Friday 19th of June 2009

As a young lad solving the puzzle of the Rubik’s Cube was one of those frustrating things that took me quite a bit of time and effort. ING’s attempts to solve the puzzle of its CDO-backed funds, DYF and RIF appear to have the same characteristics. Long and slow. The company’s roadshow around the nation this week, in tandem with its joint venture partner ANZ Bank, has generated plenty of media attention. Seemingly every day there is a new story doing the rounds and each one tries to find a more sensational angle than the last. We’ve had the stories about how much ING NZ boss Helen Troup gets paid, whether the company is for sale and a raft of other stories which appear to be more fiction than fact. My guess, from what I have seen and heard, is that the Frozen Funds group of dissatisfied investors is behind a lot of this. They remind me of the sort of protest group that turns up at a rally, just for the heck of it. Rent-a-crowd type thing. I have heard others describe them more like Al-Qaeda in their approach. Having debate about the offer and what is happening is fine, but it would be nice if the protestors kept to the issue than go off on all sorts of tangents and spread rumours. You might think I am being a little harsh, possibly I am. These people have suffered a big hit, and many are feeling, rightly or wrongly, they have been duped somewhere along the line. One of the most sensible comments I have heard all week came from an ING executive who said everyone has to take a look at themselves and accept some blame. ING, ANZ, the regulators, advisers and investors. I totally agree. What’s more, as the week has gone on ING and ANZ have fronted up (besides with cash) and acknowledged mistakes were made. It’s about time advisers and investors did the same thing. I, like many others, have been asked what I think of the offer. My view, (and I am not an investor in these funds because I couldn’t understand them) is that it’s a good one. There are three choices and the cash offer looks pretty attractive. A term deposit at 8.30% is highly attractive and way better than carded rates at the moment. Also the ANZ TD is currently government guaranteed – a fact passed over at present. The bit about waiving legal rights is a tricky one. From ING and ANZ’s perspective it makes sense and is a reasonable quid pro quo for the amount of money they are putting in. As for the bit about having no guilt attached, that appears to be the reality of these types of commercial deals, love it or loathe it. If I was an investor I would probably like it because it brings the matter to an end and gives me some certainty. Holding on for a better offer looks even less likely than winning Big Wednesday this week – it didn’t happen. Likewise, holding on for rulings from the Securities and Commerce commissions and hoping they make ING and ANZ produce a better offer is something I wouldn’t put a wager on. However, I would suggest Troup is pretty good at solving the Rubik’s Cube and will have all the squares lined up soon. Some though may be a little battered.