HSF's merger tensions

👋 G’day

Today’s brief:

• HSF-Kramer's transparent voting for their big merger sparks tension.

• 70% of employers have tougher remote working policies.

• Tech salaries eclipse lawyers, with enterprise architects topping the list.

Enjoy your morning coffee ☕️

PRACTICE POINTS

Superannuation for teens?

• Under a regime designed in the '90s, employers aren’t required to make super contributions for employees under 18 if they worked less than 30 hours a week—that’s right, you might not have been paid super for your high school job. Now Rest, the industry super fund for retail workers, is pushing for an overhaul, calling the current system “discriminatory and arbitrary”. If Labor agrees, employers could face an extra $370m in annual contributions: AFR

• Joe Longo, chair of ASIC, has warned private equity and pension funds: don’t resist efforts to bring more transparency to private markets. With less visibility on deal sizes, valuations, and potential conflicts, ASIC is focusing on private markets, which have seen a recent surge in deal activity. Longo has noted some "pushback" from the PE and legal sectors, with larger investors “dragging their feet” in response: The Financial Times

• More regulator warnings. AUSTRAC has warned 50 cryptocurrency exchanges, expressing concerns they’re being used to launder crime proceeds, including from human trafficking and drug dealing. The regulator says these exchanges have failed to report suspicious transactions, breaching anti-money laundering and counterterrorism financing requirements: AFR

WORD ON THE STREET

No room for dissent

• The partner vote on the HSF-Kramer Levin merger is fast approaching. Insiders expect the vote to be transparent, with each partner’s vote visible to others, especially management. A cynic might argue this setup will quash any anonymous dissent, ensuring the merger hits the 75% approval mark. The firm will have a few months to settle on a compensation structure if it passes. One thing’s for sure: any new structure will need to address the $1.1m gap in average profit per equity partner—$3.7m at Kramer and $2.6m at HSF: Law.com, AFR

• Legal tech provider Plexus has appointed David Smith, former partner at Gadens and Corrs, as legal practice director. Plexus helps in-house legal teams streamline operations, automate routine tasks, and boost efficiency: Lawyers Weekly

• McKinsey says it will promote a "diverse meritocracy" over DEI but reassures its workforce that hiring and promotion practices won’t change. Unlike rivals like Accenture, McKinsey doesn’t use quotas but aims for gender parity as an aspiration. While global MP Bob Sternfels emphasised the firm’s commitment to diversity, critics note the obvious gap between McKinsey’s research on diversity and its lack of formal hiring targets. And there’s McKinsey’s 30% female partners representation, below firms like KPMG, Deloitte and PwC: AFR

TALKING POINTS

Is WFH under threat?

• Corporates continue to tighten their remote work policies, with 27% demanding employees be in the office 5 days a week. In the legal industry, law firms are opting for trust over mandates. But with over 70% of employers requiring staff to be in the office most of the week, will flexible working arrangements still be the norm for law firms? Read more here.

• Meta and TikTok aren’t thrilled with the government’s decision to exempt YouTube from the social media ban. A Department of Customer Service report from September found YouTube was the most-used platform among kids aged 5-15. Both social media giants pointed to the research and questioned how YouTube’s carveout aligns with the ban's stated objectives: Capital Brief

• Xi Jinping met with top tech execs, including Alibaba’s Jack Ma and Huawei’s Ren Zhengfei, urging them to “show their talent” and boost China’s economy. The meeting signals Ma’s return to the government’s favour after his 2020 run-in over regulator criticism. With the economy slowing, Xi is pushing for a private push to fight Trump’s America: The Economist

• Does your boss get ‘Sunday Scaries’? Well, they aren’t alone. The average person experiences ‘Sunday Scaries’ 36 times a year.

TREASURY

DEAL ROOM

CDC’s $16bn shake-up

• The data centre M&A wave continues. CDC Data Centres has wrapped up its auction for a 12.5% stake in its $16bn business, with major shareholders Infratil and Future Fund using their pre-emption rights to snap up the stake. With Infratil already holding 48.5% of CDC, it could soon become the majority owner. This comes as CDC powers ahead with its expansion across Aus and NZ, eyeing a 2.2GW capacity: AFR

• Insignia Financial is demanding binding takeover offers within the next two weeks from private equity firms aiming to acquire the financial firm: Bloomberg

• BlackRock is tossing its hat into the ring for the $2bn sale of a 50% stake in Zenith Energy. But it's up against a crowded field of heavy hitters. We're talking Kiwi investor Morrison, UBS-backed Swedish firm EQT Partners, and Morgan Stanley Infrastructure Partners: AFR

• Engineering M&A is on the horizon. Worley’s half-year results next week could put the $8bn engineering firm in the M&A spotlight, especially as its rival, Wood, struggles with heavy debt. Wood’s already selling assets worth $150m to $200m, but some speculate it may offload entire divisions. Worley might be poised to pounce, particularly on Wood’s high-margin consulting and mining/LNG-related engineering units: The Australian

• Tyro Payments has been a rough two years. The eftpos terminal operator’s shares have halved since Potentia Capital pulled out of a potential buyout. Now sitting at a market cap of around $430 million, Tyro’s sending a pretty clear signal—they’re open for takeover: AFR

• The end of the battle for Fuji Soft. Bain Capital has formally ended its pursuit of the Japanese IT company, confirming it won’t make a tender offer and conceding to rival KKR: Private Equity Insights

SECTOR SPECIFIC

Rio hides delays

🚜 DIGGERS

• Rio Tinto reassured investors that its multibillion-dollar Oyu Tolgoi copper mine expansion in Mongolia was on track and on budget. But behind closed doors, the company held crisis talks over major delay warnings. Documents from Rio's legal battle with US investors revealed a report from October 2018, months before the company publicly acknowledged a nine-month delay: AFR

• China’s coal plant construction hit its highest level in nearly a decade last year, throwing a wrench in President Xi Jinping’s promise to peak carbon emissions before 2030: Financial Times

• BlueScope, Australia’s largest steelmaker, isn’t worried about Trump’s steel tariffs—they’ve noted a 20% spike in US steel prices since the tariff was announced. But BlueScope’s real worry? China. The concern is that the tariff could push more Chinese steel into Australia, threatening local production. Now BlueScope is lobbying Albo to implement harsh anti-dumping measures against China: The Australian

• St Barbara is fighting its $210m tax bill issued by the Papua New Guinean tax authorities. The gold miner “reject the IRC’s arguments which have been incorrectly applied to the tax legislation”. With a $280m market cap, we hope they’re right: The Australian.

🏦 FIN

• CBA continues to outpace its rivals, with Westpac and Bendigo Bank struggling under cost pressures. Bendigo’s half-year profit slumped 23.2% to $282.3m. While Bendigo’s CEO acknowledged CBA’s dominance, he highlighted their focus on niche markets like younger customers and retirees. But yesterday’s share price plunge suggests investors aren’t convinced: Capital Brief

• After years of investing abroad, Australia’s biggest super funds are shifting focus back to domestic government bonds – now seen as some of the safest assets amid Trump’s trade-war threats, which continue to rattle global markets.

🏡 RETAIL & REAL ESTATE

• Dexus is back in black, making a $10.3 profit due to improved conditions for builder owners.

• Billionaire publican Bruce Mathieson tried to swoop in on Star Entertainment’s Gold Coast property late last year with an offer that valued the resort at around $550m—well above Star’s current market cap of $373m. Apparently, the proposal came in just weeks before Star started prepping for VA: AFR 

• Meanwhile, Star’s former chief casino officer, Gregory Hawkins, has settled with ASIC over allegations he failed to ensure the company met anti-money laundering obligations. Hawkins will pay a $180k penalty and has accepted an 18-month disqualification from managing corporations. Hall & Wilcox represented Hawkins, while NRF is backing ASIC: Capital Brief

📱 TECH

• Online casino operator, Stake.com is exiting the UK after an OnlyFans creator posted a video mentioning plans to have s*x with "barely legal 18-year-olds” all while the Stake.com logo was on display. The UK Gambling Commission issued a warning to the casino operator, and in response, Stake has decided to cut ties with the UK market: AFR

• The Australian has revealed the highest average salaries for tech bros/gals.

  • Enterprise architects top the list again with an average of $231k

  • Followed by big data architects and program managers earning $220k and $210k, respectively.

  Despite high salaries, 2024 was a flat year for tech hiring, with fewer job ads than during the dotcom bust – woah. However, some predict salaries will jump by 6-10% in 2025 as interest rates fall and job confidence rises. And AI salaries are set to surge as companies ramp up AI projects.

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