Chris Craddock’s big idea for GrainCorp

“I nearly fell over when I saw he’d got this far,” said one person who has met him.

Big pitch

In the past five years, Craddock has met numerous financial markets types to pitch his idea. Some discussions didn’t get beyond one meeting, others went further. Craddock, known to some as Crash, has found his way into some of the top investment banks including UBS, HSBC and Macquarie, now Graincorp’s adviser. At one point, he met with funds manager Caledonia Investments, though conversations didn’t progress far.

But it wasn’t until he met Shepherd on the advice of a former investment banker about three and a half years ago that it started to come together for Craddock.

Was it the meeting with Shepherd that changed Craddock’s life?

“There’s no doubt about that – that’s the story of many people’s lives! For better or worse,” says Shepherd, laughing loudly.

Craddock declined to be interviewed for this article, on the grounds that he doesn’t want the focus to be on him. Born in South Australia, Craddock’s career in financial services firms was fairly brief, working at Bell Asset Management and Deutsche Bank in fairly junior roles. Later, he worked at Swiss Re and became self-employed, owning a part share in a Brisbane bar, among other things. But mainly he chased his structuring dream, a focus that has unnerved more than a few people who have met him, and who point out he has no real experience in pulling off this scale or type of transaction.

But Shepherd – who has people with ideas come across his desk fairly often – says in Craddock’s case, it’s a sign of his commitment and understanding of the opportunity the deal presents.

“I think in great achievement – whether in business, science, arts or football – you have to have people who are prepared to sacrifice … [if you’re not prepared to] then you’re not really fair dinkum,” Shepherd says.

“He brings to the table a concept which he has developed in detail which is unique and extremely clever. He also brings to the table this enormous capacity for work, and the capacity to bring things together. He’s a rare person … he works seven days a week, all night, it doesn’t worry him.”

But Craddock isn’t a complete ascete: the pair regularly go to the football and cricket together, have a drink, and enjoy a good dinner. “He’s good fun to be with,” Shepherd says.

Scarce details

In part, so much of the focus is on Craddock because the details of the Long-Term Asset Partners proposal remain scarce.

On the proposal GrainCorp described it as a “complex financing structure with significant leverage”. Goldman Sachs is providing $3.2 billion in acquisition facilities and $400 million from infrastructure debt investor Westbourne Capital, which suggests very little equity is required. LTAP is offering Graincorp shareholders $10.42 a share. The deal is speculated to also include Allianz to do the whole of company securitisation. LTAP said it has a 4.2 per cent interest in GrainCorp, acquired since 2016, though it hasn’t said how this was funded.

 

Many details aren’t being released, apparently because of concerns its intellectual property will be jeopardised if it’s shared.

“That’s odd – but you can get away with odd for a while with Tony Shepherd and Goldman Sachs involved. They will have to come clean in the scheme documents,” said one person, who also asked why Graincorp wouldn’t just do the deal itself if so little equity is required.

Craddock, alongside LTAP partners Shepherd, former Aurizon chief executive Lance Hockridge and professional director Andrea Staines, each hold 25 per cent of the vehicle.

Credible support

Having Shepherd and the rest of LTAP on board has lent Craddock credibility. So too has Goldman Sachs, which is prepared to use its balance sheet to support the transaction, subject to due diligence.

 

Some estimate the bank could make more than $50 million from this transaction if it goes ahead. The reason this deal has the potential to be so lucrative is because of the bridging finance, and possibly the potential to on-sell any products to clients for the insurer, speculated to be Allianz. In fact, the fees from providing bridging finance are thought to be where the money is, and one reason why the bank chose to fund it themselves.

Alongside that is that this type of deal is Goldmans’ bread and butter. It’s good for the brand, and even more so if the structure is as innovative as is being heavily hinted.

But Craddock and LTAP aren’t the only ones to have closely looked at this sort of structure for GrainCorp. Caledonia is understood to have considered a whole of company securtisation-style transaction when Archer Daniel Midlands was in discussions with the company, though the takeover was ultimately killed by the then Treasurer on national interest grounds.

Back then, the notion that a foreign multinational would own such a crucial piece of infrastructure was too uncomfortable to risk. Now it’s a maverick idea in the form of a highly secretive, complicated and heavily geared trust. The true genius will be in getting it over the line.

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