Craigs Investment Partners booked an almost 18 per cent jump in operating revenue and profit last year even as costs rose by a similar proportion.
According to the just-released Craigs 2024 accounts, the NZ wealth management network rang up almost $267 million in operating income for the 12-month period against more than $227 million over the previous year.
But expenses also surged from $206.2 million in 2023 to $243 million last year, led by employee costs that rocketed from close to $142.5 million to $166.4 million 12 months later.
Including an earn-out bonus from its sale of QuayStreet in 2023 and a valuation uplift in a parcel of NZX shares acquired in the process, Craigs recorded a net profit before tax of almost $37.5 million (or $26.8 million after tax).
The firm, now half-owned by US private equity player, TA Associates, saw a net profit after tax in 2023 of more than $48.7 million after banking a $31.25 million payment from the NZX on the QuayStreet deal.
Craigs received “total upfront consideration of $31,250,000, comprising $22,500,000 cash and the issuance of $8,750,000 of NZX shares”, the report says.
“In November 2024 a further $3,201,169 was earned in deferred consideration and recorded as a gain on sale of [QuayStreet] management rights.”
However, the prospect of further volume-based payouts on sale of QuayStreet funds via the Craigs network have dimmed on slower-than-expected flows.
The NZX wrote down provision for an earn-out payment this year to nil under against a potential bonus of a maximum $7.5 million if cumulative net flows to QuayStreet funds from Craigs since the sale topped $1.2 billion by November this year.
But NZX chief, Mark Peterson, said at the time that “the size of the opportunity remains”.
Craigs, headed by Simon Tong, also signed an agreement with JP Morgan Asset Management last year to provide products and research to the more than 200-strong advisory network.
The group earned $186.4 million from investment banking and funds management fees last year with brokerage ($62.9 million) and commissions ($17.5 million) also contributing to top-line revenue.
The accounts put an equity value on the business at almost $123.8 million including $75 million of retained earnings and $48.2 million of share capital.
TA Associates finalised its 50 per cent purchase of Craigs stock for an undisclosed sum late in April with the private equity firm subsequently gaining two board seats.
Ed Sippel, TA Asia-Pacific head and Lily Xu, a NZ and Australia specialist for the private equity manager, were named as Craigs directors as two incumbents – Deidre Copley and Brett Shepherd – stepped down.
The deal significantly expands the TA boot-print in NZ where it already owns a third of Fisher Funds (albeit in a stake rumoured to be for sale at the end of 2023).
TA also has large shareholdings in Russell Investments, Betashares and the global investment administration conglomerate, Apex Group – all of which have operations in NZ.