allocation and longer-term corporate structure.”

This morning Vocus revealed that it has decided to take these considerations further and has appointed financial advisers to execute an Initial Public Offering (IPO) of its Vocus New Zealand business.

According to the release, the IPO is expected to be undertaken before the end of FY 2021, subject to prevailing market conditions.

The Vocus board believes that a successful IPO of Vocus New Zealand will provide greater balance sheet flexibility and allow the Vocus Network Services business to invest in core long-term strategic fibre opportunities to extend its network reach, build on its product capabilities, and cement its position as Australia’s specialist fibre and network solutions provider.

It will also provide the board with the ability to review its long-term dividend policy.

What is Vocus New Zealand?

Vocus New Zealand is a fully integrated telco and energy provider that owns a significant national fibre infrastructure network.

It is led by an experienced management team and is an established challenger that is very strongly positioned within the New Zealand market.

The business has delivered consistent revenue and EBITDA growth over the past five years. It has also developed a core competency on the acquisition and integration of businesses that add both customer scale and capability to the existing operation.

The Vocus board believes there are now significant opportunities for organic growth and market consolidation across all market segments that will be better realised if Vocus New Zealand is an independent entity.

No details were provided on how much Vocus expects to raise from the IPO. However, with its FY 2020 results, it revealed that the carrying value of its intangible assets were $298 million.

More reading

• Why these ASX shares just stormed to 52-week highs
• Vocus (ASX:VOC) share price drops lower despite positive AGM update
• 5 things to watch on the ASX 200 next week

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The FlexiGroup Limited (ASX: FXL) share price has been a strong performer on Thursday.

In morning trade the financial services and buy now pay later company’s shares are up 10% to $1.18.

Why is the FlexiGroup share price surging higher?

Ahead of its annual general meeting this morning, FlexiGroup announced a partnership with payments giant Mastercard to expand the application and distribution of its bundll product.

Bundll is the world’s first buy now pay anywhere platform built by humm.

The bundll product, which is already live in Australia, allows customers to buy now pay later everywhere Mastercard is accepted and bundle their purchases into easy to manage instalments with inbuilt budgeting services.

According to the release, under the agreement, Mastercard will work with its partners to drive adoption and will support the development of the open-loop, work anywhere, pilot. Management notes that the platform is able to support different integration and commercial models to achieve scale in different markets.

The agreement is for five years and is expected to deliver a sustainable growth path for its humm business and expand the services that schemes can provide to customers.

FlexiGroup’s CEO, Rebecca James, commented: “The bundll platform is unique as it offers a turnkey but flexible solution to banks and other card issuers around the world. You don’t need to sign up merchants or integrate into legacy bank systems, and it will work in any regulatory environment.”

“Bundll’s proprietary affiliate programme also creates revenue sources globally, and creates a curated and unique shopping experience that is based on customer preference, not which retailer is paying for the click. Discussions are already well progressed with a number of banks under the strategic agreement,” she added.

Mastercard Australasia’s Division President, Richard Wormald, spoke positively about the agreement with FlexiGroup.

He said: “While there are lots of BNPL platforms around the world, this latest development for bundll is differentiated in the way it is able to partner with existing banking systems and provide BNPL technology and products without needing to sign up local retailers, while still generating a sustainable revenue stream. With the growth of BNPL, Mastercard understands that many issuers around the world are looking to solve for this increasing consumer preference.”

Trading update.

FlexiGroup took this opportunity to provide the market with an update on its performance so far in FY 2021.

It revealed that its portfolio continues to perform strongly with a downward trend in the 30+ days arrears performance for all segments during the first quarter. This was the result of a prudent approach to credit risk and approvals.

In light of this improved credit performance and cost management, the company expects its first half cash net profit after tax to be ahead of the $34.5 million it achieved in the prior corresponding period.

More reading

• Afterpay (ASX:APT) share price underperforming after ASIC finds more BNPL customers falling behind

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended FlexiGroup Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Altium Limited (ASX: ALU) share price is on the move on Thursday following the release of its annual general meeting update.

At the time of writing, the electronic software design platform provider’s shares are up 2.5% to $37.03.

What happened at the annual general meeting?

At the event, the company’s CEO and Chair spoke about its performance in FY 2020, its plans for the future, and trading so far in FY 2021.

In respect to the future, the company’s CEO, Aram Mirkazemi, spoke about the shift to the cloud through its Altium 365 platform. He believes this shift is all positive with no negatives thanks to its unique strategy of transformation through dominance.

He commented: “This strategy de-risks Altium’s move to the Cloud by extending our current value proposition to our customers and, at the same time, this strategy raises the bar and reinforces Altium’s position of absolute market dominance in PCB design. This combination will set a resonance that has the potential to bring about industry transformation.”

“While dominance and transformation are part of one journey, this strategy sets up two engines of growth for value creation. Our strong software business drives our dominance engine, and our new cloud platform Altium 365, is the basis of our transformation engine. From a business perspective, these two engines provide independent drive, and at the same time are complementary and reinforce each other,” he added.

The chief executive expects the shift to significantly increase renewal rates for maintenance subscription and reduce churn. He feels this should have the most dramatic impact on its revenue and its climb to 100,000 subscribers by 2025.

What about FY 2021?

Altium revealed that it is continuing to be impacted by COVID-19. However, it has been seeing positive signs in the last two months and is gaining confidence about the strength of its second half performance.

In light of this and based on its historic 45/55 revenue split between the halves, management has reaffirmed its guidance for FY 2021.

FY 2021 revenue is expected in the range of $US200 million to US$212 million (6% to 12% growth) and earnings before interest tax, depreciation and amortisation (EBITDA) is forecast to be US$76 million to US$89 million (38% to 42% growth).

Mr Mirkazemi commented: “Traditionally, our first half EBITDA margin is always lower than our second half as a stronger second half revenue positively impacts our EBITDA. I expect this to be exaggerated this year by COVID but confident that full year EBITDA margin will remain well within the range.”

More reading

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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