by Paul McBeth
The rumoured restructuring at Jarden, where the investment bank would exit its stake in wealth firm FirstCape and buyout former staff at a premium, could create opportunities for boutique, according to New Zealand Shareholders’ Association chief executive Oliver Mander.
Reports of the carve-up emerged this week that tensions between the investment bank’s shareholders – a mix of existing staff, FirstCape employees and the firm’s alumni – had pulled the firm in different directions, making it difficult for it to settle on a single path.
In The Bottom Line’s latest ‘The Long and the Short of It’ podcast, NZ Shareholders’ Association chief Mander said it made sense to clean up the shareholder structure if there was an irreconcilable dynamic.
“That removes any semblance of conflation between the two very different objectives of those different organisations, and probably wind up more aligned,” he said.
Streamlined ownership
The proposal would see Jarden exit its 18% stake of FirstCape, valuing the asset and wealth manager at $1 billion and leaving it jointly owned by Pacific Equity Partners and National Australia Bank.
PEP would take a small stake in the investment bank for a short period, which would likely be sold to a strategic investor who could add value to the business, Jarden chair Aiden Allen told the Australian Financial Review.
The greater alignment of Jarden’s shareholders would make it easier for the firm to offer equity to attract talent in the highly competitive Australian investment banking market.
Mander said Jarden’s growing exposure to Australia opened opportunities for the growing presence of boutique New Zealand investment banks, such as Cameron Partners and Murray & Co.
“The industry is shifting and changing and there is now a development of a meaningful second tier and I think that it’s helpful when it comes to competition for risk – connecting up pools of capital with companies that are looking to raise that capital,” Mander said. “It’s almost an opportunity for how the New Zealand market can look at the gaps that it might create and how other organisations can begin to fill those gaps.”
Industry moves
The Jarden proposal came as local rival Craigs Investment Partners agreed to buy Christchurch stalwart Hamilton Hindin Greene, strengthening its position in New Zealand’s wealth management.
Mander said that tailwinds behind New Zealand’s financial services, such as KiwiSaver and growing investment pools outside the state-sponsored schemes, created a step change in capability, which had attracted the likes of PEP to invest in FirstCape, TA Associates taking a half-stake of Craigs and Mercury Capital investing in Forsyth Barr.
That also gave boutique operators a chance to pitch specialist products tailored for particular investor tastes.
“On one hand, I don’t know if I love the fact that we’ve got a concentration of wealth managers, on the other hand, it creates opportunity for people to create more specialist products that aren’t trying to do that broad view,” he said.
“I would hope that as consolidation occurs, that people can see opportunity.”
Paul is a staff writer for Good Returns based in Wellington.
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