The scramble by many professional services firms to set themselves up in Perth is highlighting the value of key individuals.
QUITE a few eyebrows were raised when Michael Ashforth quit boutique independent investment advisory firm Gresham more than a year and a half ago to join Macquarie.
Mr Ashforth was already seen as the Perth market’s leading investment banker and could pretty much call his own shots; why would he want to jeopardise that position to become part of the Macquarie juggernaut?
In his words at the time, it was a tough decision to leave Gresham, having established the Perth office of the firm 13 years ago, but he was attracted by opportunity to expand the range of work he did and the product offering.
It was, in reality, an opportunity to chance his arm in the big league.
The move that caught many by surprise has been very successful. WA Business News’ annual survey of mergers and acquisitions activity in this state has put Macquarie at the top of the local pack for the first time (see July 7 edition).
Before Mr Ashforth’s arrival, Macquarie was a perennial bridesmaid to the likes of Azure Capital and Gresham. Its success underscores his reputation as a so-called ‘rainmaker’, a player who can bring business to a professional services firm and make it stick.
The success of that recruitment goes beyond improving Macquarie’s position in Perth. Internally, Mr Ashforth has taken on a national role heading up the bank’s resources division. Externally, the move has forced Gresham, a significant local competitor, to rebuild.
Perhaps more importantly, Macquarie has outsmarted its major competitors, who have all realised they could do with a star recruit of their own to get established in Western Australia.
The problem for so many investment banks is that there are very few people of such calibre with the networks and reputation they desire, let alone the willingness to move.
Across the professional sector, from investment banking, management consulting and the law, where the value of the individual is paramount, large global and national firms are trying to cherry-pick star players to establish themselves in Perth.
Goldman Sachs, Royal Bank of Canada and Credit Suisse First Boston are among the global investment banks rumoured to have been seeking a star recruit to set them up in Perth.
Most recognise that dropping-in an unknown face as an alternative to their hitherto fly-in, fly-out servicing of the Perth market is not the best option.
Star recruits
“The only way to establish a business in this town is with a beachhead,” one local headhunter said.
“How do you do that in Perth? You are looking for someone who is looking for something different and maybe a bit more autonomy.”
Global management consultancy Bain & Co is repatriating two well-credentialed employees, Stuart Love and Brian Murphy, to help kick-start its local presence.
However, it is the poaching of Robert Radley from PwC in Perth to head Bain’s new office that is seen as a major coup due to his reputation as one of the leading practitioners in the market.
In contrast, Bain’s rival Boston Consulting Group, has opted for a different course, bringing in Angus Jaffray, who has come from Sydney to start the new operation.
In the legal space, the global and national players have tended to recruit groups of star lawyers or merge with a whole boutique firm to capture the potential of their most prominent players (see story page 12).
Back in the investment banking space, Canadian financial services group GMP has recruited Karl Paganin to head-up its Australian corporate finance business. Mr Paganin left Euroz a year ago, making him a rare find – a top adviser without existing ties to a local firm (see story page 13).
Global bank Morgan Stanley Smith Barney beefed up its Perth office last year by recruiting broking heavyweight Andrew Fraser to give it on the ground presence backed up by its usual FIFO operators in corporate finance.
Mr Fraser admits his own high-profile financial issues from the GFC were an incentive when it came to moving from WA-headquartered Patersons to the global bank.
While ostensibly providing Morgan Stanley with an institutional stockbroking desk in Perth, Mr Fraser’s business involves significant deal making, which links into the corporate advisory space, a move that has been successful enough to make him one of the bank’s top performers on an individual basis.
“They (global banks) have finally realised they need someone who goes to the clubs and the societies and donates to a few charities,” Mr Fraser said. “Everyone has their own networks. You can’t just swan in.”
Hybrid options
While many state a preference for key individuals, the ability to recruit such players is limited. Not only are they few in number, there are big obstacles to making them move.
Not everyone wants to work for a global bank, especially if they have equity in an existing business; and not all will fit the bill in terms of experience and skills set.
As an alternative, hybrid options have appeared in order for the majors to bridge their lack of local talent and their need to be in WA.
Global investment bank UBS tried to build a presence by basing former FIFO operator Richard Saywell here. He lasted 18 months before shifting back to Sydney last year. UBS retained a Perth office but its dedication to the local market was questioned.
Late last year it arrived at an alternative, blending youth and experience in the form of Neil Hamilton and Tim Day. Mr Hamilton is a veteran industrialist, investor and non-executive director, with a list of contacts most in town would envy. Mr Day is what many of the investment banks have – a Perth-bred performer who has proved his mettle either overseas or interstate but lacks connections needed in their former hometown.
Put together with added support from FIFO operators and that would appear to be at least a viable alternative in the absence of a clear star player at the peak of their powers.
The same strategy appears to have been adopted by private equity player Catalyst, which was, until recently one of a steady stream of such fund managers flying into Perth from Sydney and Melbourne.
Catalyst has recruited WA expat Aaron Hood, who has been with the firm since 2004, to head-up a new Perth office with support from local business executive Anthony Wooles, who will work with Catalyst in tandem with his own business, AEW Capital.
Mr Wooles had his own management consultancy before launching and then listing Pearl Street, a service business for the energy and utility sector in which Catalyst almost invested. Pearl Street was taken over by Campbell Bros last year, a deal that netted Mr Wooles more than $30 million.
Shoring up
All this interest in the WA market has not been lost on the existing players, notably the boutiques headquartered here.
To defend themselves, local firms are launching pre-emptive strikes to capture local talent in moves that both improve their own capabilities and deny potential recruits for their rivals as the world’s major players eye their home turf.
As recently revealed by WA Business News, Adrian Arundell’s move to Azure Capital fits such a description.
While it’s known others in the market approached Mr Arundell, it would be fair to say that his experience was limited to the private and industrial end of the spectrum, which is on the fringe of the main listed resources action being hunted by the global players.
Nevertheless, just three years leading KPMG’s local corporate advisory work had earned him a strong reputation in the market and his skills had been recognised.
For Azure, having lost one of its own star performers with the retirement from executive ranks of Mark Barnaba, the recruitment of Mr Arundell boosts their capacity in a field that has less interest to big global rivals wanting to compete on St Georges Terrace. The move also takes out one of the few available individuals.
Similarly, Euroz went to accounting firm PwC to recruit replacements for Mr Paganin. They added Brian Beresford and Maurice Argento to their team, both of whom had joined PwC with the acquisitions of businesses they had previously been involved in – GEM Consulting in the case of Mr Beresford and Mainsheet Corporate in the case of Mr Argento.
Merrill Lynch is also thought to be seeking to stabilise and rebuild its Perth operation after the retirement of Neville Gardiner, previously head of natural resources, and the expected move of Gordon Morrison to London. It is understood the moves would make repatriated former Western Australian Chris Bingemann the firm’s most senior representative in WA, although as a first-year vice-president, he is not at the level of those who have been operating here to date. A spokesperson said the firm was still deciding on the structure of the Perth office.
It is, of course, not all one-way traffic.
Perth-based Argonaut Securities has recruited Travis Smithson from JPMorgan in Hong Kong to open a new office in a key Asian market with an increasing appetite for resources investment.
