Funds Management M&A Newsletter 2024

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Welcoming you to our Funds newsletter, where we delve into the recent trends and developments within the Australian funds management industry. In this edition, we explore the state of the industry, significant mergers and acquisitions, and the evolving landscape shaping the future of investment management in Australia.

 

State of the Industry

 

The Australian funds management industry continues to demonstrate resilience and adaptability amidst ongoing economic uncertainties and market volatilities. With a robust regulatory framework and a strong focus on investor protection, Australia remains an attractive destination for both domestic and international investors seeking diversified opportunities.

 

Despite challenges posed a few years ago by the global pandemic and recent geopolitical tensions, the industry has shown remarkable growth in assets under management (AUM) over the past few years. The increasing demand for sustainable and socially responsible investment options has also reshaped the investment landscape, with funds incorporating environmental, social, and governance (ESG) principles into their strategies as well as delving into new benefits provided by investment data system providers such GoldenSource, Finbourne, Rimes (Matrix), S&P Global (IHS/MarkitEDM), Fencore, NeoXam and BNY Mellon (EaglePACE).

                   

 

Industry Mergers and Acquisitions

 

Dexus acquired AMP Capital’s real estate and domestic infrastructure equity business (AMP Capital) in March 2023. The combined business creates a leading real assets investment manager in Australia with more than $60 billion of funds under management.

 

           

AMP and Ares Management Corporation: A subsidiary of Ares Management Corp. completed its acquisition of Sydney-based AMP Ltd.’s infrastructure debt platform in early 2022. The transaction added about $8 billion in assets under management to Ares, bringing its total AUM across its debt and equity platforms to over $12 billion.

 

         

Magellan Financial Group, Barrenjoey Capital and FinClear: Magellan Financial Group acquired a 35 percent stake in Barrenjoey Capital Partners, signalling its foray into investment banking and capital markets. This strategic alliance has enhanced Magellan’s diversification strategy and strengthens its position as a diversified financial services provider, catering to the evolving needs of its clients across the investment spectrum. Magellan also acquired a 15 percent stake in FinClear, an Australian leading independent technology and infrastructure provider for financial markets both listed and private.

 

   

Perpetual and Pendal: Perpetual completed a $2.5 billion acquisition of Pendal in January 2023 bringing Perpetual’s total assets under management to roughly $200 billion strengthening its position in the Australian investment industry.

 

Other completed mergers in the Funds industry

 

  • Australian Ethical and Christian Super
  • Australian Super and Club Plus and LUCRF
  • Cbus and Media Super and EISS Super
  • Centric Super and Encircle Super merged
  • Equip and Catholic Super and BOC Super
  • First State Super and Vicsuper and WA Super and VISSF (rebranded as Aware Super)
  • HESTA and Mercy Super
  • Hostplus and Intrust and Statewide
  • LGIAsuper and Energy Super and Suncorp Super (rebranded as Brighter Super)
  • Sunsuper and QSuper and Incitec Pivot Employees Superannuation Fund (IPES) and Australia Post Superannuation Scheme (APSS) (rebranded as Australian Retirement Trust)
  • Tasplan and MTAA (rebranded as Spirit Super)
  • UniSuper and Australian Catholic Super

 

Mergers under discussion or in progress

 

  • Active Super and Vision Super
  • Alcoa Super and Australian Retirement Trust
  • AvSuper and Australian Retirement Trust
  • Care Super and Spirit Super
  • Commonwealth Bank Group Super and Australian Retirement Trust
  • Hostplus and Maritime Super
  • Mercer Super and BT Super and Lutheran Super and Holden Employees Super Fund (HESF)
  • Oracle Super Fund and Australian Retirement Trust
  • TWUSuper and Mine Super

 

 

 

These mergers and acquisitions underscore the industry’s dynamic nature and the imperative for firms to adapt and innovate in response to changing market dynamics and investor preferences. Consolidation trends are expected to continue as firms seek scale, diversification, and strategic partnerships to navigate the evolving landscape and drive long-term growth.

 

Future Outlook

 

Looking ahead, the Australian funds management industry is poised for continued growth and innovation, fuelled by technological advancements, regulatory reforms, and shifting investor preferences. Firms will need to remain agile and responsive to emerging trends, including the rise of digital assets, the integration of AI and machine learning in investment processes, and the increasing focus on sustainability and responsible investing.

 

As the industry evolves, collaboration and partnerships will be key drivers of success, enabling firms to harness collective expertise, leverage complementary capabilities, and deliver value-added solutions to investors. With a commitment to excellence, integrity, and client-centricity, the Australian funds management industry is well-positioned to navigate the challenges and seize opportunities in an ever-changing global landscape.

 

Thank you for joining us in this edition of our newsletter. We look forward to bringing you more insights and updates on the dynamic world of funds management in the months to come.

 

Hope you have enjoyed this newsletter and for further information, please feel free to reach out to us

 

How to successfully integrate two Investment firms

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Due to the high volatility and shere number of funds and investment management businesses looking to acquire, sell or merge, we thought it would be a good idea to write an article to highlight some key take aways to consider when acquiring and integrating two investment firms.

 

When it comes to integrating two investment firms from a technology and systems stand point, there are several factors to consider. Here are some of the best practices for technical integration:

 

  1. Conduct a comprehensive technology audit

The first step in technical integration is to conduct a comprehensive audit of both firms’ technology systems. This will help identify any redundancies, compatibility issues, and areas that need improvement. The audit should cover hardware, software, networks, and data centers. This is a good time to highlight each companies unique platforms which comprise of:

  • Order management system (OMS) and trading platforms
  • Investment management and risk analytics systems
  • Enterprise Data Management and performance
  • CRM platforms (usually Salesforce in buyside clients)
  • Data visualization and business intelligence (usually PowerBI, Tableau or Alteryx).
  • Any financial advice platforms
  • Who do they outsource fund administration to and also does this cover custody, fund accounting and transfer agency services?

  1. Choose a platform for data consolidation

After the technology audit, the next step is to choose a platform for data consolidation. This platform should be able to accommodate data from both firms, as well as any future acquisitions. It should also be secure, scalable, and able to integrate with other systems.

 

  1. Establish a project team

To ensure a successful technical integration, it’s essential to establish a project team. This team should consist of representatives from both firms and should include IT professionals, project managers, and other key stakeholders. The team should be responsible for overseeing the integration process, including setting timelines, managing budgets, and communicating progress to stakeholders.

 

  1. Prioritize integration efforts

Given the complexity of integrating two investment firms, it’s important to prioritize integration efforts. The project team should focus on critical systems first, such as trading platforms, order management systems, and risk management systems. Once these systems are integrated, the team can move on to less critical systems.

 

  1. Communicate regularly

Effective communication is essential for successful technical integration. The project team should communicate regularly with stakeholders, including employees, clients, and vendors. This will help ensure that everyone is aware of the integration process, any changes that will affect them, and when they can expect the integration to be completed.

 

  1. Test and validate systems

Before going live, all integrated systems should be thoroughly tested and validated. This will help ensure that the systems are working as intended and that there are no critical issues. Testing should include end-to-end testing, user acceptance testing, and performance testing.

 

In conclusion

Integrating two investment firms technically can be a complex process. By conducting a comprehensive technology audit, choosing a platform for data consolidation, establishing a project team, prioritizing integration efforts, communicating regularly, and testing and validating systems, the integration process can be successful. It’s important to have a clear plan in place, communicate effectively, and be prepared to make adjustments along the way.

Fintech Recruitment Newsletter October 2021

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Even with Covid restrictions this has certainly been a bumper year to date and a candidate driven market!

Over the last 6 years, our Fintech industry has grown from AUD250m in 2015 to AUD4Bn in 2021.  Based on findings from Findexable 2021 global Fintech rankings, Australia has jumped two places in the global fintech rankings and now ranks 6th in the world and 2nd in the Asia Pacific region. This surge has brought about new Fintech start-ups across: buy now pay later (BNPL), share trading, foreign exchange, accounting automation, home loans, financial credit checks and credit scoring as well as new financial investment firms.

Global interest in Australia’s Fintech industry will continue to grow after Square recently acquired BNPL firm Afterpay for $39bn. This goes to show that overseas companies are certainly paying close attention to the Australian Fintech industry.

Although we have now gone into a 2nd year of lockdowns across the country, the fintech recruitment industry is surging forward with no signs of softening. I can’t recall a market quite like this for some time now!

 

 

Senior Level Industry Appointments 
  • Ann-Mary Rajanayagam, placed by Kapital Consulting, joined JANA as the Head of Technology after returning from a lustrous banking career in New York City.
  • Sam Hallinan was appointed the new CEO of Schroders Australia moving across from Nikko Asset Management in April.
  • Allison Hill has been appointed the new Chief Investment Officer at QIC in Brisbane
  • Shantell Wiliams leaves Fintech Purple Group to join Tic:Toc as their new CTO
  • Tim Larcos named as new CTO at PwC
  • John Sutherland (2020 CIO of the year) recently joined HammondCare as their new CIO

  

Kapital’s Funds & Investment Management placements:
  • Chief Technology Officers (CTOs)
  • CIO
  • Head of Technology
  • Multiple Enterprise Architects and Heads of Enterprise Architecture
  • Information Security Manager
  • Product Manager
  • Head of IT Infrastructure
  • Principle Identity Architect
  • Workplace collaboration Lead
  • Application Support
  • Multiple Business Analysts and Data Analysts
  • Investment Data Analysts
  • Data Migration Developer
  • Equity Quant Developers
  • Multiple system and Automation Testing profiles across Payments, CRM and Banking
  • Data Centre Project Manager
  • Cyber Security Architects
  • Service Delivery Managers
  • Multiple Project Managers across Security, Cloud, Applications, Infrastructure and Investment Systems
  • Solution Designers
  • Multiple DevOps Specialists (mainly Azure and AWS, not so much GCP)
  • Multiple .Net, Java & Python Developers
  • Mulesoft Developers
  • Mobile Developers
  • Desktop Support Analysts

 

Salaries and threats

We spoke about this in our last newsletter and it continues to be a very hot topic. Last year we faced more counteroffers than ever before as well as candidates, too nervous to make the switch to a new role. Now as Covid and working from home has become the new norm, the market is feeling a lot more comfortable to look for new opportunities. This is largely due to client demand but also the comfort that companies now have a solid Covid onboarding process for new hires.

There is such high demand for technology skills across Australia, that we are witnessing candidates with 2-3 offers on the table. It is certainly a candidate driven market and we have seen first hand where candidates with niche technology skillsets, are being offered anything from 20-35% pay increases to leave their current roles.

Candidates are being snapped up very quickly, offered high salaries and in many cases sign-on bonuses. There is an uptake in clients willing to look interstate and also overseas for top talent. Companies have definitely embraced this throughout 2021 and have been onboarding new hires from further afield.

What we are seeing for 2022

It is clear that the demand for top talent, will continue for the remainder of 2021 and certainly well into 2022. There has been huge demand for Development and DevOps skillsets with ~95% of our clients looking for experience in one or both of these verticals. Data Analytics still in high demand and a recent surge for Mobile Development and Mulesoft Development expertise. We will see the demand for Project Services skyrocket throughout 2022 with the relaxing of Covid restrictions and the knowledge that return to work is back on the horizon.  Simply put, there are companies, not comfortable taking on critical initiatives with project teams working from home and not in the office.

The growth we have experienced in 2021 was much needed across many industries and we will see this continue to ramp up through 2022 for all our clients. If you would like further information on the market or roles we are running, please do not hesitate to reach out to us at info@kapital.com.au

Till next time!

Fintech Recruitment Newsletter November 2020

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Market Snapshot across Buy-Side Funds & Investments

What an interesting year it has been to say the least. A solid start to 2020 in terms of hiring into planned system implementation, transformation and integration programs. Then March kicks in and everything came to a grinding halt. The disruption Covid brought had drastic changes for many industries. Healthcare ramped up, restaurants and pubs shut down and financial services companies who were very traditional in their tech set up with desktops and fixed line phones, had to very quickly, set their employees up to work remotely. Some technology and fintech start-ups looking at 2020 to be their year to gain funding from PE / VC firms or foreign investors, would need to wait another year. Companies going IPO were certainly nervous too.

We all adapted, for the better. More companies have adopted a solid work from home policy. It’s now part of the interview and onboarding process for many firms. There is far wider work life balance. Managers are now being trained and getting better at managing remotely. Employees don’t want to give off the impression they are slacking off and therefore productivity increases. The sentiment is that this is the reset we all needed.

For 6mths there was no grey area. Either companies were hiring to spend their budgets before June 30 or they were on a hiring freeze, as they were rolling budgets into the 2020-2021 financial year from July 1. What this meant, was for the first time in a while, we had the ability to be more targeted in our approach to clients and their recruitment needs.

Since Q3, we are seeing our clients back to pre-Covid levels of activity with a lot happening in the buy-side funds and investment space across data visualisation, investment data and development. It looks like 2021 is shaping up to be a busy year.

 

Senior Level Industry Appointments
  • CBUS have appointed a new CEO in Justin Arter who moved across from Blackrock.
  • Thomas Achhorner started as the new CIO of Volt Bank.
  • Mark Rider is the new CIO of Christian Super.
  • Willem Popp moved into the Head of Shared Services Technology at Judo Bank.
  • Andrew Cresp was appointed the new CIO of Bendigo and Adelaide Bank.
  • Andrew Dimech is now at Australian Payments Network as the Head of Information Technology.
  • John Knox joins Ares Management as their new chairman, moving from Credit Suisse.
  • George Confos has been appointed as the CEO of Avenue, a new Australian bank.
 Kapital’s Funds & Investment Management placements:
  • 2 x Heads of IT with another at offer stage
  • Head of IT Infrastructure
  • A number of Enterprise Architects and Heads of EA, another at offer stage
  • 4 Investment Data SMEs
  • 3 Snr Buy Side Funds Business Analysts
  • 2 x Desktop Support and Technical Analysts
  • MarkitEDM Developer
  • DevOps & Cloud Support
  • Infrastructure and Security Consultants
  • C#.Net Developers

 

Salaries and threats

This has been a very interesting topic over the last few months on a number of levels. At the start of the pandemic, we had more offers turned down than ever before. Simply put, candidates were too nervous to make the switch to a new role, rather than stay in a position where they are a known employee and going into the unknown of what Q2 would bring. Companies were offering more than 20% of the current salary and they were still being turned down. When candidates are going for interviews now, more care is taken by them, to ask about the onboarding process and company expectations. Salaries have certainly gone up. Projects that were on hold have now been given the green light. This has pushed up the demand for good industry talent however, with the reluctance of many candidates to move, supply has decreased pushing up salaries.

With the decrease in supply, many companies are starting to look for resources from further afield. Employers have adopted one week in the city, one week from home and there is more scope to use remote workers from interstate. Clients who historically would not consider interstate workers, are now open to remote resources from Hong Kong or Singapore. Some have considered Europe and the States for niche technical and system skillsets however, the time zone still plays a factor in this decision.

 

What we are seeing for 2021

Buy-side funds who had sales staff going out to meet their customers, now have to think of more intuitive ways to get the sell. This is going to demand a more efficient sales distribution team to better utilise visual dashboards through analytics, social media and virtual meetings. There will be a larger onus on solid investment data and visual aids to work this process and we are already seeing this.

The disruption of the royal commission and new financial regulation, has brought about big changes and impacts across funds and investments. Client and data reporting tools, are fast becoming a necessity and many clients are bolstering their toolsets in this space to ensure they are highly accurate with all data. Many of whom are implementing data governance frameworks, data analytics platforms and also implementing EDM (enterprise data management) platforms like EaglePace, Curium or MarkitEDM.

After the reset and softening of the global economy over the last 6 months, we see 2021 being a pumper year for all our clients.

Till next time.