Category Archives: MAJOR PLAYERS

Atlassian: the Australian millionaire factory. Story in videos & pics.

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Atlassian surges in debut

Shares of Australian business software maker Atlassian soar in their Nasdaq debut.

They’re known as the “Royals” and “the chosen ones” — the select few invited to be in New York on Thursday morning to ring the bells celebrating the opening of the stock exchange and Australian tech darling Atlassian’s massive IPO.

About 40 Atlassian employees — many of whom were hand-picked by co-founders Mike Cannon-Brookes and Scott Farquhar in the company’s early years — celebrated overnight as they became multi-millionaires and Atlassian became a company with a market cap of $US5.74 billion ($7.9 billion).

Atlassian, a leading provider of collaboration software for teams with products, opened for trading on The Nasdaq Stock Market image www.money-au.com

Atlassian, a leading provider of collaboration software for teams with products, opened for trading on The Nasdaq Stock Market on December 10, 2015. Photo: Christopher Galluzzo

By the end of Thursday’s trading in the US, however, more than just those 40 became millionaires. Former Atlassian employees say more than 100 staff are now either millionaires or multi-millionaires.

It’s also understood the shares of a number of staff who joined in recent years are now worth six figures.

“There are going to be a hundred people who are going to be millionaires today — at least on paper,” a former Atlassian employee, who didn’t wish to be named, told Fairfax Media.

Atlassian co-founders Scott Farquhar (right) and Mike Cannon-Brookes image www.money-au.com

Atlassian co-founders Scott Farquhar (right) and Mike Cannon-Brookes. Photo: Trevor Collens

They added that the Royals had been “going out on lavish dinners and celebrations” while in New York in recent days and were already discussing how they should splurge their cash, and whether it should be on luxury cars.

Many are also considering investing their money in Australian start-ups, or starting their own.

“Mike and Scott’s legacy will be beyond Atlassian,” the former Atlassian employee said. “They want to make billionaires in Australia that are going to invest in Australian companies — the next wave of start-ups

Those likely to make the most from the IPO are those who joined between 2002, when the company started, and 2008. That’s when Atlassian offered employees the chance to buy shares at a much lower price than $US27, the price shares were trading for on Thursday as the market closed. For employees who were offered — and purchased — shares at 50 cents several years ago, their stake is now 5300 per cent more valuable.

While some employees chose to hedge their bets and sell some of their shares last year for $US16 to T. Rowe Price and Dragoneer Investment Capital in a financing round, many are understood to have held on to most of them.

When Atlassian received that financing, which valued the company at $US3.3 billion, Mr Cannon-Brookes declined to specify how many millionaires his company had made at the time, but said it was “not double digit”.

“That number [of millionaires] blew both Scott and I away,” Mr Cannon-Brookes said at the time to The Australian.

“That was probably the biggest achievement to come out of this [new investment] and [something] we hadn’t thought about.”

There’s never been a more exciting time to be an Australian — as Prime Minister Malcolm Turnbull would say — or, in this case, to be an Atlassian employee.

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Henry Sapiecha

AUSTRALIAN COMPANY CEOS BEHIND SOME MAJOR COLLAPSES

BEFORE BEING BETTER BIG BOSSES & BY BLOWUPS BECOME BITTER BAD BOYS

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Frozen in the moments before disaster, the sun is shining on the happy young couples who beam out from the pages of the RAMS prospectus.

In its pages, investors were promised their own slice of blue sky, a stake in a mortgage business that chairman John Kinghorn said ”offers the potential for substantial ongoing growth in the medium term”.

But the float was doomed. The storm clouds gathered over RAMS less than a month after the prospectus was filed with the stock exchange in July 2007.

The next month, just over a year before the looming global financial crisis would culminate in the collapse of Lehman Brothers, RAMS was forced to admit to a $6 billion debt crisis caused by the freezing of short-term credit markets.

While the speed of RAMS’ downfall earned it a special place in Australian corporate history, at about $735 million in lost shareholder funds it is among the smaller collapses to result from the crisis.

The Australian Securities and Investments Commission estimates that about $66 billion was lost in global financial crisis-related collapses and near-collapses including childcare group ABC Learning, investment groups Babcock & Brown and Allco, shopping centre operator Centro and managed investment scheme operator Timbercorp.

The disaster also called into question the adequacy of Australia’s system of corporate regulation, which since the Wallis Inquiry in 1997 had been based on ”light touch” principles endorsed by both sides of politics.

Despite tough laws against trading while insolvent, many of the key players escaped sanction.

And those same tough insolvent trading rules may also have provoked some of the era’s collapses, according to leading corporate lawyer Leon Zwier.

Zwier, a partner at Melbourne law firm Arnold Bloch Leibler, says the near-collapse of Centro was the most complex of the corporate crises he has been involved in.

It began in December 2007, when Centro revealed it could not roll over $1.3 billion in short-term loans, and ended with a complete restructure, court findings that directors had breached duties and a $200 million class action settlement.

”First of all the structure, with MIS, funds-of-funds, a stapled security, Australian entities, US entities, complex banking facilities at different levels through the structure, bilateral funding, a mixture of external investors – because remember there was joint venture investing and a structure designed to go in drive only and not reverse,” Zwier says.

”Coupled with the fact of regulatory breaches – all the accounts were misstated so you had a quasi-criminal prosecution running at the same time as the work out – a class proceeding by aggrieved shareholders, the debt traded to 80 different hedge funds who we had to manage together with some par lenders. How do you get instructions from 80 different creditors when each one has strong views and different goals? You want global complexity – Centro.”

While many of those who ran or invested in global financial crisis-era failures have moved on, ASIC continues its investigations.

The corporate watchdog is still pursuing civil proceedings in which it is trying to ban Queensland couple Emmanuel and Julie Cassimatis from the financial industry over the collapse of Storm Financial in 2009.

Earlier this month a jury found Opes Prime director Julian Smith not guilty of ASIC charges over his dealings with the ANZ as the stock lender teetered in March 2008. That trial came more than two years after Smith’s fellow directors, Laurie Emini and Anthony Blumberg, pleaded guilty to similar offences.

Charges against ABC Learning founder Eddy Groves were dropped last year. While the fallout from the childcare centre chain’s debt-fuelled collapse led to Groves being declared bankrupt in January, other executives involved in high-profile collapses managed to walk away with much of their personal fortunes intact.

No one from ASIC was available to talk about the regulator’s record and what it has learnt since the crisis.

Former chairman Tony D’Aloisio defended ASIC’s record in a 2010 speech, saying it ”was able to make sound judgments because we went into the GFC well prepared”.

But under his successor, Greg Medcraft, ASIC has increased its powers to take in market supervision, previously the domain of the stock exchange, and clamped down on auditors and other ”gatekeepers”.

In response to concerns that it is too slow to investigate major collapses, the regulator this week said it would ”continue to raise with government law reform concerning our investigation powers and more flexible enforcement tools”.

But for Zwier, there is too much focus apportioning blame after the collapse and not enough on taking measures to save companies – and jobs – at the moment of crisis.

”In Australia there is always this element in corporate failure of pointing the finger at someone for the failure. Often we publicly examine the directors. We hold [them] up to ridicule and contempt in the media for the failure. All of that is part of the cultural problem with our insolvency administrations: they are perceived to reflect failure and not rehabilitation.”

He says insolvency laws have the capacity to paralyse boards faced with the possibility of collapse, putting them in an ”impossible position of conflict because what might be best for the creditors .hs.. might not be best for the directors”.

”The minute they get into financial difficulty and they have short-term obligations that they may not be able to meet, solvency becomes the biggest single issue which the board focuses on,” he says.

”The definition in the Corporations Act is wholly inadequate – it’s something like this: if the company is not solvent then it is insolvent.

”Our insolvent trading laws are so draconian that some workouts might have failed because of those laws.’

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Henry Sapiecha