Rio Tinto’s $109bn dilemma

👋 G’day

Today’s brief:

• Rio Tinto is debating a hefty capital raise to boost its ASX shares.

• ASIC uses new powers to force ASX to publish its CHESS fees.

• Baker McKenzie approves financial integration across offices.

Here’s the latest to accompany your morning ☕️

PRACTICE POINTS

ACCC’s hit list

• The ACCC has unveiled its enforcement priorities for 2025-26, and here’s what’s on their radar:

  • The rollout of the new merger control regime, with the draft process and analytical guidelines coming soon, will help businesses navigate the changes.

  • Keeping tabs on competition in supermarkets, essential services, and the ever-growing digital sector.

  • Taking aim at greenwashing, with a sharp focus on environmental claims.

  And that’s not all—new priorities also include cracking down on unsafe products for kids and tackling the murky world of misleading surcharges, with a push to make sure all add-on costs are crystal clear for consumers.

• Late last year, the Crimes Legislation Amendment (Combatting Foreign Bribery) Act 2024 kicked in, and companies are now on the hook for failing to prevent bribery of foreign public officials by an "associate" (ie, anyone acting on the company’s behalf). Risk assessments and robust procedures are now a must if they want to have a shot at using the "adequate procedures" defence down the line: HSF

• ASIC is flexing its new powers on the ASX. After ASX's CHESS system failed, ASIC is now forcing the exchange to benchmark its post-trading fees and allow competitors access to its services. Brokers have long complained about high costs, citing the ASX’s monopoly on settlement services. Now, ASIC is pushing for fairer pricing, transparency, and non-discriminatory access to encourage competition. The changes are set to roll out in three months. The regulator’s aim? Ensuring a more competitive and investor-friendly market: AFR

WORD ON THE STREET

Insurance sector shake-up

• Insurance partner Grant Mitchell is making moves, joining Mills Oakley from MinterEllison. This follows a wave of shake-ups in the insurance sector, with Hall & Wilcox poaching a 20-strong team from Holman Webb and McCabes snapping up 10 from HBA Legal: Lawyers Weekly

• Global powerhouse Baker McKenzie has given the green light to greater financial integration across its 70+ offices, with a whopping 90% vote in favour of the change. While the firm is keeping its Verein structure intact, the move is all about aligning operations, slashing costs, and boosting profitability: Law.com

• Clayton Utz, Herbert Smith Freehills & King & Wood Mallesons play key roles in Mitsui’s $8.4bn purchase of a 40% stake in the Rhodes Ridge project. CU and HSF guided the sellers, VOC Group and AMB Holdings (owned by the Wright and Bennett families), while KWM went to bat for Mitsui, the Japanese conglomerate now eyeing a piece of Rio Tinto’s iron ore empire: Law.com

TALKING POINTS

UK firms’ social mobility push

• UK law firms are stepping up their efforts on social mobility, with Simmons & Simmons the latest to set a target of at least 20% of employees coming from lower socio-economic backgrounds. This follows in the footsteps of Slaughter and May, who led the charge in 2023, and Freshfields, which set a similar goal for its 2024-26 trainee cohorts last September.

• Developments on the rogue email that was sent to all Slater & Gordon staff that purported to be from outgoing chief people officer Mari Ruiz-Matthyssen, who says she has been “wrongly accused”. Well, Ms Ruiz-Matthyssen is now taking legal action in light of the PR crisis. She claims the email gives a “clear indication as to the likely identity of the sender.”

• Elon Musk’s “justify your work” approach has now made its way to the federal judiciary, with some judges and staff receiving emails demanding a list of five accomplishments from the prior week. The judiciary office quickly advised staff to ignore the request. Critics are describing it as “as profound a violation of the separation of powers as one could conceivably imagine”: Bloomberg

• New divorce settlement laws require judges to factor in domestic violence when dividing assets. Robert McClelland, Deputy CJ of the Federal Circuit and Family Court, says the "cultural effect" of these reforms will be huge, with DV perpetrators facing the potential for "very significant financial consequences". And with over 80% of parenting and property matters in the Family Court last year involving domestic violence allegations, this shift could be a game changer: AFR

TREASURY

DEAL ROOM

Rio’s liquidity gamble

• Rio Tinto is weighing up a capital raising to boost its liquidity on the ASX, with 77% of its shares currently listed on the LSE and just 23% on the ASX. CEO Jakob Stausholm has expressed a preference for a more balanced split, but balancing the books would require issuing a whopping $109.2bn worth of shares in Aus: AFR

• Perpetual’s Wealth Management arm is back on the market now that KKR has backed out. Oaktree Capital Management and TA Associates are now circling as potential buyers. Meanwhile, KKR and Perpetual are locked in a spat over the payment of a break fee by Perpetual: The Australian, The Nightly

• Domain Group is still weighing CoStar’s $2.65bn buyout offer (at $4.20 per share), enlisting UBS as its takeover defence adviser. Sources suggest Domain’s major shareholder, Nine, might hold out for a sweeter deal—possibly aiming for an offer closer to $4.50 per share: The Australian

• Fenix Resources has agreed to a Bid Implementation Agreement to acquire CZR Resources under an all-scrip off-market takeover at a 27% premium. Hamilton Locke acts for Fenix, while Thomson Geer acts for CZR.

SECTOR SPECIFIC

Founder vs Co-Sec

🚜 DIGGERS

• After the AFR exposed its lack of paid parental leave, ASX-listed mining services company Macmahon has been shamed into action, rolling out a basic 12-week parental leave scheme for primary carers: AFR

• With east-coast gas shortages looming, Australia’s biggest gas infrastructure player APA is putting $75m on the table to boost its pipeline capacity by 24%. The goal? To avoid needing to import LNG into NSW and Victoria: The Australian

• After a rough earnings season, lithium miners PLS, IGO, and Mineral Resources have posted their largest first-half losses in over six years. No dividends, and now, it’s all about cost-cutting and potential consolidation in the sector. Looks like the lithium boom might be hitting a bump in the road: Bloomberg

🏦 FIN

• Shares of Australia’s top banks took a breather yesterday after an 8-day sell-off that erased over $63bn from their market value. The Big Four banks enjoyed record growth last year, but last week’s rate cuts sparked a major sell-off, with CBA losing as much as 10%: Reuters

• Aussie super funds are now heavily exposed to the US, with one in every $5 of super savings—about $800bn—invested across the pond. While the US has historically been a strong performer for returns, there are growing concerns that Trump’s policy chaos could put those gains at risk: Capital Brief

🏡 RETAIL & REAL ESTATE

• US retail giant Target is facing consumer backlash after scaling back its DEI policies, following in the footsteps of Walmart, McDonald's, and Ford. American shoppers aren’t happy, with foot traffic dropping by nearly 9%: AFR

• Does the gov have blood on its hands in this housing crunch? A survey by WA real estate portal REIWA has revealed that 60% of respondents view stamp duty as a major barrier to home ownership. The findings are fuelling calls to raise the threshold for first homeowner duty concessions and downsizer concessions.

📱 TECH

• Billionaire founder of software company Atlassian, Mike Cannon-Brookes has accused his former co sec of using his personal email to secretly send a trove of confidential documents about his private businesses to his estranged wife. The leaked docs included everything from employment contracts to resumes and police checks. Safe to say, Kevin Chiu is out of a job. And Cannon-Brookes is now taking him to the NSW Supreme Court, hoping to prevent Chiu from keeping or sharing any of the sensitive info: AFR

• Australia’s fintech sector saw a solid $1.1bn in investments in H2 2024. KPMG’s Pulse of Fintech report revealed a significant uptick from the previous year, though it’s driven by two massive deals. The $540m Experian-Illion acquisition and $197m Lonsec buyout have somewhat skewed the numbers, as smaller fintech startups continue to struggle. Seed-stage funding is particularly tough to come by, with VC firms focusing on more mature, profitable fintechs. Now FinTech Australia is calling for government action to adjust tax incentives and improve the funding environment for early-stage businesses: Capital Brief

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