Restructures and buyouts add fuel to Moelis Australia earnings

MA Financial joint chief executive Chris Wyke. Picture: Adam Yip

Moelis Australia has demonstrated it has capitalised on the growing number of companies being picked off the ASX and privatised this year or restructured due to high debt levels, as its corporate advisory fees increased.

Fees were up 12 per cent to $22m for the first six months of 2024 compared to the previous corresponding period.

Moelis Australia sits within MA Financial, and the overall result for MA Financial saw its net profit fall 22 per cent for the first six months of the year to $13.5m, despite a 13 per cent lift in assets under management to $9.7bn.

MA Financial was founded by ex JPMorgan banker Andrew Pridham initially as an Australian advisory firm with backing from US investment bank Moelis, before moving into asset management.

The company said in its presentation that corporate advisory activity improved for Moelis Australia despite the difficult macroeconomic conditions which have made deal execution and timing uncertain.

Moelis Australia advised on over $1bn of transactions during the first half of 2024 as a difficult operating environment made deal execution and timing uncertain.

It reported “good activity levels”, with work completed in the first six months on already announced transactions expected to generate about $11m of revenue in the second half of the year due to timing of the final closure.

There was a “continued bias” towards mergers and acquisitions activity, the company said in its result.

Equity capital markets activity remained difficult, although the markets were improving, MA Financial said, with revenue for the half down 4 per cent compared to the first six months of last year.

Corporate Advisory and Equities contributed $6.8m in underlying earnings before interest, tax, depreciation and amortisation.

The second half of the year had significant broad-based activity levels across Mergers and Acquisitions and capital structure advisory.

MA financial said while the pipeline remained robust, with market conditions more constructive than in 2023, deal completion rates continued to be subject to elongated regulatory processes and macroeconomic volatility.

MA Financial was expecting corporate advisory revenue at the lower end of the group’s $1.1m to $1.3m per executive target average, reflective of current market conditions.

MA Financial said in corporate advisory, the headcount had gradually reduced over the six months due to natural attrition.

Moelis Australia advised the Bain Capital-led lenders group acquisition of Accolade Wines from The Carlyle Group in the past year as part of a recapitalisation plan for the troubled commercial wine company and the acquisition of a rival wine portfolio from Pernod Ricard.

It also worked on some non-core asset sales for Brookfield within its Aveo business and was defence adviser to Qantm, which became subject to a buyout proposal from rival IPH and private equity firm Adamantem.

Another major role for Moelis Australia has been the restructuring of Healthscope, the country’s second largest private hospital operator on behalf of Canadian private equity firm Brookfield.

It was also defence adviser to Decmil, which was bought out by Macmahon Holdings this year.