| Meeting the demands of a growing market |
back |
|
By: Roy Barrett, Roy Barrett
|
| Roy Barrett looks back on Goodbody’s year so far, which looks set to be more profitable than 2005, and examines the challenges and opportunities ahead. Growth for the firm over the past year has come from a strong equities environment, a booming corporate finance division, and an expansion of the firm’s range of services. |
So far (and the stock market teaches us never to take anything for granted), 2006 has been an excellent year for us. All our business units have performed strongly and we expect profitability to be better than last year.
Growth
Our business is being driven forward by two complementary factors – a favourable market environment and growth driven by initiatives we have taken to develop our business.
The market environment is strong on all fronts – the personal investor has made money from both equities and property over the past few years, and in general, has the appetite to invest more. Our institutional investment clients, who are predominantly and increasingly based outside Ireland, have had great performance from their Irish equity holdings and this has encouraged them to invest further, and others to follow them. Our corporate finance business has benefited from the high levels of M&A activity and from growth in equity fundraisings for private and public companies. The IPO market has also been strong, with Aer Lingus the largest of the year, and others such as Norkom Technologies and AGI Therapeutics demonstrating the appetite of investors for new stocks.
The second driver of growth has been our own initiatives to broaden the range of services to our clients. Our private clients are now offered services far beyond traditional management of a stock portfolio. Increasingly, we research and select international funds designed to meet specific investment needs for our clients. This year, we have funded a number of major property transactions, both in the Republic and Northern Ireland and have also provided very substantial equity into other private investment vehicles, such as ISTC, a vehicle established to invest in bank capital products and other asset backed securities.
We are particularly pleased that the most recent survey of European M&A advisers by Mergermarkets International ranked Goodbody Corporate Finance as the leading adviser in Ireland for the year to September, and that strength continues with roles such as advice to Aer Lingus on the takeover bid from Ryanair and advice to the vendors in the sale of Pinewood Pharmaceuticals to Indian manufacturer Wockhardt.
Challenges
Going forward, put simply, there’s only one key challenge – making sure we hire and retain the best people. Why? - because at its heart, our business is about matching capital with ideas, and the best people come up with the best ideas and have the better relationships with clients. Whether it’s one of our private client advisers recommending an individual to invest in a stock that our team has researched, our institutional equity sales and research people helping an international institution decide how to allocate a portion of its portfolio into Irish equities for the first time, our corporate finance team proposing an acquisition to a client company or an entrepreneur appointing us to raise money, there’s always an idea one side and money the other.
Our industry is demanding and highly competitive. People can move readily from firm to firm, and it is always the best people who find it easiest to move. Being a relatively large scale and long-established stockbroking business in Dublin has helped us to grow much of our own talent internally. Because we have a track record of promoting good people rapidly, many young people are keen to join us in a junior position in the expectation of advancement. We have also hired many Irish people who have gained experience in London or other financial centres and who have made a great contribution to our development and thinking.
In terms of specific skills, we have done a great deal to streamline our business in recent years. Our back office, for example, has been outsourced, which does not expose us to shortages in this area which have been intensified by the success of the funds administration industry in the IFSC.
Market trends
The main trend this year has been the continued growth in the hedge fund community playing in the Irish market. We have also seen a significant pick up in demand for Irish equities from European based investors.
While property remained a popular investment choice amongst our private clients, we have also seen increased demand for alternative investments such as hedge funds and private equity. Coupled with this, the growth trend in Contracts for Difference (CFD) has continued as our clients seek to use leverage to increase their exposure to the equity markets. CFDs are a growing proportion of our private client business, but it must be understood that their relevance to market liquidity is enormous. The reason for this is that hedge funds, which generate around 40 per cent of institutional activity in the Irish and UK market, use CFDs as their trading mechanism. So where we see an order in an Irish equity from a UK counterparty, it is very often the case that behind it, there will be an institutional client using a CFD to deal in the stock on the other side.
Demand for our pension products also remains high as clients look to tailor their investment portfolio according to their individual retirement needs. |
|
|
|
|
