For super funds and their advisers

Macoun’s sweet success in Wilson/Pinnacle deal

(pictured: Ian Macoun)

Ian Macoun probably felt a little hard done by when he left Perennial Investment Partners, of which he was one of the early directors, in 2005. Last week, when he effectively took control of the listed Wilson Group, he should feel justified in having stayed the course. Wilson shareholders should also celebrate.

Macoun, a former Queensland Treasury official in the 1970s through to the early 1990s, including a five-year stint as chief executive of QIC, became managing director of Westpac Investment Management in 1993, prior to its purchase of the old Rothschild and Bankers Trust investment arms.

He left to join the fledgling and previously troubled Perennial as managing director in 1998, prior to its financial rescue by IOOF. Perennial’s founding business was an Asian equities capability, started by Mike Crivelli, with the help of Kerry Series, which ran into headwinds from the Asian crisis.

Crivelli, who was also connected with IOOF, which was then a friendly society, organised a safety net which changed the business completely. Perennial was awarded the outsourced mandate of IOOF’s $2-3 billion of the time, including both fixed income and equities. John Murray also joined from Westpac and formed the successful Perennial Value equities business. Things looked very good for a while.

But in 2005 Macoun left Perennial after a restructure and after he had steered the firm into the now-popular multi-affiliate model. He sold his equity in Perennial, even though he was not obliged to do so for three years, because he knew he would soon be competing with his old firm. The following year he started over, with the launch of Pinnacle.

Macoun said over the weekend: “The reality is that I was still on a mission to build the ‘ideal model of funds management’ – the multi-boutique model – and we made a good start with IOOF. But IOOF listed and changed. They wanted to buy out the management equity in Perennial, for instance. Pinnacle was my way of doing it again, but this time better, with what I had learned from Perennial. Ten years later, I honestly believe we are close to perfecting the model in Pinnacle.”

Last week Wilson Group announced it had “purchased” the outstanding 25 per cent of Pinnacle it did not own. This stake was owned by Macoun (14.2 per cent) and other management, who negotiated a complicated deal involving deferred purchase arrangements from Deutsche Bank and financing from Wilson Group itself, continuing existing management loans, and, under a new arrangement, funding them to be able to purchase more shares.

In the final wash-up Macoun will emerge with18.9 per cent of the newly configured company and will also become its managing director. Deutsche Group has sold down its 18 per cent holding by about half in the first instance, and will now sell out completely. Deutsche will be replaced, at least in part, as a key shareholder by Anton Tagliaferro’s Investors Mutual Ltd.

Macoun has also invested more of his cash into the reconstruction and, in a major win for remaining shareholders, he will also be able to rid the company of some legacy payments to management and directors, conservatively estimated at $1 million a year in savings.

The Pinnacle Macoun built has seven affiliated managers with assets totalling $19.25 billion. It also has a couple of third-party sales relationships. It earned $4.6 million of headline after-tax profit in the six months to December and is sitting on cash and liquids of about $12 million.

Following the management buyout of Pinnacle’s former parent, the broking firm of Wilson HTM, Pinnacle has been the main earner for the listed and renamed Wilson Group. But the ownership structure of Wilson Group, whereby the important management had control of only 25 per cent of the company, did not sit well with Pinnacle’s independent culture and values.

Also, payments to directors and management in 2015 following the buyout of the Wilson HTM broking business were hefty. Two Deutsche senior executives – Chum Darvall and Steven Skala, chairman, were on the board. Wilson’s appointed managing director, Alexander (Sandy) Grant, and Steve Wilson were on the board, alongside independent Alan Watson. Skala and Grant retire on completion of the deal.

The 2015 annual report shows that Grant received a total remuneration, including short and long-term benefits and options, of $781,000 last year. Macoun didn’t do too badly himself, though, taking home, calculated on the same basis, a little over $1 million for 2015. Two other key executives, CFO Alex Ihlenfeldt and Brad Gale, who orchestrated the Wilson HTM buyout, received a total of just over $1 million too.

Of the non-executive directors last year, Skala was on a total of $160,000, Darval on $99,000, Steve Wilson on $115,000, Alan Watson of $151,500 and Erica Lane, who left during the year, $28,000.

– Greg Bright

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