Merger and acquisition activity in Western Australia’s corporate finance services sector is likely to continue into 2007, with two Perth-based firms joining forces to create a new buying group.
Merger and acquisition activity in Western Australia’s corporate finance services sector is likely to continue into 2007, with two Perth-based firms joining forces to create a new buying group.
Booragoon-based NetFin, which has established offices in WA, Victoria and Queensland, and West Perth-based Southshore Finance, which has representation in Perth and Bunbury, have joined to form NetFin Consulting Group Pty Ltd (NCG).
The new entity is expected to combine the individual specialisations of NetFin and Southshore under one banner, with both continuing to operate under their existing ownership arrangements.
NCG will act as a buying entity for the two companies, providing a single point of contact for the various financiers and the payment of commissions and trails.
NetFin managing director Paul Rowe said combining the two companies allowed the group to offer a more extensive range of services to a greater number of industries.
Mr Rowe said NetFin had established itself among Australia’s largest independent funding and consulting firms for the pharmacy and health care industries, while SouthShore was a specialist in the SME and equipment financing sectors.
“If we came together, what we’d then be able to offer the business community is pretty much the full gambit of products,” he said.
“In [SouthShore’s] case, they weren’t able to do the large commercial deals, and we didn’t have a set up-to handle the small commercial deals.”
Following the merger, NCG will have a total of 20 staff across Australia and is expected to achieve about $650 million in combined lending in 2007.
Mr Rowe said the biggest growth areas for the group are expected to be its corporate and commercial lending division, which specialises in management buy-outs, mergers and large scale property transactions, and its relatively new wealth management division.
Mr Rowe flagged the possibility of other firms joining the group, with assessment currently being made on potential acquisitions to expand the group’s reach across all states.
He also divulged the group’s long-term aim of an ASX listing within a three- to five-year timeframe.
“That’s part of why the group was formed, so that at some point in the future there is the opportunity to roll-up into an entity that could then list or be part of a listed entity,” Mr Rowe said.
He said the new buying group reflected a move towards consolidation within the industry, driven by the changing requirements of financiers.
“As we move forward in this industry…people have had to aggregate, because the banks have said they prefer people who give them $10 million to $20 million [of finance] per month; they don’t want the small players.
“[NCG] provides the financiers with a large volume of lending that’s consistent; the quality is there and provided in a professional manner. That means we can then achieve greater rates and greater flexibility when we are providing our services to our clients.”
