☕️ Legal cull

Good morning.

KPMG Australia's decision to axe its commercial law practice seems a poorly veiled admission of its inability to tango with top-tier law firms. Ben Travers, the firm's Tax & Legal honcho, announced the pivot to "integrate" the Tax Controversy & Disputes practice into the tax division, hinting at an alliance strategy rather than solo ventures.

This latest restructuring, part of an $80m cost-cutting crusade, is set to carve out 30 legal roles by 30 September. The news, described by a blindsided employee as a bolt from the blue, reflects the grim reality of unmet budgets and a revolving door of talent.

But as Capital Brief’s Lauren Henning suggests, KPMG’s retreat to its tax roots also reflects the brutal competition for top-tier talent and clients in a financial services landscape marred by scandals and shifting client loyalties.

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Market movers

DroneShield's meteoric 422% rise came crashing down with a 22% plunge on Tuesday, confirming Capital Brief's Jack Derwin's warnings about short-sellers targeting the potentially overhyped stock. The news rapidly circulated across trading desks, causing a dramatic 31% drop in intraday trading and resulting in a trading halt.

Responding to an ASX query, DroneShield pointed to Derwin’s report, which included fund managers criticising DRO’s overheated valuation, asserting there was no other explanation for the sell-off.

The quick sync

• David Washbrook and Stu Grover’s Farmed Carbon develops carbon removal technology that converts rice straw waste into usable biochar and bitumen products. (Capital Brief)

• Two ANZ traders have been suspended from the bank amid an internal investigation into misconduct within the company’s markets division. (AFR)

• Australian Writers Guild CEO Claire Pullen joins journalists and creative workers in calling for an AI disclosure framework. (Capital Brief)

• Texan PE firm Gauge Capital snapps majority stake in Australian beauty brand Coco & Eve for more than $100m. (AFR)

• CBA-backed mortgage broking firm Lendi at loggerheads with a large group of Aussie Home Loans franchisees over the treatment of customer leads and a potential breach of the franchise agreement. (The Australian)

Trading floor

M&A

• Gadens merged with Trinity Law, expanding nationally, and appointed 11 new partners from top firms. (Capital Brief)

• K1 Investment Management, owner of Elmo Software, is gauging buyer interest in the HR software firm, two years after acquiring it for $486m. (AFR)

• EnergyAustralia is offering a 50% stake in its Wooreen battery project and has enlisted ICA Partners to find a financial partner for the 350-megawatt system in Victoria. (AFR)

• Potential buyers have shown interest in Bank of Queensland but withdrew after finding no clear acquisition path. (The Australian)

• Genex Power shareholders have approved J-Power's $380m takeover bid, leading to the company's exit from the ASX and transition to Japanese ownership. (AFR)

• Foxtel Group and Fox Entertainment will co-develop programming for Australian and US markets, available on Foxtel's Binge and licensed to third-party services. (Capital Brief)

• General Pants Co, owned by Richard Facioni's Alquemie Group, anticipates the dismissal of a winding-up application, resolving a recent creditor dispute. (AFR)

• Limepay has been acquired by Spenda at a reduced valuation from its previous $43.5m investment. (BNA)

• Labyrinth Resources is purchasing the Vivien gold project in WA from Ramelius Resources to consolidate high-grade mines near infrastructure. (AFR)

Capital Markets

• Goldman Sachs' second quarter earnings doubled to $3bn, surpassing expectations due to strong bond and equities trading and a recovery in dealmaking. (Capital Brief)

• Melbourne's HammerTech, a construction safety software firm, receives a $105m investment from Riverwood Capital to drive growth and R&D. (BNA)

• DroneShield paused trading after a rapid rise and subsequent nosedive, with skeptics shorting the stock due to perceived overvaluation. (Capital Brief)

VC

• ExoFlare, founded by a former CSIRO’s Data61 executive, raised $5.3m in a Seed round led by Salus Ventures. (Startup Daily)

• Titanium Ventures, rebranded from Telstra Ventures, led a US$20.5m series A for Alvys, its first major investment post-rebranding, as Telstra plans to sell its VC investments. (Capital Brief)

• ANZ Bank was reportedly well into succession planning for CEO Shayne Elliott in 2021, but he remained in place. (The Australian

People moves

• SkyCity Entertainment appoints Peter Fredricson as CFO to aid in strategic planning amid lowered earnings and suspended dividends. (Capital Brief)

• Argonaut Securities is boosting its equity capital markets team by hiring Rob Telford from Foster Stockbroking to enhance its Perth operations. (AFR)

• Logistics veteran Dominic Culbert, formerly of ShippIt, joins Dyspach as Head of Growth for Australia and New Zealand. (Startup Daily)

• Newcomer Canopy Investors hires Magellan analyst Jack McManus as portfolio manager. (AFR)

• Alvarez & Marsal hires three EY team members to establish its local valuations sector, with Stewart leading the unit. (AFR)

• Under Mark Whelan, ANZ's institutional division has become a standout performer, boosting his CEO prospects, though governance and culture issues in the bank's markets operation cast a shadow on his legacy. (Capital Brief)

• Hugh Robertson leaves Bell Potter for Morgans, joined by colleagues, his son, and wife. (AFR)

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