GFC dampens dealer group listing ambitions
Financial planning companies were two years ago lining up to voice their aspirations to list on the Australian Securities Exchange but the global financial crisis has changed the dynamic and only a few are now willing to go to market.
Groups that publicly voiced their listing ambitions included Centric Wealth, Australian Financial Services Group (AFS Group), Professional Investment Holdings (PIH) and Countplus. In 2010 only Countplus is on schedule to list.
Centric Wealth intended to list in 2008, but did not go through with it as it felt market conditions were not conducive to a public capital raising, said chief executive John McMurdo. He asserted that while listing was a “natural progression” for Centric Wealth, it was not one of its key objectives.
“We could list now if we wanted to — we are actually larger and more profitable than some of the other listed wealth managers on the exchange to date,” McMurdo stated. “But in terms of the environment, we would rather list when we had more scale because that would make us a more attractive and liquid investment. We would rather list when market conditions were better.”
AFS Group managing director Peter Daly said before listing, companies had to demonstrate sustained profitable growth and an increasing dividend stream, which he said was becoming more difficult “just by virtue of the market itself”.
The director of security facilitation service Investor Match, Dani Peer, said a lot of companies were not listing because they were not sure at what price they wanted to list.
“The problem we have now is that for any company going to list or wanting to raise fresh capital, pricing is scrutinised much more closely. In the absence of any kind of track record or way of justifying a fair price, companies will have to issue shares at a discount — which is really going to upset security holders.”
PIH is getting around the current challenges through its merger with listed Centrepoint Alliance.
Count Financial executive chairman Barry Lambert agreed that it was not a good environment for businesses generally, but this was not an issue for Countplus as its listing was underwritten by Count Financial, it had only a small amount to raise and all of its businesses were established and profitable.
AFS Group has held listing ambitions for a number of years, although its focus had shifted to negotiations with an unnamed non-institutional company that is interested in acquiring the group. Daly said nonetheless, the group aims to list in 2013 and will kick things in motion once profitability is up.
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