Investment Services Group (ISG) has embarked on a “strategic review” of its business with a range of outcomes, including a sale, on the table.
Christchurch-headquartered investment bank, Murray & Co, has been appointed to run the review for ISG – the $6 billion plus diversified financial services business incorporating fund managers Devon, Clarity and Tahito as well as the JMI Wealth advisory network and the Select Wealth platform.
Paul Glass, Devon founder and ISG chair, said the move comes at a pivotal moment for the NZ funds management sector “where scale is increasingly crucial for competitiveness and long-term success, and where rapid change is occurring”.
“Accordingly, we’ve decided that now is the right time to appoint an external advisor (Murray & Co) to assist us with a strategic review of our business and the NZ wealth industry,” Glass said.
“The range of strategic possibilities includes exploring options to help us attain scale under our existing framework, as well as how we could potentially leverage third-party investment or relationships to help accelerate this growth.”
The potential ISG shake-up follows a spike in merger and acquisition activity in the NZ investment and wealth management industries of late.
Last month, for instance, Perpetual Guardian purchased the $300 million or so Castle Point after the boutique manager itself was collateral damage in a previous merger.
Castle Point lost its biggest institutional client – an almost $400 million Australasian equities mandate – in March as BNZ handed local asset management duties to Harbour Asset Management.
The BNZ investment business (including KiwiSaver) officially joined Harbour along with the Jarden and JBWere NZ advisory networks in the FirstCape amalgam at the end of April.
And last year Fisher Funds cemented the largest in a long line of acquisitions by adding the $7 billion plus Kiwi Wealth business to its trophy cabinet at a cost of $310 million.
In 2022 another NZ funds management stalwart, AMP Capital, also exited the market as its Australian parent restructured. Macquarie bought the NZ AMP Capital arm only to hand it to Mercer a few months later.
More recently, the $33 billion plus ANZ closed its wholesale funds management arm to focus on KiwiSaver and private wealth clients ahead of a potential investment management change.
The more than $110 billion KiwiSaver is sustaining local managers, especially those with their own schemes such as Milford, Generate, Simplicity and Booster.
However, the growth of retirement savings regime has been less of a spur to traditional stand-alone institutional-leaning boutiques such as Mint, Salt, Nikko or Devon – although the latter two boast linked KiwiSaver schemes.
Earlier this year Nikko refashioned its small (about $50 million) in-house managed KiwiSaver into a multi-manager model under the new GoalsGetter brand. Similarly, the ISG-owned Select scheme – holding just $10 million – was renamed as JMI Wealth KiwiSaver in April.
Glass, who co-founded seminal NZ fund boutique Brook Asset Management (later sold to Macquarie), bought the Goldman Sachs JBWere Asset Management business in 2010 that morphed into Devon.
ISG emerged a few years later incorporating Devon, JMIS (renamed as JMI Wealth), Select, Clarity and Tahito.
Murray & Co has circulated an information memorandum among interested parties.
“I want to emphasise that our priority is to make decisions that best serve the long-term interests of our clients, employees and shareholders,” Glass said. “The review is likely to take the balance of the year, so we’re ensuring that we continue to take a business as usual focus as we work to support our clients.”
Another long-time Brook and Devon veteran portfolio manager, Chris Gaskin, is also due to leave the business at the end of this year.