Barrenjoey working with philanthropy expert Laurence Marshbaum on ‘social purpose venture’

Barrenjoey co-executive chairman Matthew Grounds.

Barrenjoey is working with Laurence Marshbaum, a senior portfolio manager from Australian Retirement Trust, on what it says is a “social purpose venture”.

Mr Marshbaum’s experience extends to philanthropy, as a founder of the philanthropic pursuit 10x10.

However, he is also a senior portfolio manager at Australian Retirement Trust and previously worked as a portfolio manager at Sunsuper.

The investment bank has not outlined the exact nature of the venture, and it comes as speculation continues to run rife in the market about plans it has to launch into asset management to fund its expensive investment banking operation.

It would be a move that would see it compete head-to-head with its 40 per cent shareholder Magellan Financial.

Relations are now said to be tense between Magellan and Barrenjoey, with Magellan venturing out to find its own investment bank to provide it with individual advice, at a time when it generally considered that Barrenjoey was its closest adviser.

A bank has been hired, and one possibility is that Jefferies Australia has the role.

Jefferies is working with HT&E for talks with Seven West Media about potential merger activity, while Seven West is advised by Barrenjoey.

HT&E is chaired by Hamish McLennan, who also chairs Magellan.

Jefferies declined to comment on whether it is working with Magellan.

Some believe that Barrenjoey may launch an initial public offering to source more funds as early as next year, while another theory is that it is bought out by British bank Barclays.

Barrenjoey has some of the best investment bankers on the street and has its name next to many of the high profile deals of the year, such as Brookfield and EIG’s $15bn buyout of Origin Energy, and it also worked on the attempted $20bn takeover by Kohlberg Kravis Roberts of Ramsay Healthcare.

But while the Origin deal looks like it has a good chance of success, the Ramsay deal collapsed.

The investment bank has now just launched into providing fixed income services, a service most describe as costly.

Other investment banks have other more lucrative revenue streams in addition to purely providing investment banking advice and services.

Goldman Sachs is forging further down the asset management route, and while MA Financial (formerly Moelis Australia) launched in the Australia market as a start-up many years ago, it was with a far more modest cost base, and investment banking now forms only a small part of its business, with most of the income generated from asset management services.

Until now, it has been the private wealth management business of Credit Suisse that has been a large generator of income, and it will be interesting to see how the investment bank performs now that it has been demerged from the Swiss financial and rebranded First Boston, with its head office based in the United States.

Barrenjoey made a $5.3m net profit in its first year of trading and says it is well placed to cope with difficult market conditions this year.

The bank’s “established businesses” of corporate finance and cash equities raked in revenue of $226.7m.

It had operating expenses including cost allocations and performance-based remuneration of $166.6m, giving it an operating profit of $57.3m.