Celebrations at Jarden as it defies market slump to forecast big profit after deal-making frenzy

Jarden is celebrating after a late-year surge propelled the Kiwi-headquartered investment bank to forecast a $30m profit this financial year.

Jarden is on track for a record year to March 2024.

Jarden is popping champagne corks after a late-year surge propelled the New Zealand-headquartered investment bank to forecast a roaring $30m profit in the current financial year, marking a stunning comeback from previous losses in the dozens of millions.

In an end of year note to staff, Jarden management said that the pre-Christmas deal-making frenzy had led to its strongest month of billings in December and it was now forecasting $190m of revenues for the fiscal year ending March 31, 2024.

“Across the Tasman, we have seen one of the worst markets in 15 years with equities volumes, equity capital markets and M&A wallet 18 per cent, 25 per cent and 30 per cent below 10-year averages,” the memo sent by co-CEO Aidan Allen says.

“Notwithstanding this extremely challenging backdrop, we are profitable and well capitalised to lean into CY24! Our Australian and New Zealand businesses both contributed positively to that performance and have solid earnings for the first nine months to December 2023 of $13m and $17m respectively.”

The performance has also been helped by “fantastic” results from its New Zealand principal trading desk, the memo says.

Jarden co-CEO Aidan Allen.

Jarden’s new forecast comes at the end of a tough year for investment bankers globally.

The year 2023 was marked by plummeting confidence, reduced deal-making and widespread lay-offs that shrank industry revenues locally by almost a third to $US2.2bn. 

The message and forecast reveal a remarkable turnaround at a bank that on Thursday filed a new set of dated accounts with the regulator showing losses in its Jarden Australia Holdings Pty Ltd unit – a subsidiary of the New Zealand-incorporated Jarden Group – hit $23m for the 12 months to March 2023.

The loss reflects the huge start-up costs of hiring top talent and is more than four times the $5m in losses to the end of March 31, previously reported to the regulator by Jarden Australia Pty Ltd – a unit owned by Jarden Australia Holdings. 

Jarden’s financial year starts April 1 and ends on March 31.

The bank declined to reconcile the two sets of numbers, but a spokeswoman said: “The subsidiary compliance filing (on Thursday) is one of four filings made by Jarden, with our main regulatory filing made in June 2023,” she said. “It therefore does not provide an accurate picture of overall performance.”

The new Jarden Australia Holdings accounts, filed by co-CEO Sarah Rennie, also show $80m in losses for the 15 months ended March 2023, six times higher than the $13m in losses reported for the same period by its subsidiary Jarden Australia back in June.

The “Holdings” accounts show there are 188 employees in that unit – versus none at Jarden Australia. It also shows accumulated losses topped $44m for the 12 months to March 31 and a whopping $124.4m for the 15 months to March 31.

The $59m increase reflected in the $80m loss by Jarden Australia Holdings for the 15 month period when compared with the 12-month performance was due to the fact that the “15-month period to March 2023 … includes multiple bonus periods, start-up costs and recharges to head office”, Jarden’s spokeswoman said.

“More recent numbers show the investment bank is on track for a record year to March 2024, targeting $190m of revenues, with Australia delivering a strong profit contribution to the group for the nine months to December 2023,” she added.

According to the memo seen by The Weekend Australian, Jarden emerged from 2023 with stronger fundamentals after cutting $25m in costs, strengthening its capital position, focusing on profitability and “refreshing” its “partnership” with Nomura. The bank also recently penned a $NZ700m wealth merger with NAB’s New Zealand operations, which includes a cash injection by PEP to gain 35 per cent of the JV.

“We have also … re-established our clearing activities in carbon and electricity in partnership with ABN Amro and refreshed our balance sheet partnership with Nomura,” the memo says. “All this ensures we can bounce strongly into calendar year 2024.”

While the recent collapse of the $16bn buyout of Origin Energy by Brookfield - where Jarden was defence adviser alongside local IB start-up rival Barrenjoey -- would have been a blow to the bank, it has also been involved in plenty of the other top deals this year.

Notable among them, according to the memo, is work for blue chip clients such as “activist advice” to Endeavour Group, advising Woolworths on its $586m PETstock purchase, and advising Atlas Arteria with IFM attempting to buy the business.

The firm also worked on a string of deals announced just this week, including the $1.3b acquisition of Lendlease Communities by Stockland and the $220m bid for Pacific Smiles by Genesis Capital.

Jarden last year separated its wealth management arm from investment banking and restructured to bring the New Zealand and Australia investment banking operations together. The IB operations employ about 160 frontline investment bankers, many of whom were expensive hires from UBS, JPMorgan and Goldman Sachs.

The Australian’s Dataroom column has previously reported Jarden has a capital position of $NZ150m to move forward in 2024 as a stand-alone entity, following its selldown of New Zealand-based wealth management.

But the new Jarden Australia Holdings accounts also reveal the New Zealand subsidiary Jarden Investments - one level below the ultimate NZ parent Jarden Group - had to issue a “letter of financial support”.

This was “to enable the (company) to continue its operations and fulfil all of its financial obligations for the period of at least 12 months after the signing of the financial statements,” the accounts say.

The accumulated losses reported in the new Jarden Australia Holdings accounts compare with the $31m of accumulated losses for the 15-month period ending March 31 reported by Jarden Australia in June.

The company’s negative outflow is similarly exponentially bigger than what was disclosed in previous accounts, with the Jarden Australia Holdings accounts showing negative operating cash flows of $73m for the 15 month period and $1.8m in the 12 month period to the end of March.

The closing cash balance on Jarden Australia Holdings’s accounts as of March 30 was $45.6m when looking at the 15-month period, and $54m when looking at the 12-month period.