Costs push Jarden Australia into the red

Jarden hired some of the top investment banking talent in Australia as part of its expansion into the local market.

Jarden Australia has lodged its annual report with the Australian Securities and Investments Commission, showing high costs have pushed the group into a $13.3m loss for the fifteen months ended March 2023.

The result compares to a $5.1m loss for the 12 months to December 2021, before Jarden Australia changed its end of financial year date.

The Australian arm of the New Zealand investment bank and wealth manager Jarden Group generated $98.9m of revenue and other income for the latest period, compared to $74.6m for the year to December 2021.

The subsidiary’s total expenses for the 15-month period were $106.5m, compared to $81.6m in the year to 2021.

The New Zealand wealth manager and investment bank Jarden Group launched its Australia investment banking operations in 2020, which followed two years of booming mergers and acquisitions activity.

Market activity has also dramatically slowed during 2022 and 2023.

Jarden’s investment banking co-heads Aidan Allen and Sarah Rennie said that the result was impacted by cash bonus payments to staff amid expansion plans.

“Since the end of year, we have taken costs out of the business in order to ensure Australia can support group profitability going forward in a weaker market,” they said in a statement.

The Australian move was spearheaded by Jarden Group former chief executive James Lee, who left last year.

He hired former UBS equities star Robbie Vanderzeil to become chief executive of Australia, before Mr Vanderzeil moved to the role of chairman.

But Mr Vanderzeil stepped down as a director late last year and last month, he departed the firm.

Jarden’s investment banking operations across Australia and New Zealand are now run by co-chief executives Ms Rennie, a top former UBS and Goldman Sachs equities operative and the former UBS investment banking head and high profile rainmaker Ms Allen, both of whom joined Jarden in 2020 when the investment banking operation was launched.

Jarden Australia’s directors’ report shows that Mr Allen resigned as a director in May last year after being appointed in November 2021, but it is understood that he has joined the board of Jarden Group as part of a company restructure.

The annual report shows $58m of balance sheet capital compared to $38m at December 2021, with total equity at March of $26.7m.

The unit has $50.5m of total current assets and $24.8m of total current liabilities, with $26.7m of total net assets.

The balance sheet notes $31m of accumulated losses, with $24.8m of payables and other liabilities for matters such as goods and services received by the company during the reporting period that remain unpaid at year-end.

Jarden Australia reported $92m in receipts from commission and fee income, while payments to customers, suppliers and employees was $107m.

The annual report said that Jarden Investments, part of Jarden Group, had issued a letter of financial support to enable the company to continue its operations and fulfil all of its financial obligations for a period of at least 12 months after the signing of the financial statements.

It forecasts to have sufficient cash flows to meet its obligations as they fall due, taking into account available credit facilities.

The group’s borrowing facilities expire in August and the directors expect these will be renewed for a further 12 months, the report said.

“The directors are satisfied that the company has adequate resources to enable it to continue in business for the foreseeable future and believe it is appropriate to adopt the going concern basis in preparing the financial statements.”

It added that during the period, it issued 20 million shares at $1 each, with the Australian arm paying no dividends.

The result comes as investment banks across the board, including the most powerful names in Wall Street, grapple with tougher industry conditions and are shedding staff as a result.

In the past year, Goldman Sachs has cut staff, as has Morgan Stanley and Bank of America, while Credit Suisse has been sold to UBS following a near-death experience around March.

A preliminary report from Refinitiv out last month showed Australian investment banking fees were down 50 per cent in the first half of this year compared to the same period in 2022, with $US953.1m in fees generated.

Despite posting a loss for the year to March 2023, Jarden has worked on a number of high profile mandates and continues to win work, and has since cut costs through redundancies.

Current deals afoot include advisory roles for the sale of Origin Energy to Brookfield and InvoCare to TPG Capital.

It advised Stockland on the $1bn sale of its retirement arm to EQT, worked with Potentia for its purchase of technology company Nitro Payments and negotiations to buy Tyro Payments, floated Peter Warren Automotive and has advised Woolworths on a number of deals, including the acquisition of a $586m stake in Petspiration and its demerger of Endeavour Group.

Jarden is currently advising Kohlberg Kravis Roberts on its attempt to buy the $2bn Ticketek owner TEG Group, with the global private equity firm working with Qantas as its strategic partner on the bid.

Ms Rennie and Mr Allen said they were pleased with the momentum of the business to date with “a strong profit contribution from the investment bank in the quarter to June” across Australia and New Zealand.

The New Zealand asset management arm was also performing strongly, they said.

The investment bank, which last year restructured the business to separate its wealth management arm from investment banking and bring the New Zealand and Australia investment banking operations together, is also among the advisers working on the $1.2bn plus float of freight forwarding company Mondiale VGL, set to head to the boards by Christmas.

Jarden’s Australian business counts more than 160 staff in its ranks, and despite some recent job cuts, Jarden Australia has been making efforts to hire in Perth and has added at least one equities analyst to its ranks from Credit Suisse.