Listed company JDV is about to join the long list of Perth businesses acquired by bigger interstate competitors, but based on past experience in the financial services sector, all is not lost for Perth.
Listed company JDV is about to join the long list of Perth businesses acquired by bigger interstate competitors, but based on past experience in the financial services sector, all is not lost for Perth.
JDV is expected to join a select group of technology-driven financial services companies such as Sealcorp, Flexiplan and Sanford, that have been sold interstate yet remained major employers in their home town.
Collectively, these businesses constitute a remarkable success story for Western Australia, and it was all done without any government help.
Sealcorp is a clear market leader in the national master trust industry, with 530 staff in Perth and $21 billion in funds under administration.
Flexiplan, which was rebranded MasterKey Custom two years ago, is not as big as Sealcorp but nonetheless has a substantial Perth presence, with 200 staff and $6 billion in funds under administration.
In the online stockbroking field, JDV and Sanford are two of the biggest players.
Melbourne company IWL purchased Sanford in 2003 and is poised to snare JDV after two major shareholders said last week they would accept its takeover offer.
IWL says Perth will remain the support centre for its broking solutions business, which will account for one quarter of the national online broking market after the JDV acquisition is completed.
These numbers indicate that Western Australia is punching above its weight in both the online broking and master trust markets.
The success of these technology-driven businesses has also been a boon to the local IT industry, providing employment and contract opportunities.
Perth could have ranked even higher in the master trust business if Allied Superannuation had been run differently.
Allied was founded in Perth in 1972 by Gary Pearce and Bill Mitchell, who built a very successful corporate superannuation business with up to 100 staff and 220 corporate clients in the late 1990s.
Ownership and control of the Allied business passed through several groups in recent years, none of which could match the success of the company founders.
The final owner, US banking group Mellon, transferred the last of its WA superannuation clients to another fund manager last year.
Industry players believe it was a classic example of a big company not being able to manage a relatively small business in a remote corner of the globe.
That certainly hasn’t been the case with Sealcorp, which has gone from strength to strength.
Sealcorp was founded in 1985 by Graeme Morgan and Bill Healy, who sold the business to St George Bank in 1997 for $272 million.
St George’s price was higher than expected and there was speculation at the time it had paid too much, but Sealcorp has since delivered impressive growth.
Sealcorp director operations and IT, Jan Kolbusz, said the company’s formal headquarters was in Sydney but it had retained decision-making authority in Perth.
“We don’t just run the operations in Perth, we actually do all the technology development and investment decisions out of Perth,” he said.
Mr Kolbusz said the company spent more than $10 million per year on new IT developments, on top of its recurring IT spend.
“That would make us the largest systems development house in Perth,” he told WA Business News.
Flexiplan has a similar history to Sealcorp, being established by Sue Thomas in Perth in the early 1990s.
She had some heavyweight backing, including from current Wesfarmers chairman Trevor Eastwood, superannuation guru Peter Promnitz and financial advisory groups Gannon Growden Schonnell and Western Pacific.
Flexiplan was established as a premium service and it is still run that way by its current owner, National Australia Bank subsidiary MLC, which gained full ownership in 1999.
MLC now operates two master trust platforms, with MasterKey being the mass-market product (with $35 billion in funds under administration) and MasterKey Custom being its premium product.
An MLC spokesman said 90 per cent of the staff running MasterKey Custom were based in Perth.
Meanwhile, IWL has effectively won its long-running campaign to gain control of JDV, after major shareholders Westpac Bank and Royal Bank of Canada announced last week they would accept its offer.
This follows its 2003 acquisition of JDV’s arch rival Sanford, which had been founded by Perth technology whiz Stephen Goh.
JDV runs Westpac’s online broking service while Sanford runs National Australia Bank’s online broking service, and their combined market share will make IWL second only to Commonwealth Securities.
IWL chief executive Otto Buttula said employment in Perth had increased to about 120 people following the Sanford acquisition, boosted by IWL’s decision to run all of its IT infrastructure out of Perth, and he anticipated most of JDV’s 145 staff would be retained.
