Australian Guarantee Corporation - 1970s

1970s

Through the 1970s AGC expanded and increased profits. It avoided many of the disasters that befell others in that time, though it did indulge in the diversification strategies that were in vogue, ending up for a time with a majority interest in Budget Rent-A-Car and in property developer Mirvac, plus minority interests in all sorts of things from winemaking to caravans. On the finance related side though AGC expanded overseas, and in Australia acquired Bill Acceptance Corporation (BAC) in 1977 (which it ran as an independent business).

In general lending though those years was conservative and risk was tightly controlled. Lending against real estate in particular was capped at 30% of the loan book and spread by type and geography. The head office in Sydney at the time was devoid of luxuries, in a way reflecting in its environment the discipline applied to the business.

One property position that did spiral away in that time though was the Kooralbyn resort development started by prominent businessmen Peter Abeles and Arthur George in 1975. They put up $2m and AGC put up $4m, but costs increased and after advancing $12m AGC took it over. AGC then spent yet more over subsequent years until finally exiting in 1987 for a loss of some $50m. The motto within AGC that "the first loss is the best loss" had been illustrated, but the experience didn't keep it out of much worse property forays like the Como development in later years.