Foreign winners and losers in Australia


January 20, 2017

Here is our take on the happy and unhappy foreign players in Australia. Why the hell did we invest in Australia? We love making truckloads in Australia



Why the hell did we invest in Australia?

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

A

AEP: Sold CitiPower to Cheung Kong Infrastructure and Hong Kong Electric Holdings for $1.53 billion in July 2002, booking a $US125 million loss mainly because the Australian dollar was so low at the time.

AES: US giant utility has dropped more than $100 million on Victorian energy assets.

Aqua Del Ray: Japanese company based in Kobe that ploughed $250 million into the Laguna Quays resort in the Whitsundays and then sold it to Village Roadshow for $23 million. The ANZ also took a huge bath.

Arco: US miners dropped a fortune on the Gordonstone coal mine after enormous union problems.

Asahi Breweries: Japanese brewer bought 20 per cent of Foster's off John Elliott and lost a few hundred million when it almost went broke in the early 1990s.

Air New Zealand: dropped $1.3 billion buying Ansett

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B

Barclays Bank: Got burnt in the 1980s and went down badly again recently in a WA nickel project run by Preston Resources.

Baulderstone Hornibrook: the German construction giant has scaled back its Australian operation after failing to make enough money under Nick Greiner's leadership in the late 1990s.

Brierley Investments: despite sucesses with investments like James Hardie and WD & HO Wills, the losses in electrical retailer Vox and Ansett (through Air New Zealand) make Australia a net negative experience for the Kiwi corporate raiders.

BTR PLC: paid way too much for the minorities of the Alan Jackson-created BTR Nylex.

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C

Charles Schwab: the biggest online US broker dropped plenty in their aborted online broking joint venture with Packer's ecorp.

Chase Manhattan: dropped an absolute bundle in Joe Gutnick's Centaur Mining and also got burnt by Skase to the tune of $120 million with the Chase-AMP joint venture in the 1980s.

Cogema: French yellow cake giants dropped at least $50 million on buying into the Koongarra uranium project in Kakadu in the hope that John Howard would allow it to proceed. No chance after the traditional owners knocked that on the head in 2000. Also virtually no return from any of its other Aussie uranium or gold assets after 30 years of trying.

CMS: US utility wrote off $500 million of equity invested in Loy Yang Power from the Kennett Government.

Connex: the French company is well under water on its Victorian public transport investments although has now expanded and extracted big price rises so might start clawing it back.

Constellation Brands: the US wine giant paid more than $2 billion for the equity in BRL Hardy in 2003 and then in 2008 substantially wrote down the value after a bad experience as the global wine market tanked.

Consolidated Natural Gas: The American power giant was part of a consortium which paid a ridiculous $2.47 billion for the Dampier-to-Bunbury natural gas pipeline. It went into receivership and was sold for $1.86 billion in October 2004.

Continental Airlines: Flooded by route allocations and landing slots in favor of Qantas (just before its public sale - how convenient). Loss of about $250 million over 3 years of final operations.

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D

Daikyo: the Japanese property giant spent way to much developing things like Green Island off Cairns, the Gold Coast International hotel and Palm Meadows resort.

Daimaru: the Japanese retailer dropped more than $200 million on their upmarket retail stores.

Dairy Farm International: the Hong Kong-based company dropped a packet in Franklins.

De Beers: the South African cartel spent $300 million on diamond exploration in WA over 20 years and never found a cracker. Were rumoured to have gone over the Argyle ground but missed it.

Deutsche Bank: didn't lose too much in the 80s and bought Bain for a good price before building investment banking and funds management into a successful operation. However, all that is now forgotten and lost given emerging corporate bad debt exposures such as with the Babcock & Brown empire.

Dimension Data: This South African company spent about $300 million buying Datacraft and Comtech but in 2002 axed more than 100 staff and must regret their Australian dalliance in light of the tech-telco crash.

Dominion Resources: El Paso's Yankee partner in Dampier to Bunbury gas pipeline which was bought for $2.4 billion in 1997 and then sold out of receivership for $1.86 billion October 2004.

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E

EIE: dropped hundreds of millions in the Queensland 1980s property crash.

El Paso: the largest shareholder in Epic Energy, which paid $2.4 billion for the Dampier to Bunbury gas pipeline in 1997 but then saw it sold out of receivership for $1.86 billion October 2004.

Entergy: US utilily which lost plenty on CitiPower, largely thanks to the currency.

Exodus Communications: tried to get fair interconnect and peering with Telstra. Result: $140 million data centre in North Ryde Sydney now worthless because of the closed shop in telco interconnect in Australia. They were conned by the Federal Government into believing things were fair.

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F

Fluor Daniel: was sued for $400 million by Anaconda over the Murin Murrin nickel project design so Australia has not been happy for the US engineering giant.

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G

Gateway Computers: the US computer manufacturer pulled out of Australian and dozens of other countries in 2002 due to inadequate returns.
GE Capital: $1.6 billion AGC buy in 2003 made them an absolute giant in Aussie finance and they made big bucks from businesses like the Coles Myer credit card business and Wizard, before the credit crunch came and wiped everthing out, turning the Australian frolic into a disaster.

Global Crossing: same as Exodus Communications, prohibitive cross connect fees and half-circuit led to lose of about $130 million.

GPU: the American utility booked a $450 million loss when it sold its Victorian electricity transmission business, PowerNet, to Singapore Power.

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H

HBOS:
more than tripled their money originally with a controlling stake in Bankwest but then sold out to Commonwealth Bank for just $2 billion and now left with residual corporate exposures which are turning bad.

HSBC: dropped plenty in Bond and other 1980s entrepreneurs when lending standards were slack.

Hutchison Telecommunications: have ploughed well over $3 billion into Australia and seen little return from the mobile business so far.

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I

Investec: The London-listed South African investment bank is growing by organic expansion, but also bought Wentworth Associates, which bought them David Gonski as chairman along with all his contacts. Have dropped a bit on unhappy investments such as Miller's Retail and the Warehouse Group.

Ivanhoe Mines:
Robert Friedland's Canadian miner wrote off $100 million on a Tassie iron ore project in 2002 but is now back in the game having floated off parts of its remaining Australian operations.

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K

Kumugai Gumi: Japanese property whacked by the property market in projects like Melbourne Central.

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L

Lemvest: US media player dropped close to $200 million on failed pay-TV company Australis Media.

Lucent: US telco networks company destroyed almost $1 billion trying to finance and build One.tel's 3G mobile network.

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M

MCI Worldcom: paid an excessive $530 million to Sean Kennedy, Malcolm Turnbull, Trevor Kennedy and friends which contributed in a small way to the company collapsing in 2002. Ozemail was sold to iinet for about $100 million in 2005.

Merrill Lynch: Bought McIntosh Securities for $120 million but now largely exiting Australian broking and lost $85 million in 2001.

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N

National Express Group: British company that won rights to run half Melbourne's trains and trams, lost money and then pulled out with a loss of more than $300 million in 2003.

Nissan: Could never turn a dollar in the car business and shut down manufacturing in 1992 in an exit that cost $1 billion.

Nissho Iwai: the Japanese company was the happy owner of the Cable Sands mineral sands operation in WA until rit was put into Bemax in the three-way deal with Sons of Gwalia, which collapsed in 2005.

NRG: had 25% of the equity when its consortium paid an excessive $4.8 billion for Victoria's 2000mW Loy Yang A power station in 1996 but this all disappeared when the banks sold the station a few years later for about $3.5 billion.

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O

Ong Beng Seng: The Singaporean tycoon tried to save Brashs but only succeeded in losing almost $100 million.

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P

PacifiCorp: The US company contributed to a ridiculous $2.3 billion bid for the 30-year old Hazelwood Power station in the Latrobe Valley and also paid an excessive $2.15 billion for one of the Victorian electricity distributors so overall it regretted the experience Down Under.

Parmalat: the Italians paid way too much for Pauls/QUF a few years back.

Pegasus Gold: These big-noting yanks wrote off $500 million on the much-hyped Mt Todd gold mine near Katherine in the Northern Territory.

Pepsi: Australia is one of Pepsi's worst market share stories and the Pizza Hut strategy also failed.

Pick 'n Pay: The South African grocery giant, on its second tilt in the Aussie market, struggled again after picking up some of the Franklins stores in NSW when Dairy Farm International quit in 2001.

PowerGen: The British company paid way over the top for Victoria's Yallourn power station and was crippled by a long strike.

Primus Telecommunications: same deal as Exodus and being lied to about real competition in the local loop and basically conned into investing only to become a mere re-seller, not the true carrier they hoped. Loss of about $80 million.

Principal: US funds management company took a $400 million write off on its Bankers Trust investment in 2002.

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R

Royal Bank of Canada: Came into Australia in the 80s but lost more than $100m lending to dodgy entrepreneurs like Skase and Bond. Also dropped heaps on 25% stake in controversial broker Hartley Poynton.

Royal Bank of Scotland: despite a profitable investment in Computershare, has ended up a net loser from ABN Amro purchase and large bad debts.

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S

Simplot: US potato giant paid too much to Pacific Dunlop for the pastry/potato based operation and lost heaps.

Singtel: The silly Singapore Government paid $14 billion for Optus in 2002 when it was probably worth about half that.

Singapore Airlines: lost more than $300 million in Air New Zealand thanks to Ansett debacle but keep coming back for more, as we can see with Tiger Airlines.

Standard Chartered: UK Bank, lost well over $100 million in Australia in the late 80s on loans to all sorts of shocks, and is now a small representative office in Sydney.

Starbucks: hurtled into the Australian market in 2001 but then closed three quarters of their 80 stores and axed 600 staff in 2008 because the locals just didn't warm to the product.

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T

Telecom New Zealand: paid way over the odds for AAPT which has produced two write-offs totalling $1.3 billion.

Thales (was Thompson): the French defence giant paid about twice what it was worth to buy half of ADI from the Government. They also had to sub part of their partner's (Transfield's) stake. Apart from the ammunition business ADI isn't making money. Overall a net loser.

Thyssen: Paid far too much for Byrnecut, once a darling of the mining contractors, and also lost the lot through Colrock, courtesy of Harry Adams' Gympie Gold.

Truworths: Sportsgirl was an absolute disaster for the South Africans.

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U

United Global Communications: Denver-based media giant almost sunk under a mountain of debt, about $500 million of which can be blamed on the then embattled pay-TV outfit Austar which was profitably recapitalised in 2002, but UGC ended up handing over control to John Malone's Liberty Media.

US West: Sol Trujillo's old company dropped about $500 million on Optus Vision and the Super League wars.

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V

Vienna Alpine: gave BHP-Billiton $60 million settling blow-outs on the construction of the giant HBI plant in Port Hedland.

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W

Walter Construction Group: German outfit that made a fortune from ELGAS at Botany, the public at M5 and the Music Conservatory, but then collapsed in February 2005, largely due to its parent's woes

Woolworths: The South African company is still battling to turn around Country Road, and was regularly bothered by minority shareholder Solomon Lew and his attack dog Michael Kroger.

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We love making truckloads in Australia

As for happy foreign investors, we've come up with quite a few so far:

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

A

Alcoa: has made billions out of aluminium and bauxite over the years, even after considering Alumina's plunging share price.

Aldi: German-owned budget supermarket chain which has just received a huge free kick from the ACCC's grocery inquiry.

Anglo American: appeared to pay a premium for the Shell Coal assets, but has since been proven right given the state of the dollar and high coal prices.

American Express: despite falling market share they've made good money in Australia and made Sydney a regional headquarters after Bob Carr offered big incentives.

Apache Energy: the US company controls the Harriet joint venture on the North West Shelf, which operates a string of profitable oil fields all processing through the Varanus Island production hub. Recent gas explosion certainly took the gloss away.

Aon: like Mercer, this US company are heavily and profitably involved in the delivery of services for the superannuation and insurance industry.

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B


Bankers Trust: created $2 billion in value before selling to Principal.

Billiton: made billions by negotiating a favourate merger with BHP that sent its share price soaring.

British Airways: bought its 25 per cent of Qantas at $2.60 a share and sold out at more than $4 for $1.1 billion in 2004.

British America Tobacco: bought out the minorities in 2002 for a hefty $17 a share but despite looming legal liabilities have had a happy time in Australia, especially since they became a duopoly with Phillip Morris.

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C

Conrad Black: Picked up 25 per cent of Fairfax at an average of $1.50 a share and sold to Brierley for almost $3.

Cable & Wireless: sold out of Optus for $14 billion but took a lot of plummeting Singtel scrip so the profit wasn't nearly what it might have been for the Poms.

Cadbury Schweppes: bought back the Australian arm 12 years ago and are making plenty in the drink and sweets markets, despite the supermarket duopoly and emerging problems with private label alternatives. Just sold Schweppes for a huge price to the Japanese.

Canwest: probably the most successful foreign investor having turned $50 million into about $2 billion through Channel 10, despite its current woes and huge debt challenges back in Canada.

Chicago Freight Car Leasing: happy enough with their investments in the rapidly changing Australian railway scene.

Clear Channel: brutally efficient US radio operator has made plenty from its radio joint venture with APN, although parent is now going through a debt crisis.

Coca Cola Company: They dumped a $1 billion loss in the Phillipines on the Australian offshoot and make large profits from about $1 billlion a year in related party transactions. While CCA has slumped in recent years, Coke still blitzes Pepsi in the Australian market but have missed the boat a little on energy drinks.

ConocoPhillips: owns 56.72% of the lucrative Bayu-Undan gas field and Darwin LNG project which will deliver an estimated $200 million in royalties to East Timor once it reaches full production.

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D


Daily Mail Group (DMG): UK media player paid almost $500 million to secure FM commercial radio licences in most Australian capital cities. Nova FM doing well with ratings but Vega flopped badly initially.

Daimler Benz: the Germans were wise enough not manufacture here but do well on their imported sales.

Duke Energy: Bought the Port Hedland and Newman power stations in WA from BHP in 1998. In 2004 Alinta paid $1.69 billion for Duke Energy's gas pipeline and power plants in Australia and New Zealand.

Durban Roodepoort Deep: The South African gold miner lost $34 million on the takeover of Hargraves Resources after its Browns Creek mine in NSW flooded a few months after DRD took charge. Also copped plenty of flak during the $50 million takeover of Dome Resources when it dropped a pallet of cyanide pellets from a helicopter into the PNG jungle. Then launched a $105 million bid for Fijian-based Emperor Mines, but with the gold price booming things have picked up a little.


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E

Energy Initiatives: the US company bought a 50 per cent equity stake in Victorian electricity distributor Solaris for $219 million in 1995 and sold out two years later to partner AGL booking a 58 per cent profit.

Esso: the most profitable foreign investor thanks to Bass Strait oil and gas which has allowed it to ship more than $10 billion to America over the years.

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G

General and Cologne Re: One of the big players in the re-insurance market. Owned by Berkshire Hathaway (of Buffet fame), but took some reputations hits for helping Rodney Alder out of a few scrapes around balance date.

General Motors: the most profitable of the car manufacturers and turning a good quid despite its parental problems.

Genessee Wyoming: bought Australia Southern, Australia Western and Australia Northern Railways a few years back and turned a good dollar on it after buying out joint venture partner Wesfarmers.

Glencore: the Swiss trading house originally dropped about $600 million on the Murrin Murrin laterite nickel mine in WA but more than made it back with the profits its 40% owned Xstrata has made out of MIM and now its Minara Resources stake is worth more than $2.5 billion.

Goldfields: the South Africa company made good money, initially at least, out of WMC's St Ives gold mining operation.

Goldman Sachs: paid a big price to buy into JB Were, but probably a long-term win.

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H

Harmony: Bought into Bendigo Gold for a pittance and is now looking very handsome as the gold price stays high, although recent production problems have reversed some of these gains.

Hochtief:
these Germans control Australia's largest construction company Leighton and have made excellent profits for many years under Wal King's leadership.

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I

IBM: Despite massively overpaying for their rental deal on the Southgate tower in Melbourne they've made good money in Australia in recent years.

ICI: timed their profitable exit from Australia perfectly in 1997 at the lofty price of about $11 when the dollar was also strong, but missed the Malcolm Broomhead turnaround which saw Orica shares peak north of $30 before the global financial crisis hit.

Independent Newspapers: Tony O'Reilly's Irish media giant owns radio and lots of profitable regional newspapers.

ING: banking and funds management giant that bought Mercantile Mutual and sold its half share to QBE for $740 million in 2003.

International Power: paid a ridiculous $2.3 billion for the 30-year old Hazelwood Power station in 1996-97 but insiders claim this has paid off in the end for the business. Carbon costs could eventually leave this one a loser.

Itochu: the Japanese industrial giant dropped plenty in the PowerGen consortium that bought the Yallourn power station but generates good returns selling mining equipment and from other minority investments in various resources plays.

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K

Kelloggs: a boring but successful story in Australia.

Kimberly Clark: Huggies nappies kick butt so much that they've made hundreds of millions in their Amcor joint venture which was wound up in 2003 as the Australian partner sold out for a huge profit.

Kodak Eastman: did well under Ziggy Switkowski to have an excellent market share lead over Fuji but then closed its Melbourne manufacturing plant in 2005.

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L

Lion Nathan: buying Bondy's brewing assets eventually enabled founder Dougie Myers to sell out to Japanese brewer Kirin for a good price and now the beer duopoly is doing so well that Kirin are also well in front.

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M

Mars: absolutely dominates the pet foot market and the confectionary profits are also good so they are one of the happiest foreign investors with Forrest Mars gloating that he's been here 75 times.

Mazda: turn over about $600 million a year from imports but wise not to manufacture here.

Marsh & McLennan: owns the highly profitable Mercer consulting business for the investment industry which also does plenty of HR work.

Metro Cash and Carry: struggled with Davids early but is now coming good through Metcash once Woolies pulled out of the wholesale market.

Mission Energy: bought 49 per cent of the Loy Yang B power station from The Kennett government in 1992 for $1.3 billion with an over-priced long term supply contract then took the rest in a renegotiation in 1997 that left them still well in front.

Mitsui: owns 8.33% of North West Shelf and also lovely profits out of coal and iron ore such that the total value of the Australian assets now exceeds $10 billion.

Mitsubishi: the Coal and Allied acquisition has been a ripper for this Japanese company although the car operations have been more troubled. Also owns 8.33% of North West Shelf plus a suite of iron ore investments that more than offset its troubled car operations.

Microsoft: Bill Gates makes money everywhere.

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N

Nestle: bought well off Pacific Dunlop and are making plenty from all their dairy products.

Nike: Were smart enough never to manufacture here and our love of all things American means Australia has been a happy hunting ground.

Norwich Union: renamed Aviva and making good dollars from insurance and funds management, led by its Navigator Mastertrust.

NTL: the British cable company bought the ABC and SBS transmission towers for $650 million in 1998 and then sold them to Macqurie Bank for $850 million in 2001. That said, the same assets are now worth more than $2 billion.

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P

Pernod Ricard: French giant owns Orlando Wyndham which has Jacobs Creek as flagship.

Philip Morris: made plenty over 40 years from food and ciggies.

Placer Dome: world's fifth largest gold mining company, based in Canada. Acquired Aurion Gold, adding 1 million ounces of gold production annually.

PMI: giant US bond insurer which made $US80 million in Australia in 2007 while its US business imploded and then sold out to QBE in 2008 for more than $1 billion.

Proctor & Gamble: another boring but successful story for one of the biggest consumer goods companies in the world.

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R

RAG: German company that picked up prime Queensland coal assets for a song, and is now making a packet.

Rail America: bought Freight Australia and are travelling very well with it.

Raytheon: giant defence contractor now trading nicely with Australian revenues to top $600 million in 2008.

Rothschild: sold booming funds management business to Westpac for a big price in 2002.

Royal & Sun Alliance: took a big profit when floating Promina but the new investors have enjoyed additional huge profits as the troubled British insurance giant left plenty on the table.

Rio Tinto: the London-based company has Australian assets worth more than $50 billion even after the resources bubble burst.

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S


Service Corporation International: the US giant bought out the Adsteam funerals and death industry business in the early 1990s and then sold 80% to a consortium led by Macquarie Bank in 2001 and is now the listed company Invocare.

Shell: making about $1 billion a year at the moment from oil and gas despite lower returns on downstream operation.

Showboat: mad big bickies on the Sydney Casino licence by selling Star City to Tabcorp.

Sony: Australians are big spending gadget lovers so Sony does very well here.

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T

Texas Instruments: dominate the school calculator market.

Texas Utilities: the $5.1 billion sale of its Australian energy assets to Singapore Power gave it a $500 million book profit, although it never paid a dividend during several years of ownership.

Toyota: the most successful of the car manufacturers over the years.

Tyco: the largest foreign employer in Australia with 15,000 staff who dominate parts of the building and construction industry.

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U

UBS Warburg: investment banking powerhouse that turns over more than $1 billion a year in Australia and fights it out with Macquarie Bank for market leadership.

Unilever: another fast moving consumer goods outfit that loves our consumer society.

Utilicorp: partially floated United Energy with AMP, raising $390 million and confirming a 20 per cent plus profit on their initial $1.553 billion purchase in 1996, then quit all its Australian investments profitably for $980 million (after debt) in 2003.

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V

Virgin: Ansett's loss was Virgin's gain in the airline game and Branson was $1 billion in front after the float, although the residual 25% stake has since crashed in value.

Visa International: Have been ripping off customers massively on behalf of their member banks and love the fact that Australians are mad consumers who've gone debt crazy.

Vodafone: the British telecommunications giant may have taken 11 years to turn a profit in Australia, but it is looking good.

W

Wackenhut: the biggest US security services company ran three of the seven Australian privately run "correctional facilities". Government contracts pay well and on time.

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X

Xstrata: Another company making a fortune from Australian coal and base metals after the MIM takeover but it did drop a hefty $180 million on the Windimurra vanadium project in WA. Australian assets exceeded $30 billion after Jubilee Mines takeover but have since crashed with everything else.

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Check out all the Mayne Report business lists here. Go here to see the full comprehensive list of lists we've created documenting the dominance of foreign investors in Australia and our relative poor performance on the international business stage.