Brendan Burwood has just one more task ahead of him now: to negotiate an exit for shareholders in the listed shell of the former Chant West Holdings, to end a corporate saga which started when the software customisation company Enzumo Ltd acquired the business of fund research company Chant West in December 2015.
After settling a legal dispute with Zenith Partners, the Melbourne-based retail-orientated research house will go ahead with its purchase of Chant West, originally proposed in February for $12 million in cash. The terms of the settlement are confidential, at least for the time being. The holding company announced last month that it was selling the original Enzumo software business to the Centrepoint Alliance for $1.5 million.
Zenith also bought NZ research firm, FundSource, from the NZX last May for about $340,000.
Burwood, the chief executive officer, confirmed the name change for the shell last week (on July 1), after the deal with Zenith was consummated. It is now known as Consolidated Financial Holdings and has taken more modest office space in Sydney. The name change had already been approved by shareholders on March 31 in readiness for the sale of the Chant West business. Burwood can now either sell the shell and return everything to shareholders or use the cash to buy something else, subject to board and shareholder approval.
In what was seen by some as largely a negotiating ploy, the private equity-controlled Zenith said it would withdraw from its original agreement because of the changed market circumstances due to the Corona crisis. Burwood said he would take them to court to enforce the agreement and did so.
Geoff Peck, head of client development at Chant West, said in a note to clients last Friday (July 3): “While it has taken a little longer than originally planned, we are confident that this is a strategic and logical fit for both companies as it expands the client service capabilities, relevant online toolsets and staff opportunities of both Chant West and Zenith. The outcome of this transaction is that the combined company will have some 70 staff, located in Sydney and Melbourne. It will provide an expansive client base covering the advice, super and pension sectors, a broader IT platform and tool suite, plus a shared commitment to unbiased research and consulting services for our clients.”
Chant West was founded in 1997 by Warren Chant and his partner Andrea West, who had both worked together at SBC, a broker and fund manager which became UBS. The firm competes directly with Super Ratings at the big end of the super and investment market, providing research, ratings and awards. The market is growing in funds under management but shrinking in terms of the number of players, which is the more important statistic for a research firm.
Super Ratings, founded by chairman Jeff Bresnahan in 2002, bought the main rival to Zenith, the Lonsec research house, in 2011 and formed a new unlisted holding company, Lonsec Fiscal Holdings. A merger between Zenith and Chant West seemed logical – providing a nice symmetrical touch – given the changing demographics of the market.
Warren and Andrea, who had been joint chief executives of the listed Chant West Holdings for a time when the software business was burning cash, resigned as directors in 2018. While they maintained a substantial shareholding, they have taken no active part in the company since, as they enjoy a more laid-back lifestyle.
Greg Bright is publisher of Investor Strategy News (Australia)