Feeling the power of one
Former UBS Global Asset Management managing director Paul Fiani effectively torpedoed the $11 billion private equity takeover of Qantas earlier this year, now regarded as the year’s biggest corporate debacle.
Fiani, who managed 7 per cent or $700 million of Qantas stock at the investment bank, refused to accept the offer of $5.45 a share from Airline Partners Australia (APA), saying it was too low and not in the interests of his clients.
Ultimately, the Qantas shareholders rejected the APA bid, although by a very narrow margin, which Fiani later acknowledged being “very pleased” about.
“My fiduciary duty to my clients was clear and I was never going to accept the bid, as I didn’t believe for a moment that it was in my clients’ interests.
“My clients are $100 million better off as a result of the deal not proceeding, and, collectively, Qantas shareholders are $1.5 billion better off,” he reportedly said.
“If the deal had succeeded, on the other hand, that money would now be in the hands of the bidding consortium, so I’m very pleased it’s still in the shareholders’ hands.”
The fallout over the deal was that Fiani walked away from the $12 billion he managed at UBS to start a boutique fund, Integrity Investment Management, with fellow former UBS staffer Shawn Burns.
Fiani acknowledged facing “tremendous pressure” to withdraw his opposition to the deal from a lot of people who wanted to get it across the line.
“There was lots of money up for grabs and that obviously comes with its bit of pressure.”
Some of the criticism came from no less a source than then Qantas chairman Margaret Jackson. She reportedly said that shareholders had a “mental problem if they didn’t understand the intricacies of this deal”.
Fiani admitted it was “pretty disappointing” to have quit UBS after 11 years with the firm, but said he did so because he felt his position at UBS had “become untenable”.
On the deal itself, he said he would have liked to see all shareholders given better information and for the company to more broadly consult with the owners regarding the value of the company.
“We were the largest shareholder and I was unable to meet with the chairman until after the board had already recommended the bid.
“From my perspective, that’s a bit like a real estate agent selling your home without asking you what you want for it.”
— Liam Egan
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