Euroz terminates Prodigy JV

Euroz has flagged an $8 million hit to its earnings after pulling out of its 80 per cent-owned Prodigy Investment Partners joint venture, which had underperformed in recent years.

Euroz cited industry headwinds, increasing barriers to entry and an inability to achieve sufficient scale as factors in its decision.

Prodigy’s offices in Sydney and Melbourne will close and its three funds management partnerships with Flinders Investment Partners, Dalton Street Capital and Equus Point Capital will be wound up.

Flinders had been a strongly performing small companies fund but total funds under management (FUM) was just $35 million.

Dalton had seen FUM decline to $62 million at the end of 2019 after delivering low positive returns, while Equus had FUM of just $3.9 million.

Euroz entered into the Prodigy joint venture in June 2014 with former MLC chief executive Steve Tucker.

The company said it expected the costs of discontinuing the business to be around $8 million, with a non-cash component of $7.2 million and a cash component of $0.8 milion.

Euroz chairman Andrew McKenzie said the company would continue its funds management services through its Perth-based Westoz and Ozgrowth funds.

“We remind shareholders that our Westoz Funds Management strategy has been very successful over the past 13 years with both Westoz and Ozgrowth returning over $162 million in fully franked dividends to their shareholders over this time,” he said.

Euroz shares closed down 7.7 per cent today at 78 cents after emerging from a trading halt.