Wellesley’s $52.5M target the most ambitious yet

Press, 3 July 1986, Page 29

Wellesley’s $52.5M target the most ambitious yet

By

SIMON LOUISSON

in Wellington Wellesley Resources’ aim to raise $52.5 million , from the public is more ' ambitious than any previous public share issue on the New Zealand Stock Exchange. Other recent issues such as Omnicorp and Rada Corporation have both sought to raise $5O million, but each has had big company backers as the promoters. Analysts were taken by surprise at the size of the new company to be formed — over $l4O million — but many suggested the issue would go well. The man behind Crom- . well, Mr Graeme Brin- , gans, formed Cromwell ' Property Resources 10 ’ years ago with a capital ‘ of $lOOO. The market capitalisation of Cromwell Corporation has since burgeoned to more than $6O million. Cromwell is 85 per cent owned by Wellesley, which in turn is two thirds owned by Mr Bringans and his wife, Margaret. People who invested in

Cromwell when it floated in 1984 have had a Cair return on their investment. Buying a 50c share at $l, the share rose to 460 c in May 1985, which adjusted for the subsequent cash issue equated to 412 c. Since then the price has risen to over 820 c. A 6c dividend was paid in 1985 and a one-for-three cash issue at 300 c and a one-for-four bonus issue was made. Mr Bringans, aged 40, left school soon after scraping through School Certificate, and by the age of 22 was general manager of the Wellington construction company, Williams Construction. He joined Williams after a short time with National Mutual and said he immediately struck up a good rapport with Mr Arthur Williams, the chief of Williams Construction. One day, he was called into Mr Williams’ office and told Mr Williams wished to go overseas and Mr Bringans was now managing the company. Mr Bringans knew that this was Mr Williams’ method of testing him,

and although he was not quite prepared for the job, he took up the challenge. However, in 1976, after 11 years with Williams, Mr Bringans decided to take the plunge and set out on his own. He exchanged his Mercedes for a Morris Marina, borrowed $lOOO from his wife as capital and set up office in a tidy room in downmarket Wellington. He began by developing townhouses, but soon learnt that the big money was in commercial development. The decision to go public was taken so the company could continue to grow without having to borrow at high rates of interest. In the light of the subsequent rise in interest rates, this decision was well justified. Cromwell operations are divided into four areas: developing and selling property on its own account, retaining some property from which rent is derived and extracting profit from the revaluation of the property, buying property on

behalf of specialist clients such as Leadenhall Funds, and acting as a property consultant. Cromwell has been run as a lean operation with less than 20 management staff. The company’s success has been attributed by Mr Bringans to its concentration on up-market property developments. He said that imitators of Cromwell have developed properties in less than ideal locations and, paid the price by not being able to find suitable tenants. Another strong aspect of its policy is to ensure a high percentage of leasing commitment before a project proceeds. “Cromwell will continue to develop a corporate profile based upon a reputation for sound management and relatively conservative positions in terms of proprietorship and risk management. We believe these fundamental criteria will enable us to be a top performing company in the property sector,” Mr Bringans said in the Cromwell annual report.