Australian ICMIF member The Business Council of Co-operatives and Mutuals (BCCM) last week congratulated Australian Unity on becoming Australia’s first mutual to issue Mutual Capital Instruments (MCI). Australian Unity Limited announced an offer of Australian Unity Mutual Capital Instruments to raise AUD 100 million on Friday 27 November 2020.
Established in 1840, Australian Unity was Australia’s first member-owned wellbeing company. To support the ongoing, sustainable growth aligned with its core purpose, BCCM said, Australian Unity intends to raise capital through the issue of Australian Unity MCIs.
BCCM CEO Melina Morrison (pictured) said Australian Unity was the first mutual to take advantage of the legislative changes passed in April 2019 that allowed cooperatives and mutuals to raise capital through a Mutual Capital Instrument (MCI). “BCCM worked for more than five years with the Federal Government to pass changes to the Corporations Act to have mutuals defined and be able to raise capital through an MCI,” Morrison said.
“Prior to these changes, Australian mutuals were prevented from raising growth capital and often this encouraged demutualisation. This process saw some of Australia’s great member-owned companies change their business model and shift away from their member-first focus.
“Thanks to the legislative changes passed in April 2019, cooperatives and mutuals can now compete on a level playing field with their listed competitors,” said Morrison. “It is fitting that Australia’s first member-owned wellbeing company is the first mutual to issue MCIs.”
Morrison said the new definition in the Corporations Act provides that a mutual entity is a company where each member has no more than one vote, reflecting the ethos that underpins the democratic model of cooperatives and mutuals: one member, one vote. An MCI is a new type of share that can only be issued by mutual entities. It enables the attraction of investment capital, whilst protecting the mutual ownership structure.
“A cooperative or mutual’s purpose is to serve their members, who are their customers, suppliers, employees or a mixture of all three,” Morrison said.
“Unlike other business models, cooperatives and mutuals do not need access to external capital to underpin the primary functions of their business, they need access to working capital for the development of the business. This could be investment in technology, acquisitions to improve the service provided to members or product development.
“Nineteen cooperatives and mutuals have passed changes to their constitution in the past 12 months, enabling them to issue an MCI, and more are set to follow. Around the world cooperatives that are household names, such as Rabobank, have been able to take advantage of external capital for many years.
“With Australian cooperatives and mutuals now able to access external capital, we are excited about the prospects for the sector and the role cooperatives and mutuals will play in Australia’s economic recovery,” concluded Morrison.
Mutuals advocate Mutuo (UK) was also instrumental in the design and implementation of the project which brought about the new share in Australia and worked closely with BCCM on the project. Mutuo is a leading advocate for mutuals, promoting all types of cooperative & mutual business through activities including public affairs and political advocacy; policy development; and management consultancy for mutuals/cooperatives.
Commenting on the news, Peter Hunt, Managing Partner of Mutuo said: ‘Today is the culmination of four years’ work and just shows what can be achieved by cooperative and mutual businesses working together with their peak body to deliver a real change in legislation. The new mutual capital instruments draw upon the best experience of cooperative and mutual fundraising from across the world.
“The new capital will facilitate growth and innovation in the best Australian cooperatives and mutuals, supporting the continued success of the sector. Mutuo’s mission is to improve the business environment for co-operatives and mutuals and we are delighted at this development. We wish Australian Unity all the best in their pioneering effort,” Hunt concluded.
Australian Unity Managing Director, Rohan Mead said: “Australian Unity is delighted to issue Australia’s inaugural mutual capital instrument and to provide eligible investors with the opportunity to invest in Australian Unity. The Offer will support Australian Unity’s ongoing and sustainable growth as it continues to provide health, wealth and care products and services that deliver both community and social value.”