Revived Equity Trustees prepares for acquisition mission
Fund incubator and private client service provider Equity Trustees put its highly publicised woes of 2003 further behind it yesterday by announcing a net annual profit for 2005 of $3.7 million - up almost a third on last year.
The Melbourne-based company, which has distribution partnerships with the likes of MIR, Pimco and HG Hiscock, also indicated that it was on the acquisitions path by announcing a planned $9 million capital raising to be funded by a share sell off.
But managing director Peter Williams would not confirm whether any of the money would be used to make another play at merging with, or buying into, the ANZ Bank ’s trustee business, which Equity Trustees signed a head of agreement to merge with in October last year.
If the deal were to go ahead, the merged entity would form Australia’s third largest trustee company.
William’s however, said that any possible deal with ANZ would not be finalised in the short-term.
The consistency of profitability over the last two years for Equity Trustees marks a turn of fortunes for what is one of Australia’s oldest financial services companies. In 2003, it lost more than $3 million after discovering it had been overcharging clients.
The incident lead to the company’s share price dropping almost 40 per cent.
Williams said the present improvement in profitability in all four of the company’s business units - funds management, private clients, funds services and superannuation - was not just driven by strong investment markets.
“They help but they’re not the driver. The driver is the change in culture of the business,” he said.
“A number of us joined in 2003 when the company was in quite a pickle. And basically we worked out pretty quickly the chief executive officer and the chief financial officer could manage the cost and everyone else could drive the revenue. They’re pretty simple business principles, not rocket science.”
According to Williams, the company’s private clients arm, which is similar to a European private bank, now has funds under management over $1.1 billion. The company’s funds management arm, which includes wholesale distribution partnerships with MIR and Pimco, manages around $1 billion.
Williams said the $9 million capital raising had been planned because “trustee companies often find it hard to raise debt.”
He said the money would be used to help equity trustees expand along the eastern seaboard and to strengthen its balance sheet.
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.
