Barrenjoey making waves with licences, UBS hiring onslaught

New investment bank Barrenjoey’s background manoeuvring has created more shockwaves in the sector.

Barrenjoey Capital‘s founding partners (L-R) Chris Williams, John Cincotta, Brian Benari and Guy Fowler.

New investment bank Barrenjoey’s background manoeuvring has created more shockwaves in the sector, culminating in senior hires resigning from their current posts and it receiving trading and clearing licences.

The past week has seen the Brian Benari-led firm tick off important milestones, including Monday’s raid on about 10 UBS staff. On Friday, Barrenjoey, which counts a host of UBS alumni among its founders and senior ranks, received trading and clearing licences from the ASX and alternative exchange Chi-X Australia.

The Barrenjoey onslaught is causing one of the greatest disruptions in the local market in living memory, as it picks off staff from a host of rivals.

Its latest big-name hires, including top-rated duo banking analyst Jon Mott and mining analyst Glyn Lawcock, will cascade through the market as UBS looks to plug those gaps. Barrenjoey has already lured staff from about 30 rivals for its 200 appointments over the past nine months.

But the grind to get the firm up and running is far from over, as it seeks to get systems and processes running smoothly and staff on deck as their non-compete per­iods expire.

After a flurry of appointments last year Barrenjoey expects to be trading shares and executing block trades in the June quarter. It has already advised on Lendi’s marriage with mortgage broking group Aussie, and has a pipeline of other mergers and acquisitions and ASX floats in its pipeline.

Barrenjoey chief Brian Bernari. Picture: Renee Nowytarger .

But there is also the vexed issue of the start date at Barrenjoey for former UBS Australia chief executive Matthew Grounds, at one time dubbed a rock-star banker and a close confidant to billionaire James Packer.

Sources suggest Grounds may start as early as April, given his non-compete period for UBS finished in December, and any deferred pay vested at the beginning of this month.

Mr Benari, a former investment banker and Challenger chief executive, said: “We’d be delighted if Matthew agreed to join Barrenjoey, but what I can confirm is that Matthew is neither an employee or shareholder … as we stand today.”

With David Gonski on the board, Barrenjoey had an implied valuation of almost $400m at the time of launch and has combined capital backing from Magellan Financial Group and Barclays, giving the firm financial firepower.

Benari shrugs off the suggestion that Australian companies looking for advice often preferred those with offices and connections offshore, noting the new firm was supported by a $10bn balance sheet provided by ­Barclays.

“We’ve been capitalised. We can stand shoulder to shoulder with the other globals that are operating out of Australia, but we can do that in a manner that we think attracts the brightest and the best.”

Barrenjoey has a partnership model where staff own just over 50 per cent of the firm, drawing on models such as Macquarie Group and Bankers Trust with high levels of employee ownership. Decision-making is based in Australia, rather than having to jump through compliance and other approvals in offshore markets.

The local investment banking market has often been labelled over-banked but that hasn’t deterred firms such as New Zealand’s Jarden and New York-based Jefferies from pushing into Australia in the past two years.

Conversely, Deutsche Bank, Nomura and Malaysia’s CIMB have exited institutional share trading over the past decade. Others, including Barclays and Investec, have retreated from the advisory space.

Banking analyst Jonathan Mott.

The local market has typically been dominated by UBS, Macquarie and Goldman Sachs in recent years, although firms such as Morgan Stanley have become a force to be reckoned with.

One thing is certain: UBS isn’t backing down from a fight and the rebuild has momentum.

The Swiss bank moved swiftly last year to fill gaps caused by Barrenjoey’s first round of poaching. and given the noise in the market it had probably anticipated some of the latest exits.

UBS Australasia co-CEO Anthony Sweetman said: “UBS remains wholly committed to Australia and maintaining our investment in our client-facing franchise, or our client-facing business.

“There’s no change in that regard.

“Clearly there’s been some departures where we’ll need to do some rehiring, but the fundamental commitment to being a leading participant in the market and being wholly client-focused isn’t going to change.

“We’ll be looking to rebuild the team that have been impacted.”

CLSA, which saw about 30 of its staff poached by Jefferies in 2019, has also had to restock.

The resignations at UBS came thick and fast this week.

Mr Mott resigned on Monday morning and his offsider Minh Pham is following him. Mr Mott, a top-rated bank analyst, joined UBS in 2002 from Merrill Lynch. He is jumping over to Barrenjoey alongside lead UBS mining analyst Glyn Lawcock and transport and gaming analyst Matt Ryan.  There are about 10 UBS exits to Barrenjoey in the latest round, while the firm is also losing director Tom Godfrey to MST and associate Leonardo Pinto to Goldman Sachs.

Barrenjoey embarked on an earlier hiring drive last year as it started to execute a plan to make a big dent in the local equities trading and merger and acquisition advisory sector.

Further exits from UBS and other firms are expected this week, adding to scores of hires by Barrenjoey over the past six to nine months. Former UBS block trade specialist George Kanaan was among senior staff to leave the investment bank last year, while JPMorgan lost a spate of senior bankers to Barrenjoey including Jabe Jerram, Anthony Brasher and Dyson Bowditch.

Decamping from UBS to Barrenjoey in this week’s crop are research executive director Craig Stafford, investment banker and managing director Luke Bentvelzen, equities executive director Craig Webb, retail analyst Aryan Norozi, co-head of emerging companies research Josh Kannourakis and mining analyst Dan Morgan. UBS private equity banker Justin Dwyer also resigned on Monday and is expected to join Barrenjoey.

The Australian flagged in February that Barrenjoey was planning to scoop up large numbers of UBS research and advisory employees, after bonuses and stock awards hit staff bank accounts.

Former UBS stalwart Guy Fowler is Barrenjoey executive chairman and David Gonski has joined the board, alongside the firm’s founding partners and representatives from Magellan and Barclays.