Hartleys plans for growth

THE management team leading the buyout of broking firm Hartleys is planning substantial growth over the coming six months as it moves toward completion of the transaction next month.

Managing director Richard Simpson expects to sign up three or four experienced brokers over the next few weeks and up to a dozen brokers over the coming six months.

The new brokers are expected to contribute substantial additional equity to the business.

“We have raised just shy of $5 million and that number will increase to about $5.5 million,” Mr Simpson said.

“We will be adding staff prior to completion [of the MBO] and they are all looking for equity.

“I want big business writers to have equity in the business.”

Mr Simpson said completion of the MBO would be marked by removal of the Hartleys sign that is such a prominent feature of Perth’s skyline.

“The big sign won’t be a feature. That money can go into hiring people,” he said.

“I want to send a very strong signal that the signage is a symptom of the past.”

Mr Simpson said he and his colleagues had received many inquiries from brokers wanting to join the business, and claimed he could afford to be selective.

“I’m not looking for rapid growth from young bucks. It’s the young guys who are growing quickly that create the compliance issues.”

He said experienced brokers were attracted by the opportunity to buy equity in an independent broking house that would have lower transaction thresholds than the national and international broking firms.

Any new staff joining Hartleys would be a reversal of the one-way traffic over the past two years, when it has racked up large losses.

For the year to June 2003, Hartleys’ wealth management business incurred a loss of $28.3 million, including one-off charges of $21.9 million.

Notable departures include Graeme Yukich, who established Entrust Wealth Management, Heather Zampatti who joined Bell Potter Securities and Andrew Frazer, who joined Paterson Ord Minnett.

The broking business presently has about 80 staff, including 40 brokers.

In all, 33 staff members have contributed equity and Mr Simpson said he planned to put in place a process so that all staff could buy shares in the business.

The staff include Craig Smith-Gander, formerly of CIBC and Terrain Securities, who joined the MBO team as operations manager in May.

Mr Simpson has recruited former PricewaterhouseCoopers auditor Sean McGuinness as chief financial officer and will shortly be appointing a compliance manager.

The broking business is also looking to recruit a gold analyst and an industrial analyst to join base metals analyst Kevin Tomlinson and research associate Simon Tonkin.

Mr Simpson said he was in “pretty advanced discussions” with potential recruits.

As part of the office refit currently under way, which will result in all staff being on one floor, the research team will be housed in a glassed

area in the middle of the dealing area.

“I want a lot of interaction with the desk, in ideas generation and feedback,” Mr Simpson said.

“We want some good, short sharp research on stocks in our space.”

The MBO team expected to complete the final precondition for the transaction this week, he said, when the company was designated an ASX-participating organisation.

This followed the granting of an Australian Financial Services licence on September 2, a key milestone in the MBO. That triggered a number of logistical changes, such as the office refit, installation of IT and communication systems and formal transfer of clients.

The MBO is due to be completed on Friday October 17, when ‘H Management’ will buy the broking business.

The listed company that presently owns the broking business will seek shareholder approval on that date to change its name from Hartleys to JDV, reflecting its technology business.

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