AM considers changing ownership structure

AM Corporationhas brought in a consulting firm to help it decide on its next strategic direction, which could include putting itself on the market for a suitable buyer.

The fund manager has hired Gresham Partners to focus on two key objectives. The first is to investigate partnering options for the core business of AM Corporation in superannuation, master trust and wrap platforms. The second objective is to reposition the business generally.

However, partnering could also mean a number of other options such as forging new alliances with other fund managers or offering equity to AM’s network of independent financial advisers, according to chief executive Trevor Howell.

“We’ve given Gresham Partners a very broad ranging brief to look at whether it is appropriate to introduce a partner or look at ownership of the company as well as looking at the business itself and any other suggestions,” he says.

AM Corporation has spent its 27 years of existence as a fiercely independent investment specialist, but the company is now considering a break with the past. AM group general manager of adviser services Graham Davison says the key values and culture of the group will remain unchanged.

“This should be no surprise for our supporters,” Davison says. “It’s almost a case of ‘it’s about time’.”

Howell says there is already evidence the group has changed its tack, starting with his own appointment as chief executive.

“In bringing in an external CEO, that represents a mindset change,” he says. “Since then we’ve been recruiting new people and we continue to look at the business models, so this latest move is just another incremental step towards a new model.”

The primary reason for the contemplation of a new direction is that in the last few years AM Corporations funds under management have plateaued, Howell says. The group is currently on track to bring in $500 million for this year, but the decision to examine its options is also partly motivated by the group’s troubled traded policies fund which could inhibit the company reaching its potential.

“Change is necessary. There’s no doubt that capital is an important part of running any business in this market,” he says.

As a majority shareholder in the company, founder and chairman David Smith will be considering the proposals arrived at by Gresham carefully. Already he has acknowledged that one option would be to dilute his own share of the company.

“It is important that any partnering proposal reflects the importance of the independent financial planners to AM Corporation,” he says.

“I have asked Gresham to make recommendations on how financial planners who actively support AM Corporation can be recognised in an ownership sense, even if this involves a transfer of a proportion of my interests to them.”

Howell expects Gresham to come back to them with their recommendations at the end of the year after spending the next fortnight familiarising itself with the AM Corporation culture.