20/12/2021 - 08:00

Changing of the guard at IR firms

20/12/2021 - 08:00

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With multiple changes at the top of WA’s leading investor relations firms, we review their performance and strategies.

Changing of the guard at IR firms
Michael Weir (left) will lead Citadel-MAGNUS’s Perth office after the retirement of John Gardner. Photo: David Henry

Citadel-MAGNUS is about to become the third major investor relations firm in Perth with new leadership, with the retirement this month of founder John Gardner.

His exit follows that of Cannings Purple founder Warrick Hazeldine, who stepped aside as managing director early this year and will shortly retire as chairman.

A third change was at FTI Consulting, where Shaun Duffy retired last year as senior managing director after 10 years with the firm.

These firms are among the market leaders in Western Australia, according to the Business News Data & Insights (see table).

Cannings Purple has advised on 61 mergers and acquisitions deals worth $12.2 billion over the past five years, putting it just ahead of Read Corporate and FTI Consulting.

Read Corporate is the top firm in equity capital markets, advising on 135 deals worth $3.7 billion over the same period, ahead of Cannings Purple and Citadel-MAGNUS.

While the departing directors focus on new careers, their replacements are looking to maintain market share in a rapidly changing sector.

Mr Gardner is leaving Citadel after 25 years in corporate communications, most of that with his own company.

“I’m re-evaluating and thinking what’s next for the next 10 to 15 years of my career,” Mr Gardner told Business News.

Mr Gardner said the change would allow his wife to focus on her career while he could spend more time with his three daughters.

He will continue with other pursuits, including board roles at the WA Cricket Foundation and tech startup IQ Wellness.

As he contemplates future options, Mr Gardner can look at the different pathways taken by his erstwhile competitors.

When Mr Duffy left FTI, he set up a one-man consulting business with the intention of operating at a slower pace and having more time for mid-week golf, but has ended up taking a full-time role with Little Green Pharma.

The ASX-listed company is primarily focused on medicinal cannabis but is also exploring opportunities for psychedelic medicines derived from mushrooms.

Mr Duffy now runs LGP subsidiary Reset Mind Sciences, which is pursuing this opportunity.

It was a case of commercial opportunity intersecting with personal interest, as a family connection had prompted Mr Duffy to start researching psychedelic medicines as a treatment for depression.

He said the opportunity would not have presented if he had continued with his full-time role at FTI.

“It’s amazing when you throw off the safety net, you start to see opportunities you had never contemplated before,” Mr Duffy said.

Reinforcing the emerging credibility of psychedelic medicines, former state government minister and experienced company director Cheryl Edwardes – who is also an adviser at FTI – sits on the board with Mr Duffy.

Mr Hazeldine has taken a different path after leaving Cannings Purple, which he grew from a startup in 2004 to WA’s largest full-service communications firm with more than 40 people.

That team includes Peter Klinger, who leads Perth’s largest investor relations practice.

Warrick Hazeldine has taken new board rules as he exits Cannings Purple. Photo: David Henry

Mr Hazeldine is chair of ASX-listed Global Lithium Resources, recently joined the board of aspiring critical minerals producer ChemX Materials, and is the incoming chair of medicinal cannabis company Cannaponics, Mr Hazeldine has also established a family office and private equity group, BRT Equity, which is investing in the critical minerals sector.

“That thematic has a long way to run, and with so many IPOs, all those companies will need directors,” he said.

National strategy

Reflecting on his time at Citadel-MAGNUS, Mr Gardner said the firm achieved his early goals.

He established MAGNUS Corporate Communications in Sydney and later merged with Sydney-based Citadel, after returning to Perth to set up an office here.

“The vision was always to have a Perth-Sydney business that was one team across two offices,” Mr Gardner said.

One of his earliest clients was uranium play Extract Resources, which was the subject of a protracted takeover battle that ended when a Chinese group bought it for $2.2 billion.

“In many respects, Extract Resources was the making of the business,” he said.

“Probably my second client was Cedar Woods Properties, and they are still a client today.”

Mr Gardner said the business model was to provide ongoing investor relations services on a retainer, with a view to then working on big transactions.

“We wanted to get really strong and attract the best merger and acquisition work because frankly that’s the most exciting,” he said.

Mr Gardner said the MergerMarket league tables highlighted the firm’s success across Perth and Sydney.

They rank Citadel-MAGNUS as the number one Australian IR firm for advising on M&A deals in the Asia Pacific (ex-Japan) during the past four years.

Michael Weir, who has been with Citadel since 2015, has broad experience as a business journalist, an in-house communications manager with ASX-listed companies Gindalbie Metals and Emeco Holdings, and a PR consultant.

He remarked on how much his work had changed.

“We are more of a strategic adviser at that high level, around the boardroom table, often alongside the lawyers and the investment banks,” Mr Weir told Business News.

“That is completely different to my first stint back in the 1990s when it was just pure public relations.

“Our role back then was to push clients’ stories to get in the media, whereas now the media is quite a small part of what we do because our brief with the clients is much broader.”

Messaging

That said, one of the perennial challenges facing investor relations firms has been finding effective ways to get their client’s message out, especially as newsrooms have shrunk and retail stockbrokers have shut down.

One option has been to set up investor conferences.

Read Corporate was an early mover. It established the Resources Rising Stars conference in 2001 and since then has run it every year on the Gold Coast.

“That stemmed from a desire to get the message direct to retail investors as the broking industry consolidated,” director Nicholas Read said.

Read Corporate set up a new conference in Perth this year – Boom in a Room – and that was likely to be repeated.

Other channels used by Read include online news service Bulls n’ Bears and online platforms such as Stockhead and Small Caps.

Mr Read said it was a big change from his early days, when his main distribution channel was faxing media releases to a select group of business journalists.

“The thing that has stayed the same is the relationship with clients,” he said.

With a client list that includes Bill Beament, Kerry Harmanis, Karl Simich, Ken Brinsden, Tim Goyder and David Flanagan, Mr Read is allowed to make that boast. Another firm to invest in new distribution platforms is Chapter One Advisors.

The firm was established by David Tasker, who previously ran the investor relations practice at one-time market leader PPR, which imploded after the GFC.

After that experience, Mr Tasker said he wanted to keep Chapter One small.

Chapter One publishes the investor magazines The Pick and Techinvest, which are distributed as inserts in The Australian Financial Review.

It was also a quick mover in the field of online events, after fortuitously trialling the technology pre-COVID-19.

Chapter One has partnered with Sydney-based Share Café (which pre-COVID produced traditional Q&A videos) to present weekly live events every Friday.

Mr Tasker said nearly 300 listed companies had presented, with more than 2,000 people watching each event.

Chapter One has also been active in the events space, most recently partnering with Vertical Events to set up an investor conference in Busselton sponsored by Canaccord Genuity.

Another investor relations firm with a different focus is Fivemark Partners, which specialises in the resources sector and counts Fortescue Metals Group, Evolution Mining, De Grey Mining and Aurelia Metals as clients.

The Fivemark team includes former business journalist Michael Vaughan, but also directors such as co-founder Lee Bowers and new recruit Andrew Prior, who come from a stockbroking and financial analyst background.

Mr Vaughan said Fivemark was aiming to fill a gap in the market between the major investor relations and corporate finance firms.

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