Industry heads: be careful what you list for

A message to Robbie Bennetts from those who should know: be careful what you list for.

Bennetts’ Professional Investment Services (PIS), the country’s second largest dealer group, has all but abandoned plans for a proposed listing, choosing instead to focus on a trade sale.

But the heads of Australia’s largest listed financial planning groups have questioned whether PIS should have considered a listing in the first place — if, that is, its motivation is simply to cash in.

Count Financial’s Barry Lambert, Investor Group’s Kevin White and Fiducian’s Indy Singh, all prefaced their comments by saying they did not have a detailed knowledge of PIS and its plans.

However, all agreed that listing is not for everybody.

White, Investor Group’s managing director, told Money Management that with the market on a high, the time could be right for a listing — for the right financial planning group.

“I think it is a good time to list,” he said.

“The Associated Planners transaction sort of started the market thinking about the strategic value of distribution in the financial services sector. That as much as anything has started people thinking that there is strategic value in financial planning.”

However, he warned the key was the motivation behind the plans to list.

“I suppose at the end of the day, it depends on what their [PIS’] shareholders want to do,” he said.

“If they want to get some capital to grow the business, what I am saying is that the share market can be quite receptive to that.

“If all they want to do is realise the capital of existing shareholders, then they should look at a trade sale.”

Singh, managing director at Fudician, said financial planning businesses should not consider listing simply to cash out their group’s value to existing shareholders.

“If the push is to list and get out, then I do not agree. But if you are looking to build a business, then there is never a right or wrong time to list,” he said.

He said groups that list for the wrong reasons would be found out in an open market.

“You have to understand that you will have to go through the scrutiny,” Singh said.

“To be honest, I don’t think we were fully prepared for the corporate governance. When you make a trade sale, you don’t have to have the transparency and you continue on as business as usual.”

For Lambert, managing director at Count, the situation that Bennetts and other PIS shareholders find themselves in is vaguely familiar.

Before Count went public in 2000, it had a number of buyers prepared to pay a premium, but chose to list instead.

“Our aim was to grow our franchises, so I would [list] again if I had my time over. We had people wanting to buy us and we ended up listing at half the trade sale,” he said.

“If your motivation for listing is to get the cash, you are better off going for a trade sale.”

His message to Bennetts?

“I do not know Robbie’s plans, but every time I have spoken to him, I have advised him not to list,” Lambert said.