Sydney's Top Companies revealed

Sydney's Top Companies revealed

Rising interest rates, the ascent of large carbon emitters, sustained demand for logistics services, and a raft of mergers and acquisitions have reshaped the Sydney Top Companies list in 2022.

The rise of earnings in the fossil-fuel sector is one of the evident trends, despite the general corporate push towards a greener future, as Whitehaven Coal (ASX: WHC), AGL Energy (ASX: AGL) and Origin Energy witnessed some of the largest jumps through the ranks over the past 12 months.

But the reasons for this are nuanced, especially for AGL which has been among the many high-profile takeover bids launched during the year that led to significant upheaval in boardrooms across Sydney.

Atlassian billionaire Mike Cannon-Brooks had two failed tilts at AGL, but still managed to exert his control on the energy company after taking a major shareholding. That led to the departure of chairman Peter Botten and CEO Graeme Hunt, and the appointment of four of his nominees to the board – a coup by any measure.

Ryan Stokes enlisted former Cleanaway (ASX: CWY) CEO Vik Bansal to replace Zlatko Todorcevski at Boral (ASX: BLD) after his company Seven Group Holdings (ASX: SVW) secured a majority 72.6 per cent stake in the building materials company.

Successful takeovers led to the exit of some of the biggest names on the Sydney list, namely Sydney Airport Ltd which was swallowed in a $23.6 billion buyout by Sydney Aviation Alliance - a consortium comprising IFM Australian Infrastructure Fund, IFM Global Infrastructure Fund, AustralianSuper, QSuper and Global Infrastructure Partners.

Energy play Spark Infrastructure also was acquired for $5.2 billion by private equity group KKR and the Ontario Teachers’ Pension Plan Board. The deal signalled the growing interest in the energy sector by private equity and corporate predators looking to secure a foothold in energy from the resources base to retail distribution.

While Cannon-Brooks has a plan to transition AGL to renewables faster than the previous board intended, that’s the reason being touted by Canada’s Brookfield Asset Management and US energy investment group EIG who launched a joint $18.4 billion bid for Origin Energy (ASX: ORG) last month.

That deal has serious regulatory hurdles to overcome, but Brookfield notes that it has a $30 billion capital arsenal to help Origin transition after the partners split the business in two.

The banking sector again dominates the top three positions this year, a nod to Sydney’s position as Australia’s financial capital. But the sector is facing headwinds as interest rates continue rising and the risk of defaults increases with them. Commonwealth Bank of Australia (ASX: CBA) has already voiced its concern should interest rate increases continue.

However, one of the more recent entrants in the financial services space, Zip Co (ASX: ZIP), has been roundly bumped from the list amid a general downturn in the troubled buy-now-pay-later sector.

Zip, which was sitting in 46th position last year, has seen its shares decimated amid rising interest rates and new regulations earmarked for the industry to curb the enthusiasm of indebted consumers.

The demise of crypto exchange FTX is also highlighted by Evolution Mining’s executive chairman Jake Klein as critical for the gold sector. Perhaps it is a touch of schadenfreude, but Klein says the significant losses incurred by investors in FTX and crypto assets generally have reinforced gold’s worth as a ‘superior storer of value’.

The fortunes of property groups were mixed, except for those with exposure to the logistics sector. What began as a trend during the pandemic continues to gain momentum with demand for warehousing and transport services as strong as ever. Companies capitalising on this honeypot of opportunity include Goodman Group (ASX: GMG), GPT Group (ASX: GPT) and Stockland (ASX: SGP).

In fact, logistics-related companies took out three of the top 10 positions this year with Goodman, supply chain group Brambles (ASX: BXB) and logistics software growth story WiseTech Global (ASX: WTC) making the grade.

Sydney Top Companies 2022 is snapshot of a changing corporate landscape that is still shaking off the pandemic. It also offers insights into companies looking for a sustainable future in uncertain times.


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