Jefferies Australia boosts profit in bumper year for M&A

Jefferies Australia accounts show the group is performing well Down Under. Picture: iStock

The Australian unit of investment bank Jefferies has increased its net profit to $10.2m for 2024 as it poached top Wall Street banking talent and featured as an adviser on some of the most high profile mergers and acquisitions trades in the local market.

Accounts just lodged with the Australian Securities & Investments Commission shows that for the year to November 30, Jefferies Australia generated $127.3m of revenue, up from $102.m a year earlier.

This was on a consolidated account basis, which also showed its total comprehensive income, or profit for the year was $10.2m compared to $7.8m in the previous corresponding 12 months.

The upbeat result came in a year when the value of Australian-related deal activity increased 13 per cent year-on-year, according to LSEG.

Expenses related to its 115 employees increased to $81.2m from $65m in a year when Jefferies poached a number of high profile equities operatives, including Mario Argyrides, the head of equities for Australia and New Zealand for Goldman Sachs.

This was part of a global Jefferies drive to outlay millions to take on larger rivals that are thinning their ranks.

But the positive outcome of 2024 in Australia for Jefferies, the seventh-largest investment bank by revenue globally, came as Wall Street traders remain cautious about the global prospects of the parent company.

Jefferies Financial Group reported its first quarter earnings that were down nearly 4 per cent year-on-year for capital markets and investment banking revenue.

The Wall Street Journal reported that analysts had expected a 10 per cent lift, and the surprise caused its shares to fall about 10 per cent on the day, in line as the share prices of its rivals also fell.

But mergers and acquisitions advisory revenue picked up, rising 17 per cent.

In Australia, the local arm of Jefferies, run by former UBS and Credit Suisse banker Michael Stock, has started 2025 with a bang.

It was one of two banks that advised James Hardie on its $14bn buyout of US rival Azek – likely to be the biggest M&A deal of the year – and is believed to have won a sought after role advising TPG Capital on a float or sale of the $4bn pet care company Greencross.

It is also advising Nine Entertainment on the sale of Domain Group, in which Nine has a 60 per cent stake.

Domain and CoStar are now in exclusive talks over the $2.8bn buyout.

The results show the local investment bank’s team push to secure more big ticket M&A advisory roles for ASX-listed groups, adding to its private equity client list, has paid off.

Jefferies will also help private equity firm Navis Capital sell its $1bn-plus healthcare company Device Technologies later this year.

Jefferies advised Kohlberg Kravis Roberts in its quest to buy Perpetual’s Corporate Trust and Wealth Management units last year.

In 2023, it made efforts in 2023 to sell Ticketek owner TEG Group to private equity firm Silver Lake.

It was also mandated for the sale last year of the country’s largest diagnostic imaging provider I-Med.

However, both businesses were withdrawn from sale when suitors were unprepared to meet the $3bn-plus asking prices of both companies.

The Australian accounts said that certain employees had been awarded shares in Jefferies Financial Group as part of their compensation.

It said that the company, which had 250,000 ordinary shares as issued capital, reimburses its parent for the cost of the share awards through intercompany accounts.

Last year, the Australian business reported a fall in its annual net profit as fewer floats, equity raisings and mergers and acquisitions weighed on the industry across the board.

Some of its Australian deal income is booked with the US-based parent where Jefferies private equity clients and corporates are based, rather than through its local accounts.

Jefferies opened its Australian office in 2018, ahead of other investment banking groups that launched in the local market.

One of Jefferies first big mandates was advising KKR buying Arnott’s Biscuits for $US2.2bn in 2019.

The WSJ reported Jefferies started as a small equities-trading shop in 1962 and over time became known for its leveraged finance business and work on smaller mergers and acquisitions.

It has been the go-to bank for activist investor Carl Icahn and smaller private-equity firms.