JP Morgan sells margin lending business
SHAREBROKING firm Forsyth Barr is moving into the margin lending business after acquiring the firm Leveraged Equities from JP Morgan for an undisclosed amount.
Margin lending isn't widespread in New Zealand with just a handful of players including JB Were, ASB Securities and Fulcrum Securities, active in the market.
However, it is big business in Australia, and Forsyth Barr managing director Neil Paviour-Smith expects it will grow in New Zealand.
"It's something that increasing numbers of people are looking at," he says.
Although margin lending is a new operation for Forsyth Barr, Leveraged Equities is complementary to the existing operations, Paviour-Smith says.
"It gives those with wealth the opportunity to gear up. This is really no different to what they do in housing."
Paviour-Smith says the company wants to offer a margin lending service to advisers, other than those who work for Forsyth Barr.
Leveraged Equities will be set up independently from Forsyth Barr with its own offices and own staff, he says. It will also pay a trail commission to advisers who use the service.
Currently the Leveraged Equities only lends on New Zealand shares, but it is looking at offering services with Australian listed shares, and even managed funds.
While the price of the deal hasn't been disclosed, Paviour-Smith describes it as "very attractive".
Leveraged Equities has been in operation under the previous owners since 1994 and has a receivables book of over $20 million.
—Philip Macalister
Recommended for you
With the final tally for FY25 now confirmed, how many advisers left during the financial year and how does it compare to the previous year?
HUB24 has appointed Matt Willis from Vanguard as an executive general manager of platform growth to strengthen the platform’s relationships with industry stakeholders.
Investment manager Drummond Capital Partners has announced a raft of adviser-focused updates, including a practice growth division, relaunched manager research capabilities, and a passive model portfolio suite.
When it comes to M&A activity, the share of financial buyers such as private equity firms in Australia fell from 67 per cent to 12 per cent in the last financial year.
