ferret's stock to watch: record investments ltd

Ferret's Stock to Watch: RECORD INVESTMENTS LIMITED
08:23, Wednesday, 8 June 2005

COMPANY SHOULD HAVE $750M INVESTMENT OPPORTUNITIES BY JUNE 30

Sydney - Wednesday - June 8: (RWE Australian Business News)
***********************************************************

OVERVIEW
********

What do you think of a company that can lift its share price from
the original float price of $1.90 to $5.60 since listing on February 28,
2001?

The company, Record Investments Ltd (RCD), is paying shareholders
22.7c a share to give a better than 4 per cent yield.

Record yesterday told the Australian Stock Exchange that its
investment levels are expected to be higher than previously indicated to
the market.

As a result of a number of new investment opportunities, Record
expects total investments to be in excess of $750 million by June 30.

This compares with total investments as at March 31 of $535
million.

As a number of the new investments are expected to be short-term
in nature, it is anticipated that investment levels will fall back over
the six months to December.

Notwithstanding this, total investments by December are now
expected to exceed $650 million, compared with the previous guidance of
$600 million.

In excess of $200 million of new investments are expected to
settle in the month of June.

As a result, these are not expected to have a material impact on
Record's investment earnings for the current half year.

There is, however, additional fee income associated with these
opportunities.

Mark Phillips, Record's managing director, said: "A number of
attractive investment opportunities have been presented to Record over
the last few months and we expect to complete some of these prior to the
end of the financial year.

"We remain very pleased with the strength and quality of the deal
flow from Allco as well as progress made in relation to non-Allco sources
of origination."

The new investment activity is spread across most of Record's
core asset classes.

The most significant of the new opportunities are as follows.

* Shipping: Record expects to complete approximately $30 million
of new shipping investments by June30. These investments have been
originated by Allco and represent interests in three freight carrying
vessels.

* Funds Management: Record has established a new strategic
relationship with Rubicon Asset Management Ltd, an Australian-owned funds
management company. Record will provide funding for the shorter term
warehousing of assets destined for new and existing Rubicon managed
funds. All such funds will be asset backed, consistent with Record's
traditional investment approach. During June, Record's exposure under
Rubicon facilities is expected to increase to approximately $150 million.
These facilities are to be used to warehouse assets for a number of
different funds.

* Anticipated fundraising means that the level of investment in
Rubicon-originated transactions is expected to fall to approximately $50
million within three months.

An example of the assets that Record's facility assists to
warehouse is a portfolio of US properties leased to the US Government.

These assets are intended to be placed in the Rubicon America
Trust, which is listed on the Australian Stock Exchange.

SHARE PRICE MOVEMENTS
*********************

Shares of Record rose 31c to $5.60 yesterday. Rolling high for
the year has been $6.46 and low $3.96. Dividend is 22.7c a share to yield
4.04 per cent.

At the annual meeting on April 26, chairman Tony Berg - who has
indicated he will soon retire - said he would like to comment on the
success of the company since listing in 2001 and some of the issues it
has dealt with in recent months.

He said a lot of that success is due to Record itself and the
sound strategy on which its operations have been based; a lot, too, is
due to the Allco Group, which is not only a major shareholder in Record,
but also has a management agreement with your company under which Allco
provides a ready flow of investment opportunities to Record.

The meeting voted on a proposal designed to further enhance the
relationship between Record and the Allco Group.

"Specifically, we are seeking shareholder approval for a share
placement, the granting of further options, and the issue of shares on
the exercise of these options and existing options to the Allco Group,"
Mr Berg said.

"Record Investments is a unique company in that it is dependent
on Allco for deal flow but, at the same time, independent of it.

"Since Allco did not have the capital to support the equity or
residual interest in the deals it originated, it made sense to create an
allied company to invest in those deals.

"This arrangement has been successful for Allco and also for the
shareholders of Record," Mr Berg added.

The chairman disclosed a number of statistics which illustrates
the degree of this success:

* Record has invested a total of $850 million since 2001.

* As at March 31 Record had total investments of $535 million.

* To support these investments, Record has raised approximately
$340 million in equity capital and $200 million in debt facilities.

* Net profit has increased every year, reaching $25.9 million in
the year ended June 30 last, and increasing again in the half year to
December 31 to $22.5 million.

* Record has paid increased dividends every half year, the latest
being 13.5c per share paid in March.

Mr Berg said this success is largely attributable to the
creativity and consequent deal flow from Allco, Record's own small but
dedicated management team, the wisdom of the board of directors, the
company's disciplined and responsive approach to opportunities and its
unique strategy of investing in asset classes yielding high returns.

He added that when Record was floated, it was the appropriate
vehicle to provide the equity capital for Allco's deals.

However, Record's success has encouraged the market to look for
ways to jump on the structured finance bandwagon.

Consequently, Allco found it was able to raise capital
independently of Record.

BACKGROUND
**********

The objective of Record Investments is to provide attractive
financial returns by creating or investing in businesses that develop,
invest in and distribute a range of structured financial products.

The businesses in which Record has invested have been selected so
as to offer both earnings returns and potential for capital growth.

The creation of Record Investments has been prompted by the
objective of developing a new product distributor and investor in quality
high-yielding financial assets.

Investment in structured financial products has traditionally
been the domain of banks, insurance companies and other major financial
institutions and has not been readily accessible to retail or
institutional investors.

It is anticipated that Record will receive the majority of its
investment opportunities from its manager, Allco, although Record has
also invested in opportunities originated by third parties.

Allco is an independent financial services group that is a
leading arranger and packager of structured finance transactions.

Over the last 20 years Allco has proven successful as a product
provider and innovator, predominantly using third party intermediaries to
distribute its products.

However, Allco has witnessed its product distributors and their
investors earn handsome returns, often for accepting a low level of risk.

Allco has established Record Investments to allow public market
investors the opportunity to participate in this distribution and
investment process.

Put simply, Record is to become an intermediary that replaces the
product distributors and investors currently used by Allco.

By investing in Record, investors gain exposure to transactions
originated and structured by Allco and the attractive returns that these
investments have historically yielded.

For so long as Allco is the manager of Record, Allco must offer
to Record all relevant structured finance opportunities which arise
before offering them externally.

Record and the manager will target investments in which they
possess relevant experience and have access to opportunities which
provide acceptable returns.

Initially, Record and its investee companies will consider
investments in three sectors of the financial services market; leasing,
securitisation and funds management.

The divisions within Record are focused on different aspects of
Record Investment's activities.

Each division is currently comprised of investments in other
companies, a number of them subsidiaries of Record, which undertake the
specific business activity itself.

The Leasing division will be primarily an underwriter and
investor in transactions.

The Securitisation and Funds Management divisions will focus on
distributing financial products and risks to investors and lenders.

ENDS

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I don't hold RCD