AFTER months of will they won’t they speculation, the management team at stockbroker DJ Carmichael has successfully completed a management buyout of the 50 per cent stake held by Australian Heritage Group.
The news of the buyout comes hot on the heels of the official announcements coming out of another Western Australian broker Hartleys about the appointments for its new management team following its management buyout.
The 50 per cent stake went for $1.5 million to 28 of DJ Carmichael’s 70 staff – including those that were already shareholders in the business.
Four of them own between 4 per cent and 16 per cent of the business.
The buyout also included the DJ Capital Market business.
The management buyout was officially concluded on October 31 with $1 million paid on that date and the remainder to be paid by October 31 next year.
DJ Carmichael managing director Rodney Beeton said the firm had historically been owned by its staff.
“Having a large external shareholder does not seem to work effectively in stockbroking,” he said.
Mr Beeton said the synergies that previously existed with AHG ceased because the investment house had been in the process of changing its operations.
He said the parting from AHG had been amicable.
With the AHG connection severed, one of the key things on the management team’s agenda will be to rebuild the firm’s image.
The firm was drawing headlines for a number of things, including the removal of high profile analyst Peter Strachan. One of the other reasons was for its loss last year.
However, some of the negative press surrounding the firm earlier this year was due to its connection with AHG which was going through a very spiteful public battle to reshape the board of listed pharmaceutical player VRI Biomedical.
Mr Beeton said much of the negative publicity surrounding the firm was due to the AHG-VRI battle.
He said the firm’s loss had been due to the costs incurred from gaining its Financial Services Reform license and from restructuring the business.
“We’re the first broker in Australia to get that FSR licence,” Mr Beeton said.
“And market conditions were terrible.”
The firm’s restructure is aimed at broadening the business.
“We’ve taken it from a stockbroker to a broad financial business,” Mr Beeton said.
“We have the strongest options desk in WA and one of the strongest in Australia.
“We’ve been profitable every month of this financial year and the profits are growing.”
Some of those profits have come from the stronger trading conditions facing the market, especially the number of new mining floats trying to get started.
While DJs has not been a big player in that area, Mr Beeton said it would try to be.
“The corporate advisory side of the business is something we’re working on,” he said.
The firm is also beefing up its dealing desk with plans to have between 40 to 50 dealers operating.
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