Australian Biotechnology: A 10-Year Study of Investor Performance

A recent study assessed the investor performance of the Australian drug development biotech (DDB) sector over a 15-year period from 2003 to 2018. The current study builds on that research and extends the analysis to 2020, using a 10-year period starting 2010, to exclude the impact of the global financial crisis in 2008/09. Based on a value-weighted portfolio of all 41 DDB firms, the overall sector delivered a negative annualized return of -4.1%. Individual firm performance was also assessed using the compound annual growth rate (CAGR) in share price over the period as a measure of investor outcomes. On this basis 68% of firms produced negative CAGRs over the period, and of the 32% of firms that produced positive CAGRs, six firms produced CAGRs greater than 20% per annum and in three cases of recently-listed firms, the CAGR’s were greater than 50%. Overall however, the sector overall delivered very poor investor returns and despite a relatively large number of listed biotech firms, Australian biotechnology continues to be small and weak in terms of its contribution to global biotechnology industrialization. As such it lacks the critical mass to grow a robust bioeconomy based on drug development, which remains the standard-bearer of biotechnology industrialization.

Comparative analysis of the relative attractiveness of the current fiscal terms in the South East Asia region

This paper aims to assess the relative competitiveness of the current fiscal terms in South East Asia in the context of changes proposed and implemented across the region. A discounted cash flow (DCF) analysis was carried out based on the generic fiscal terms of Brunei, Indonesia, Malaysia, Thailand, and Vietnam based on an offshore, shallow water development. Where applicable, a comparison will be made against the previous fiscal terms of the country. Analysis will focus on investor returns and from the host government perspective evaluating net present value (NPV), internal rate of return (IRR), and government take. The fiscal terms were also assessed on whether they are progressive or regressive and provide an equitable return to both investors and host governments. Indonesia, Thailand, and Malaysia have seen recent shifts in their fiscal terms with new terms introduced in 2017, 2018, and 2021, respectively. Indonesia saw the introduction of the Gross Split Production Sharing Contract (GS PSC), which based on this analysis does not appear to be an improvement on the previous Cost Recovery Production Sharing Contract (CR PSC). Thailand saw the introduction of a CR PSC which was applied to the two expired offshore, producing, blocks. Based on our analysis, the newly introduced fiscal terms for Malaysia appears to provide a significant improvement to the previous terms and is likely to encourage further investment. Governments and regulators will face greater pressure to provide further incentives and greater flexibility to attract investments in the face of maturing fields, marginal fields, challenging sour gas resources, and capital constraints resulting from and Environmental, Social, and Corporate Governance (ESG) pressures on oil and gas companies.

Impact of the Finance Act 2020 on Gas Utilization Projects

The newly passed Finance Act 2020 (FA2020) in Nigeria is reviewed especially as it relates to the oil and gas industry. The review is partly executed by modeling the specific provisions of the Act that impact gas utilization projects. The effect of the provisions on investor returns as well as the extent to which government objectives are met is ascertained – the government objectives being to prevent tax leakage via excessive financing costs, as well as encourage gas development and utilization. A qualitative assessment of the FA2020 is first conducted to examine its provisions applicable to the oil and gas sector. Furthermore, a spreadsheet Discounted Cash Flow (DCF) economic model of a gas central processing facility is built. A hypothetical $800Million (CapEx), 300mmscfd gas processing facility, which is 70% debt financed is modeled by incorporating the provisions of the FA2020. The metrics of the project (both investor and government) are then compared under the scenarios of with and without the FA2020. Key results indicate that the economic returns to investor in the gas processing facility are still largely preserved at a healthy level, even as government take improves by $102Million due to the FA2020. Specifically, without the FA2020, investor returns an IRR of 21.11% while due to the FA2020, investor IRR declines to 19.79%. Sensitivity analysis serves to illustrate one of the aims of the FA2020, which is to prevent tax loss from high cost of financing. Lengthening the tenor of loans reduces the fraction of the financing costs that is tax deductible. The modeling result shows that, ceteris paribus, for one (1) year increase in loan tenor, the amount of financing cost that is tax deductible reduces by 5%. Another important outcome is that for every $1 of government receipts preserved/enhanced by the FA, the investor NPV declines by 38cents This impact assessment of the FA2020 on gas utilization projects is conducted against the backdrop of several government pronouncements and policy positions to encourage domestic gas development. Financing plays an important role in delivering gas projects, consequently the evaluation of the impact of the FA2020 becomes imperative. This is to allow an examination of the effect of the Act on the ability to meet the strategic objective of powering the economy via gas while fulfilling Nigeria’s climate change commitments by deeper adoption of gas as a transition fuel.

EXPRESS: Despite Efficiencies, M&As Reduce Firm Value by Hurting Customer Satisfaction

Most researchers focus on the effect of mergers and acquisitions (M&As) on investor returns and overlook customer reactions, despite the fact that customers are directly impacted by these corporate transformations. Others suggest that in M&A contexts, a dual emphasis of customer satisfaction and firm efficiency is both likely and beneficial. In contrast, the authors demonstrate that M&As not only do not yield a dual emphasis but also cause a decline in customer satisfaction to the extent that it eclipses any gain in firm value from an increase in firm efficiency. A quasi-experimental difference-in-differences analysis and an instrumental variable panel regression provide robust evidence for the dark side of M&As for customers. The authors use the attention-based view of the firm to demonstrate that post-M&A customer dissatisfaction occurs because of a shift in executive attention away from customers and toward financial issues. In line with the related upper echelons theory, they find that marketing representation on firms’ board of directors helps maintain executive attention on customers, which mitigates the dysfunctional effect of M&As on customer satisfaction. This research identifies a negative M&A-customer satisfaction relationship and highlights executive attention to customer issues and marketing leadership as factors that mitigate this negative relationship.

The costs and risks of Brownfield redevelopment versus Greenfield development: a priveat sector perspective on the effectiveness of community incentive packages. A case study of Waterloo, Ontario

Traditionally, there has been minimal interest on behalf of developers, land owners as well as private sector stakeholders to redevelop brownfields (De Sousa, 2000). The fears of real or perceived contamination have made the redevelopment project too expensive and risky to develop profitably. Limited government funding and assistance to the private sector for brownfield redevelopment further complicates brownfield redevelopment. This research investigated Ontario’s Community Improvement Plans with brownfield provisions and how they quantitatively aid investor returns. Hypothetical scenarios for a multifamily residential development were generated for both hypothetical brownfield and greenfield sites where brownfield incentives could be implemented. The pro forma analysis revealed that a full exemption from regional development charges (RDC) had the greatest effect on investor returns (NPV and IRR) followed by the joint TIEG offered in the City of Waterloo. Greenfield development is the most financially feasible option with no added costs or risks from contamination.

The costs and risks of Brownfield redevelopment versus Greenfield development: a priveat sector perspective on the effectiveness of community incentive packages. A case study of Waterloo, Ontario

Traditionally, there has been minimal interest on behalf of developers, land owners as well as private sector stakeholders to redevelop brownfields (De Sousa, 2000). The fears of real or perceived contamination have made the redevelopment project too expensive and risky to develop profitably. Limited government funding and assistance to the private sector for brownfield redevelopment further complicates brownfield redevelopment. This research investigated Ontario’s Community Improvement Plans with brownfield provisions and how they quantitatively aid investor returns. Hypothetical scenarios for a multifamily residential development were generated for both hypothetical brownfield and greenfield sites where brownfield incentives could be implemented. The pro forma analysis revealed that a full exemption from regional development charges (RDC) had the greatest effect on investor returns (NPV and IRR) followed by the joint TIEG offered in the City of Waterloo. Greenfield development is the most financially feasible option with no added costs or risks from contamination.

Optimization of Capital Distribution and Composition of a Shipping Company Fleet Through Evolutionary Algorithms

The research examines the optimization of fleet management of a shipping company through control algorithms, as finding an algorithm that will reduce a marine company’s exposure to risk by diversifying its fleet composition is one way to make it dominant. The study focused on three companies that, in 2014, invested US$$1 billion in a fleet of tankers, using three different techniques to optimize their fleet composition: equal number of ships of all types, the established risk minimization model and the proposed Risky Asset Pricing maximization model. Seven years of data was used for the synthesis and 4 years of data was used for the evaluation. The research findings show that classic portfolio management through risk minimization is ineffective, as it appears to reduce performance below what is a random or evenly distributed fleet. Comparing the three methods, the superiority of the Risky Asset Pricing model is clear. This algorithm looks for solutions where the demand for ships is low but has enormous fluctuation potential and seeks to identify ships that are at high risk with great potential for price increases to maximize investor returns. The value of the research lies in the identification of methods to optimize capital distribution and composition of a shipping company fleet, which presents valuable insights for the benefit of scholars and maritime companies. Moreover, and contrary to extant works that focus on Markowitz’s theory, this article instead describes how evolutionary algorithms can be used to optimize fleet management.

Australian Biotechnology: Promissory Expectations and Ecosystem Performance far From the Global Superclusters

Australia is an interesting case study of biotechnology ecosystem development. Despite its distance from the US biotechnology superclusters, the country has had high expectations for its potential development into a biotechnology superpower. These expectations have not been met over the last two decades. Despite generous R&D tax incentives and a robust network of public research organizations (PROs), the local biotechnology industry has remained small and weak, without a single ‘big biotech’ emerging. Cluster analysis over 11 years of all private and public DBFs indicated that the PRO network output failed to translate to the development by the local biotech industry of drug candidates that could attract Big Pharma deals. Analysis of the investor returns over 15 years from all public drug development biotech firms (DDBs) showed that not a single firm produced attractive long-term investor returns and the sector overall generated negative returns for investors. Despite high promissory expectations, favorable government policies and an inflated view of the quality of the country’s science output, Australia has failed to create a sustainable biotechnology ecosystem. Some of the reasons are identified and suggestions are offered for changes in government policy that could improve value creation by the local biotech sector.

Art as an Asset: Evidence from Keynes the Collector

The risk-return characteristics of art as an asset have been previously studied through aggregate price indexes. By contrast, we examine the long-run buy-and-hold performance of an actual portfolio, namely, the collection of John Maynard Keynes. We find that its performance has substantially exceeded existing estimates of art market returns. Our analysis of the collection identifies general attributes of art portfolios crucial in explaining why investor returns can substantially diverge from market returns: transaction-specific risk, buyer heterogeneity, return skewness, and portfolio concentration. Furthermore, our findings highlight the limitations of art price indexes as a guide to asset allocation or performance benchmarking. (JEL B26, C43, G11, G12, G14, Z11) Received: September 7, 2018: Editorial decision: November 24, 2019 by Editor: Nikolai Roussanov