Craigs Investment sees more placements, posts 7.5% profit gain
Neil Craig, chairman of brokerage Craigs Investment Partners, says 2013 may continue to be a busy year for placements as a rising sharemarket stokes demand and investors continue to chase yield in the face of low interest rates.
The brokerage half owned by Deutsche Bank lifted profit in 2012 by 7.5 percent to $5.7 million, according to its annual accounts filed with the Companies Office. Annual revenue fell to $74.7 million from $75 million.
Craigs was tracking behind 2011 for the first seven months of last year, which were "pretty tough from a brokerage point of view", Mr Craig told BusinessDesk. That changed in the final five months as New Zealand stock trading picked up as the realisation low rates for bank deposits were here to stay.
"Investors have a huge amount of money on call and realised they could get a better yield on equities," he says.
The firm's revenue from brokerage rose to $26.4 million in calendar 2012, from $25.4 million a year earlier. Revenue from fees for managing some $7 billion of client funds rose to $40 million from $38.8 million.
Commissions, which the brokerage earns on initial public offerings, placements and new debt issues, fell to $8.3 million from $10.9 million.
"The only new issuance was really in the last quarter," Mr Craig says.
That included Fonterra's sale of units in the Fonterra Shareholders' Fund, for which Craigs was one of the lead managers, while the firm also underwrote Arrium's sale of its stake in Steel & Tube Holdings and was arranger for Kiwibank's sale of $150 million of subordinated bonds.
In the 2013 year, January "turned out to be a relatively solid month and that's flowed into February and March", Mr Craig says.
Craigs and Deutsche Bank managed News Corp's sale of its 44 percent stake in Sky Network Television this month and MrCraig says the market easily absorbed both that sale and Quadrant Private Equity's selldown of its holding in Summerset Group as rising equity markets stoked demand.
"I would not be surprised if there were more sales, because we think the market will remain reasonably solid," Mr Craig says.
The brokerage is one of the firms working on the sell-down of the government's stake in electricity generator and retailer Mighty River Power, slated for May.