"Senator Santoro admitted last week to acting as a sub-underwriter for capital raisings associated with 14 companies including Watpac, which in May last year announced it would develop 10 retirement villages "from North Queensland to Ballina" in NSW with investment bank Babco-ck & Brown.
The capital-raising, just four months after Senator Santoro's appointment to the ministry, was announced two weeks later. Watpac sought $41.2 million to fund its push into NSW and diversification into retirement villages.
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he federal Government controls tax rulings that affect retirement villages.
Watpac managing director Greg Kempton said he had not known until Friday's announcement that Senator Santoro had acted as a sub-underwriter.
"Anyone investing in Watpac or acting as an underwriter would have done pretty well in the last few years," Mr Kempton said.
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Senator Santoro would not reveal the size of the 72 share holdings he failed to disclose.
Mr Kempton said he was unsure whether Senator Santoro had traded shares in Watpac.
The Brisbane office of stockbroking giant ABN AMRO Morgans was the lead-underwriter for at least eight of the capital raisings where Senator Santoro acted as a sub-underwriter.
Those eight companies had collectively raised more than $250million in the past 18 months.
ABN AMRO Morgans did not return calls yesterday.
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To minimise risk, stockbrokers then engage sub-underwriters who agree to soak up a proportion of any leftover stock for a fee of between 2 per cent and 3 per cent of funds raised. Watpac and Babco-ck & Brown last May announced the establishment of a business, FreeDomain, which it said was to establish "self-contained" villages for ageing baby boomers. The partners said they planned to create a "coastal chain of estates from North Queensland to Ballina".
"FreeDomain has been specifically designed to address the needs of Australia's rapidly growing 'baby boomer' demographic," Mr Kempton said at that time.
He said each village would cost between $30 million and $40million to fully develop.
"The immediate task for the joint venture is to seek development approval and construct the Pacific Paradise site (on Queensland's Sunshine Coast) while seeking a number of other sites for future development," Mr Kempton said.
The raising of 19.8 million shares at $2.08 each was by ABN AMRO Morgans. Watpac shares, which were trading at $2.29 last May immediately before the FreeDomain announcement, closed at $3.95 yesterday."
