Absolute Capital offloads capital market subsidiary

Alternative investment firm Absolute Capital has announced the sale of its third party securitisation transaction business Absolute Capital Markets to a new pooled development fund yet to list on theAustralian Stock Exchange.

The sold business is to be renamed Establishment Capital, will remain Sydney-based, and will retain current employees Gareth Clague and Arthur Karabatsos who will continue to develop the business.

Absolute Capital managing director Deon Joubert says the group chose to offload the subsidiary as it has moved away from this market sector in recent years.

“The capital markets concept is a good one but Absolute Capital wants to focus on its core competencies which are alternative asset management and structured products,” Joubert says.

“We are focusing our expertise on structured products along the lines of our Principal Protected Income Notes.

“We feel we can add more value to capital markets as an investor rather than as an advisory firm trying to be all things to all men,” he says.

Joubert says despite the sale there is still a need to develop the market for non-residential mortgage asset securitisation in Australia.

The move follows a heads of agreement signed last week that will seeABN Amrotake a 50 per cent stake in Absolute Capital, to result in the joint launch of a number of debt products into the market.

Absolute Capital had originally flagged that it was in discussions with a major shareholder in September that would support its alternative debt operations.

“The deal with ABN Amro is part of the equation. We are looking to settle down from a corporate point of view, and while the capital markets business is a decent business model it could have been a distraction for us,” Joubert says.