Dealing through the decades

JOHN Featherby’s move into the broking business amid the carnage of a stock market crash perhaps goes some way to explaining his longevity in the sector.

Mr Featherby (or Feathers as he’s known in some circles) got a call from John Poynton to join his father’s firm as a broker, in 1987, a time he recalls there was little interest in the small end of the market.

He told Business News many companies were trying to recover from the wreckage of the crash, but in true Western Australian fashion there was one sector where there was money to be made.

“Around that time, we saw a rally in the gold price,” he said.

“After five years of the market being under a lot of pressure, we saw a little bit of a resources boom in that period between 1992 and 1994.

“That saw a lot of merger activity; Sons of Gwalia had a very aggressive expansionary phase.

“That activity probably fostered a recovery in the small end of the market.”

Mr Featherby worked for that same firm for 35 years, including a management buyout in 2003 whereby Hartley-Poynton become Hartleys, of which he was chair for seven years between 2008 and 2015.

He remained a director until the firm’s merger with Euroz in 2018 and retired from broking in 2022, but his enthusiasm for the sector has not dimmed.

“I always had a passion for the resources sector, the resources sector I think has been the powerhouse behind the success of the state,” Mr Featherby said.

“Ultimately to be successful, though, companies need exploration dollars and markets will always be fickle.

“There’ll be days, indeed months and sometimes years, where it’s hard to raise money … at its core it’s all about patience.”

Mr Featherby described the exploration success of Mark Bennett-led explorer Sirius Resources and the company’s pivotal nickel discovery in WA’s Fraser Range as a memorable time in his career.

“For me, the exploration success that Sirius had with Nova was one of those times. I’d been a big supporter of that company, probably the only broker that had the faith and confidence given all of the preliminary and precursor work that had gone into making that discovery,” he said.

“It seemed to me to make a lot of sense that there had to be an opportunity, and at a time when the management could have said, ‘this is all too hard’, they persisted.”

Eddie Rigg

Argonaut co-founder Eddie Rigg brings plenty of the bullish, yet strategic, spirit needed to cut it as a broker.

“Our industry is all about winning, it’s not about participating,” Mr Rigg told Business News.

One of the best-known dealmakers on the terrace, Mr Rigg is quick to acknowledge the GFC of 2009 came as one of the most frightening and challenging periods in his career.

“We didn’t know if the world’s banking system was going to collapse … sitting up at night watching CNBC and just asking if the world’s financial system was coming to a halt,” he said.

“I always thought there’d be a correction; I didn’t realise there’d be a crash like that.

“We had a system that said ‘look, if this happens, we go to plan A and plan B or plan C; and we went straight to plan C’.”

Argonaut was fortunate to be in a solid enough financial position to weather the crisis in 2009, but there were difficult and emotional decisions to be made, including redundancies and big pay cuts for the firm’s top earners.

But the tough times didn’t last.

“I was able to call everyone back 10 months later or 11 months later and say to everyone ‘in your bank account not only is the money you’ve forgone, I’ve added the same amount again’,” Mr Rigg said.

Ongoing compliance requirements, particularly the changes that washed through the system post-GFC, had become ever more costly and resources intensive, he said.

Mr Rigg said Argonaut’s decision to stay as a purely stockbroking and corporate finance business focused on resources had been justified.

“What we saw in the industry was a big move from lots of firms to go down that financial planning, fee-for-service type work for clients,” he said.

“We avoided that like the plague and as it turns out [it was] one of the great things we did by avoiding it.”

The result of heightened compliance measures has led the firm to trim its retail offering, with revenues failing to make up for growing compliance costs.

“We raise money to grow companies and get money to take companies over or we sell assets to other companies, there are very few retail investors who get hurt by that,” Mr Rigg said.

“Firms like ours who’ve got an unbelievably good track record of compliance don’t want to deal with retail investors because we don’t make money out of it.”

Across the Argonaut business, he said, there had been far more successes than failures, although there was a handful of the latter.

“You almost spend more time thinking about the ones that have been more challenging,” he said.

“We didn’t do enough to understand the geology on a couple of stories and those still get me. They still bug me. I still wake up and think about it.”

Among his career highlights are a deal struck between BC Iron (now BCI Minerals) and Fortescue Metals Group just before the GFC, and De Grey Mining’s Hemi discovery, which Mr Rigg called the best near-surface discovery in Australia since Telfer in 1971.

“Timing and luck are so important,” he said.

“Yeah, you have great people, you can have great rocks, but there needs to be a bit of timing and needs to be a bit of luck.”

Michael Manford

It would be fair to say Michael Manford knows a thing or two about the twists and turns of market cycles.

“Michael Manford is a rare beast; there’d be no-one that I can think of in a senior position in the industry with anything like forty-four years of active experience,” Canaccord Genuity boss Marcus Freeman told Business News of his colleague.

“We’ve joked that Michael can read demand for a transaction better than anyone down to the nearest few dollars.”

Mr Manford joined then longstanding Perth broking firm Patersons Securities in 1979 and had been executive chair since 1994, before the firm was bought by Canaccord Genuity in 2019.

Mr Manford stayed on as Canaccord Australia’s executive chairman.

“Broking has been a fabulous industry to be involved in over that period of time,” Mr Manford told Business News.

“I've found that for every eight-year cycle, two of the years have been quite ecstatic and a lot of fun, six years usually have just been good, solid years and then [sometimes] there’s a couple of bad years.”

The consistency of capital raisings established across Canaccord over the years is something Mr Manford views as more of a success than a standout deal, per se.

“Every year we raise capital for between 150 and 300 companies. There’s just a consistent flow of Western Australians and others prepared to support in a venture capital way,” he said.

But one transaction stood out in recent memory.

“For instance, the Northern Star transaction where we were lead manager to a $765 million capital raising so they could get their 50 per cent in the Super Pit,” Mr Manford said.

Canaccord CEO Mr Freeman went so far as to call the transaction, which came together a month after Canaccord Genuity and Patersons merged, a watershed moment. Despite his longevity in the sector, Mr Manford said his enthusiasm for the business had remained a constant.

“Look, I absolutely do [enjoy it]. I’m still very involved in the day-to-day activities of Canaccord. I’m always getting excited about how we’re going to get a transaction done and how much demand we’ll get for it and trying to judge the demand of a transaction and contribute to the conversation in that respect,” he said.