Soul Patts invests in financial services

Diversified investment house Washington H Soul Pattinson is investing in financial services.

Robert Millner with Todd Barlow, CEO of Washington H. Soul Pattinson. Picture: Hollie Adams

Diversified investment house Washington H Soul Pattinson is investing in financial services as it eyes a reversal of the self-directed super trend that saw an exodus of capital flow from major superannuation funds in recent years.

“It’s our view, the self-directed super trend that we saw in the last few years is going to reverse back to a lot more of the advised super funds and that’s what we’re particularly interested in,” Soul Patts managing director Todd Barlow told The Australian.

“We see people being more ­selective in where they put their money and we particularly like the more nimble boutique operators rather than the very large generic products.”

Soul Patts increased its exposure to financial services last year by investing in Hunter Hall International and Pengana Capital. The companies then merged their operations, leaving Soul Patts the largest shareholder in the merged entity, with a 32 per cent holding. “We’ve done a lot of work in the financial services space and we’ll continue to look there because it has the great ­thematic of having an increasing superannuation base, which is growing every year and that will continue to increase for 20 or 30 years,” Mr Barlow said.

Soul Patts is in talks to invest in a private company that plays in a similar segment, Mr Barlow said.

Mr Barlow also revealed that fund manager Perpetual had sold down most of its holding in Soul Patts following its failed legal bid to unwind the cross shareholding between Soul Patts and brick maker Brickworks. “Now that the court case is behind us and ­Perpetual has sold the majority of their shares, we’ve got a very ­supportive shareholder base, which is great,” he said. “For the entire six years that this agitation was going on, our shareholders have been very supportive. It’s ­really only Perpetual that was causing this agitation.”

Soul Patts owns 44 per cent of Brickworks, while Brickworks owns 42.7 per cent of Soul Patts.

Soul Patts yesterday reported a more than doubling of its full-year profit on the back of strong performances from its investments in coalminer New Hope and internet and telco company TPG Telecom.

Statutory profit more than doubled to $333.6m in the year to July, up from $149.4m a year ago. Much of the lift was due to its 59.6 per cent stake in New Hope, which swung from a $29.2m loss in 2016 to an $83.8m profit last ­financial year thanks to a recovery in the coal price.

Soul Patts’s stake in Brickworks contributed $36.3m to the result but chairman Robert Millner warned that higher energy costs worried the brickmaker. “We’ve got this enormous headwind in front of us with energy costs; Brickworks has a $20m ­adjustment to make.

“We’ve been aware there’s a gas shortage coming for a number of years and the government’s done nothing to ensure there’s an adequate supply of gas to Australian manufacturing. In fact what we’ve seen is a moratorium placed on the exploration of further gas onshore in places like Victoria. In that time we’ve also seen ageing coal-generated assets being turned off, which has only exacerbated the problem.”