New Zealand is likely to see a further shake-out in the private wealth advisory sector following two major deals inked last week, according to David Fear, First NZ Capital (FNZC) head of wealth and markets.
Last Wednesday FNZC took over the wealth management arm of Christchurch-based boutique Murray & Co with Macquarie agreeing just days later to sell down most of its New Zealand advisory operations to a consortium of buyers.
Fear said FNZC’s purchase of boutique advisory firm Murray & Co announced last Wednesday reflected underlying competitive pressures in the industry driven by technology, transaction costs and an increased compliance burden.
“It’s becoming more important to achieve scale where you can,” he said.
With the addition of Murray & Co’s seven advisers, the FNZC advisory force would jump above 50, Fear said. While that’s about half the number of advisers operating under both the country’s two largest broking houses – Craigs and Forsyth Barr – he said FNZC did have plans for further growth.
“We’ll look at opportunities as they arise,” Fear said.
Under the deal, Murray & Co split out its investment banking and wealth management arms with FNZC buying out the latter business. The agreement also saw FNZC sell down its existing 25 per cent stake in the original Murray & Co entity to family interests of managing director, Justin Murray.
Murray family interests also purchased Murray & Co shares owned by Humphry Rolleston and Rob Campbell to assume 100 per cent control of the investment banking business. Rolleston, Campbell and Bill Trotter would retire as Murray & Co directors once the deal was completed, the company said in a statement.
Despite the ownership split, FNZC would continue to co-operate closely with Murray & Co “where appropriate”, Fear said.
Similarly, Macquarie Australia would keep a working relationship with its NZ distribution arm post the sale revealed last week as well as a “cornerstone shareholding” (understood to equate to about 20 per cent).
“Macquarie will continue to provide equities research and access to domestic and international deal flow through a long term retail distribution arrangement,” the Australian investment banking firm said in a statement.
The remaining Macquarie NZ shares would be split about 50/50 between staff and former Fisher Funds chief investment officer and current Generate KiwiSaver director, Warren Couillault.
Martin Wright, Macquarie Capital NZ chief, said Couillault would “lead [Macquarie NZ] into its next phase of growth”.
“An essential part of the arrangement has been to provide a number of MPW NZ staff the opportunity to participate in equity ownership alongside Warren and Macquarie,” Wright said in a statement.
Macquarie NZ has 31 authorised financial advisers (AFAs), down from 45 in 2013, according to Financial Markets Authority data.