Local investment banks are showing mixed results as the economic cycle changes.
Local broking and investment banking firms required to make their financials public have reported mixed results.
Craigs Investment Partners was the latest to open its books, showing a net profit of $25.45 million for the year to December 2022. While down 41 per cent on the previous year’s $42.79m, it was just a touch lower than the $27.3m reported for 2020.
Total operating revenue slipped slightly from $251.17m in 2021 to $238.44m last year, with brokerage fees falling by $23m to $49.3m, while fee revenue from investment banking services rose from $166.5m to $170.8m.
The accounts included details of the sale of funds management arm QuayStreet Asset Management to NZX last November for an upfront consideration of $31.25m. The deal also included a potential earn-out consideration of up to $18.75m, based on net funds under management inflows from the Craigs network over a three-year period.
Craigs, which is now wholly owned by its staff following a buyout from Deutsche Bank in April 2020, pays dividends to its parent firm CIP Holdings, including a special dividend of $7.67m declared on February 1, 2023 and a final dividend of $4.98m on March 2 this year.
As previously reported in Stock Takes, Goldman Sachs New Zealand saw its profit leap last year to $18.2m, up from the $5.69m recorded in the 2021 financial year. Total revenue from investment banking fees came in at $35.9m, up from $27.4m in 2021, while operating expenses declined from $19.4m to $12.3m.
Directors, including NZ-based Andrew Barclay and Justin Queale and Australian-based Simon Rothery and Conor Smyth, acquired shares in Goldman Sachs Group through an equity-based compensation arrangement. And UBS New Zealand turned in a loss of $0.83m in 2022 from a loss of $0.79m the previous year, despite net fees and commission income jumping to $26.4m from $14.7m.
Interest expenses came to $1.04m, more than double the prior year’s expense of $0.45m. Before tax, UBS NZ’s operating loss came to $2.7m, from a loss of $1.1m in 2022.
Over at Jarden, things are getting bit messy in Australia.
The investment and advisery firm doesn’t report financials statements to the Companies Office in New Zealand, but the Aussie press is filling plenty of column centimetres about some high-profile departures, speculated job losses and changes to the firm’s bonus payment scheme.
Earlier this month, the Australian reported Jarden had injected A$20 million into its Australian subsidiary as deal volume declines amid a slowing economy.
This week, the newspaper’s Data Room column reported that Jarden had offered deferred cash payments to less than half the staff in the bonus pool. Meanwhile, sources told the column that shares that were offered to staff at NZ$25 each a year ago, had now halved – selling at $12.50 apiece.
Last week, the AFR reported six positions had been made redundant at the bank’s equities team and more job losses could be expected within the investment banking team.
The trouble comes not long after Jarden announced a leadership shake-up following the firm’s decision to operationally separate its wealth and investment bank businesses.
The changes included appointing Aidan Allen and Sarah Rennie as incoming chief executives of the investment bank, and Malcolm Jackson as chief executive of Jarden Wealth and Asset Management. Sam Ricketts and Dan Reynolds assumed the role of co-heads of the New Zealand investment bank, and Silvana Schenone was previously named as co-head of Investment Banking NZ, alongside Ricketts.
Former CEO James Lee stepped down at the end of March after 22 years with the firm.
SkyCity appears to be at loggerheads with Australian investment firm Macquarie over the termination of a $220m carpark deal, leading to speculation the issue could be heading to the courtroom.
It’s been six months since Macquarie Capital Principal Finance pulled the pin on an agreement to buy a long-term concession over the carparks after SkyCity wasn’t able to deliver the full assets due to fire damage at the nearby Convention Center construction site.
The Herald first reported the likely problem in early September, and when Macquarie announced the termination on October 27, SkyCity confirmed it would be taking back the operation of all the carparks and looking to raise debt to pay for that.
Just how much SkyCity would need to pay had to be determined by a process set out in the original agreement and was subject to valuer agreement.
This is where the two parties are digging in and, according to the Australian Financial Review, neither is happy with the other’s suggested valuation.
SkyCity had told investors the timing for “re-acquisition” was expected to be late 2022 or early 2023. With negotiations dragging on, the AFR this week reported sources saying the likelihood of legal action was increasing by the day.
No doubt SkyCity is deep in talks with its insurers over the matter. The company had already flagged an interest-bearing liability of $49.7m in relation to the carparks, plus $23.2m in reconstruction costs.
It has also had to pay ongoing compensation to Macquarie for non-delivery, to which $13.7m was recognised as another expense in its December interim accounts.
Bed Bath & Beyond is making headlines for all the wrong reasons, with the once-popular US home goods retailer filing for Chapter 11 bankruptcy this week.
The news may have confused some local shoppers wondering what the move would mean for the New Zealand Bed Bath & Beyond chain.
For the record, the two companies are completely unrelated.
The New Zealand business took advantage of the fact that the US company never trademarked its brand here.
Established in 1995, Bed Bath & Beyond (NZ) is one of this country’s largest Manchester specialists with a nationwide chain of 57 stores.
The company is 51 per cent owned by Sydney businessman Fred Bart, with the remaining shares split between Aucklanders Murray Carter and Trevor Brown.
In contrast to its US namesake, Bed Bath & Beyond appears to be in good financial health in New Zealand.
The company reported a tidy net profit of $8.6 million in the year to July 2022, its last publicly available accounts show.
That was down on the previous year’s $10.5m, but revenue did climb from $109.3m in 2021 to $114.2m last year. The company has very little bank debt, with most of its non-current liabilities stemming from property leases. That enabled directors to pay $13m in dividends to shareholders in the 2022 financial year, up from $10m in 2021.
Somewhat different, then, to the troubled US chain, the Chapter 11 filings of which reveal it has US$5.2 billion in debts on just US$4.4b of assets. The US company plans to close all brick-and-mortar stores by June 30.
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