Companies table their case for lead ranking

LEAGUE tables always generate plenty of debate, both for the rankings they produce and the methodology employed to construct them.

The contentious nature of league tables is illustrated by the fact that four different broking firms could claim to be the number one player in WA equity capital raisings, depending on which numbers were used.

Euroz Securities claims to have been the top WA-based broker in “straight equity capital raisings” in the past two years, based on the Australian Equity league tables published by Thomson Financial Services.

Hartleys also uses Thomson data in its advertising, which shows that Hartleys ranks ahead of Euroz.

Both firms are correct, they just use different tables.

Euroz came out best in the Australian Equity table, while Hartleys came out best in the Australian Equity and Convertible Offerings table.

The latter includes convertible note issues for Croesus Mining, Repcol and Gympie Gold, which lifted Hartleys up the ranking.

However, there is a major shortcoming with the Thomson tables. Data for WA-based broker Paterson Ord Minnett is aggregated with that of its 50 per cent shareholder JP Morgan.

To get around this problem, Paterson produces its own tables, which show that it was the top WA-based broker for equity capital raisings in both 2001 and 2002.

This is borne out by the findings of WA Business News’ capital raisings survey, summarised in the table on page 12.

The table also shows that national broking firms, led by JBWere, have managed substantial capital raisings for WA companies.

A large national firm such as JBWere is simply not relevant to the vast majority of small and mid-cap WA companies.

Nevertheless, JBWere clearly raised more money for WA-based companies than any other broker last year.

The WA Business News league table uses a simple and consistent methodology.

It includes all transactions where a broking firm was underwriter, manager or sponsoring broker. It does not include “participating brokers”.

The total value of each transaction has been assigned to each broking firm, irrespective of the number of brokers involved.

This reflects the inherent difficulty in apportioning credit for capital raisings, even in transactions where there was a single sponsoring broker or manager.

The reality is that some sponsoring brokers are responsible for only a portion of the total amount raised.

Apportioning credit can be even more difficult when multiple firms are involved, for instance in GRD’s $17.5 million rights issue.

Euroz was lead manager and sole underwriter for the entire placement, while Paterson was sponsoring broker.

Euroz clearly had the more important role and carried greater risk, but WA Business News has not attempted to apportion credit between the two firms.

Similarly, three firms were involved as managers of Perilya’s $10.7 million placement. The full amount has been credited to all three – Paterson, Hartleys and Euroz.