Shaw and Partners chief executive, Earl Evans, has said the firm is seeking to double the assets under management at its latest New Zealand acquisition ISG.
Last week, the firm announced a $62 million deal to take a 75 per cent stake in investment firm Investment Services Group (ISG) which manages over NZ$7 billion in assets across wealth and funds management, as well as an investment platform.
ISG has 65 staff across its wealth and fund management divisions and international wealth business JMI Wealth will rebrand to Shaw and Partners Financial Services, while its fund management arm Devon Funds will retain this title and continue to operate with NZ leadership.
Speaking to Money Management, Evans said the deal had been prompted by ISG a year ago which was looking to explore potential avenues to take the firm in the future and became a serious consideration for Shaw in February.
“It just made perfect sense for us,” he said. “It was logical, it has adjacencies with our Australian business so we are thrilled with the partnership.”
While the firm always considered opportunities that came across its path, including some in Hong Kong and Singapore, Evans said New Zealand hadn’t necessarily been on the firm’s radar until now.
However, he is no stranger to the New Zealand market from his previous role at Macquarie where he worked as chief executive for banking and financial services, North America, for 12 years.
“We get lots of opportunities sent our way but then you do the due diligence and find they aren’t so great.
“We’ve expressed to the market that we have this capital, we are looking to expand and if they have an opportunities, please run it past us.
“With this deal, I know the New Zealand market very well from my time at Macquarie and felt very comfortable doing this deal there. The market is very similar to Australia, it’s very well-regulated and very transparent which makes it easy to understand so we see it as an area where we can add value.”
With the deal set to complete in July, it is keen to double the assets under management at ISG which currently stand at NZ$7.1 billion, evenly divided between the wealth and the funds divisions.
“We don’t look at this as a passive investment, we’ve bought a 75 per cent stake and we look at it as a partnership rather than an acquisition and we want to work with the [ISG] staff, bring the two firms together and hopefully achieve growth, that’s the plan.”
Until now, the firm had had primarily grown by organic means so Evans said the deal was somewhat “left field” for Shaw and Partners but will help it achieve scale.
“Advice is undoubtedly a scale business, there’s no question about it, but there are limited opportunities on the M&A front because a lot of consolidation has already happened over the last decade.
“We’ve always taken an organic view and we have grown the Australian business from $6 billion to $38 billion in that way over the last 10 years. This deal was left field for us, but we are confident we can make it work, and we took our time getting to know the ISG business.”
Shaw is not the only firm that has been looking at NZ lately, and Evans said the market over there has reached a “nexus point”.
“It’s a good marketplace but New Zealand hasn’t consolidated much over the last 10 years so it was probably prime for consolidation. Private equity firms have started investing in businesses like ourselves, and that’s probably what’s triggered it in both Australia and New Zealand.
“It’s reached a nexus point and we’re seeing lots of activity after a fairly benign period for 10 years.”
