From today's AFR paper edition.
What David Koch did next
One of Australia’s most prominent financial commentators is getting into the capital solutions business.www.afr.com
David Koch teared up last year telling viewers he was departing Sunrise, the oft-dominant morning show he had spent (a remarkable) 21 years playing its dorky finance dad.
And good for him, He’d get his mornings back, and more time for his other interests.
There’s his club president role at Port Adelaide. Its success has brought him into the conversation to succeed the imperious Richard Goyder running the AFL. And Pinstripe Media (with his son, Alexander “AJ” Koch), which shares Sydney office space with his other media start-up, Ausbiz, a streaming TV channel and collection of podcasts that covers finance and business run by co-founder and owner Kylie Merritt.
He and wife Libby Koch own 31.8 per cent of Ausbiz. There’s also big-name backers such as former treasurer Joe Hockey and renos-over-receipts tycoon Sanjeev Gupta, whose 2.2 per cent stake must be borne of his relationship with Port Adelaide.
This week, it took a baffling strategic turn. It was announced that ASX-listed ARC Funds Limited would take a 30 per cent equity stake in Ausbiz Capital, a new, wholly owned subsidiary of Koch’s media start-up that’s being described as a “capital markets business”.
ARC Funds will tip in $1 million in three tranches over three years. This would be seed money for Ausbiz Capital, which would offer “high-quality financial products”. Among those listed were high-interest savings accounts, term deposits, capital raisings, alternative investments, managed funds and trading services.
Ausbiz Capital – run by managing director Simon van Es, and with Koch on its investment committee – will use the money in “marketing and promotions” to Ausbiz Group’s “existing database” of 110,000 subscribers.
That is: Koch’s parent company will own 70 per cent of a side capital markets business that says it will do commercial deals with its own media start-up so it can get access to its subscribers and email list. And that is in order to sell them financial products.
Are there screaming conflicts at every turn? Oh, no question. But hey: don’t let it get in the way of this fantastic new media business model!
ARC up
If Ausbiz Capital’s new equity partner was a reputable dealer such as (pick any) Goldman Sachs or say, Barrenjoey, there might be something interesting here. Instead, ARC Funds looks like a firm in D-grade.
ARC Funds was formerly Australian Rural Capital. In 2016, it was outed as the partner for China’s Shanghai Pengxin Group, which sought to acquire South Australian cattle company S. Kidman & Co. (It would eventually fall into Gina Rinehart’s hands.)
It renamed in 2021 and currently trades as a penny stock on the ASX. Its shares are worth 9¢, while it has a market cap of $3.4 million. Last year, ARC Funds made a post-tax loss of $829,938 on revenue of $91,897.
How does it suppose to market products or securities when it barely exists? Or rather, what does it say about the quality of whatever dogs breakfast products they get access to? That will be up to Koch and Ausbiz Capital to filter it out.
It is easy to raise eyebrows at would-be rivals in the overly concentrated market of financial and business media. Those on the fringes, such as The Market Online (owner of pump-and-dump forum HotCopper) need to make money in a murky space. Disclosed and barely disclosed sponsored content, and pay-for-play deals, flourish alongside straight news.
But who is Kochie kidding? On his Ausbiz profile, he opens his bio with: “TV is my hobby, but business is my passion.” If this is his idea of business, maybe he should have stuck with TV.
Nepotism and potential conflicts of interest in a Koch venture? I just don’t believe it.
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