Going it alone in broking game

AS Healthscope’s board gathered to consider a $2 billion takeover bid, one person had many reasons to take a keen interest in the outcome.

More than 30 million reasons, in fact.

Melbourne businessman David Evans can thank his father for plenty in life, but most recently it would be the Evans family’s 5.5 million shares in Australia’s second-largest private hospital operator.

Those have just delivered a cool $34.3 million after a consortium led by TPG and Carlyle Group won the multi-billion-dollar auction for the company.

Asked what he will do with the money, the 45-year-old Evans laughs. “I haven’t thought about it,” he says, before quickly stressing it is a family affair.

“I advise my mother on her investments and we also take some outside, independent help as well, so it is not just about me.

Start of sidebar. Skip to end of sidebar.

End of sidebar. Return to start of sidebar.

“I think it is a good price. The board seem like they have done a good job . . . It was a great investment for the Evans family.”

Like his father Ron for many years before him, David Evans sat on the Healthscope board for two and a half years after Evans senior lost his battle with cancer in March 2007.

David Evans gave up that seat in November to follow in his father’s footsteps in a much more significant way, as chairman of the Essendon Football Club and to concentrate on his boutique stock brokerage, Evans & Partners.

Ron Evans was also an Essendon president but is more widely remembered as a chairman of the Australian Football League.

Where many sons choose a different path from their famous fathers, David Evans has carried on his father’s legacy — in investing, stockbroking and now football.

“He is a part of me. He taught me. We shared so many conversations together about business, about football, about family. So those conversations live in me and they get passed down to my kids,” he says.

A small, almost nondescript photo of his father sits behind his desk at Evans & Partners’ East Melbourne offices, in the shadow of the Melbourne Cricket Ground, while one of his father’s old racing momentos hangs on the wall.

Evans says his father taught him a simple lesson in life: “Just to go out of your way to be honest and truthful and put your trust in good-quality people,” he says.

“On the sports administration side, it was a view he had that you are a custodian of something that is much bigger than you are.

“You are entrusted with something for a period of time and you try to leave it in a better place than where you found it.”

Sports administration has been occupying plenty of Evans’ time of late, as the Essendon Football Club has suffered a string of losses, including a loss to the bottom club in the AFL competition.

As a reminder that football is never far away his next guest after our interview is former champion Essendon player Tim Watson.

Evans is calm when asked about Essendon’s plight. The situation has improved since a sterling win a week ago against North Melbourne.

“Football can be a brutal game when you are not winning, particularly at Essendon where there is such a weight of expectation because it is such a successful club,” he says. “So when you turn out performances like we have in the past few weeks, I knew the scrutiny was going to come thick and fast, and it did.”

He is not about to let the poor performances and the intense scrutiny of coach Matthew Knights get in the way of his broader vision for the club.

“It comes back to my father’s comments about being a protector of the culture and leaving the club in a better place. So you still need to make decisions that are going to benefit future generations, future boards and future custodians of the club.”

Dealing with the crises at Essendon might appear insignificant compared with what Evans went through when he launched his new brokerage just before the onset of the global crisis.

After a decade running Goldman Sachs JBWere’s private wealth and institutional equities businesses, he left the bank in March 2007.

He left after more than two years of weekly commuting between his Sydney office and Melbourne home to be closer to his father, who was losing his long fight with cancer.

It also meant he could be closer to his beloved farm at Thornton, near Lake Eildon, north of Melbourne. A huge painting of the property hangs on his office wall.

“It was a great time in my life,” he says of his stint in Sydney.

“I felt very privileged to be given the opportunity that Goldmans gave me to do that job. To run the equity division of Goldmans was a fascinating job and I got to meet a lot of great people.

“Time away from home is tough. We got through it fine because I’ve got a very supportive wife and three great kids. It makes the period when you go back on Thursday nights all the more special.” (Evans flew to Sydney on Monday morning each week and returned on Thursday evening.)

Eight months after quitting Goldman, he threw open the doors of Evans & Partners on November 7, 2007, with 20 former JBWere advisers and support staff.

“As a small business we started from nothing, so at times you felt like you were on a roller-coaster,” he says of riding out the crisis.

“But we have made money every month from when we started. That time when markets were dropping 3, 4, 5 per cent a day, sure that was scary, but it was scary for everybody. That was a case of crisis management really.

“We stayed close to our clients. Clients could ring in on conference calls and listen to our analysts talk. We had a very high weighting to cash through that period.”

Today the firm has grown to 38 advisers in Melbourne and five in Sydney (in a new office), servicing more than 1300 clients. There are no more than 50 active clients per adviser.

Evans is the majority shareholder, while the firm’s advisory board members and 26 other executives all have shares.

“We don’t want to be the biggest investment house in Australia but we want to be one of the pre-eminent ones,” Evans says.

For many years he felt the 2003 merger between Goldman Sachs and JBWere left a gap in Melbourne’s investment community.

Indeed, Thursday was the last day the Goldman Sachs JBWere name hung at the office of the brokerage at 101 Collins Street, 170 years after JBWere was founded by Jonathan Binns Were.

As of yesterday the broker is known as Goldman Sachs & Partners. The Were name will live on at National Australia Bank, which last year bought 80.1 per cent of the JBWere private client business.

Today 60 per cent of Evans & Partner’s staff are ex-Goldman, but Evans dismisses any talk of revenge against his old firm.

“I made a decision to do this and I’d been thinking about it for a long time. There was an opportunity to be very focused on the client and on a different research model, which was independent. It was about executing a plan and a vision from my time at Were,” he says.

“I still have a lot of friends there (one of his good friends is Craig Drummond, former Goldman Sachs JBWere chief executive, now head of Merrill Lynch Australia), and they have a very successful business.

“The Goldman model, while it has obviously been through some public relations issues of late”, has obviously been very successful for clients for many years, he says.

Evans says one of the key selling points of his firm is the independence of its research. He plans to recruit another two research analysts in the next 12 months.

“Our research is very high conviction . . . focused on where we think will be the significantly above-average returns versus the benchmark,” he says.

It focuses on blue-chip, top-100 companies. Some of the firm’s best stock calls have been Lion Nathan before the Kirin takeover, Foster’s before its demerger and Coca-Cola Amatil.

Evans also wants to develop the firm’s fledgling equity capital markets (ECM) business.

Over the past year it has anchored capital raisings for two companies — Saracen, a small Perth gold company, and Tox Free Solutions, a waste manager also based in WA.

“It has been tough for new issues and initial public offerings. I see this as an opportunity to build the ECM side of the business because I think there might be some people come free from the big investment banks because of the lack of deal flow.

“We can use this time to build out that business,” he says.

“I have a vision that our business is going to have a significant revenue line in the future. I’m not going to put a number on it.” But he is aiming for ECM to be “20 per cent of our business long term”.

“The institutional business and the private wealth business are 40 per cent each.”

The Evans & Partners advisory board is star studded.

Chaired by former ACTU secretary and Reserve Bank director Bill Kelty, it includes John Wylie, former KPMG national chairman David Crawford, Origin Energy chairman Kevin McCann and television identity and Collingwood Football Club president Eddie McGuire.

Evans describes Crawford and Kelty as two of his key mentors.

Crawford himself sees much of the father in the son.

“David has an incredibly strong moral streak to do the right thing . . . even if it is not to his own benefit,” says Crawford, who is chairman of Foster’s and Lend Lease and a director of BHP Billiton.

“When Ron passed away it was a hell of a shock to David.

“My arrangement with David is that he doesn’t have to make an appointment to come and see me. He can pick up the phone, any hour of the day or night.”

But, Crawford jokes, Evans has one flaw: “There is a very severe flaw in his judgment, with his choice of football team!”

Crawford is a die-hard Collingwood supporter.

Of another passionate Magpies supporter, Eddie McGuire, Evans says their relationship developed from that of the Collingwood president with his father.

“They got to know each other and they spent a lot of time together. Our friendship was born out of that. I think Eddie has given the board a terrific insight into branding,” Evans says.

McGuire’s company, McGuire Media, produces a multimedia audiovisual product for the firm’s clients called The Morning Mail, providing a 10-minute market summary, with interviews and analysis, each morning. “The Morning Mail, that was Eddie’s idea.” The relationship “has been fantastic for me”, Evans says.

McGuire says he was attracted to the advisory board because of the unique opportunity the firm provided.

“It was an exciting proposition that David was articulating to come up with the answer to a perceived hole in the market. The positioning of the firm was ahead of its time,” McGuire says.

“David is a guy who is very considered, very measured but also has an eye for the very big picture. He is a natural leader.

“David and Ron engender a loyalty and have that measured, calm approach, but at the same time that steely resolve to take an idea and turn it into reality.”

Evans says the future of the private client stockbroker remains bright despite the explosion of online trading offerings and cut-price products.

“If you continue to add value to your client and provide quality advice that sees your client preserving and then growing wealth across all asset classes, I think you will do very well. With the growth of compulsory super, that opportunity is only going to grow.

“On the institutional side, I think the opportunity is there to create some really differentiated research that is independent, that is focused on helping institutional fund managers to generate alpha (returns above the index).

“They also operate in a very competitive space . . . and they are looking for an edge. So a broker like ourselves is going to get paid if we come up with very good, smart ideas that give them that edge.”

He sees a strong future for “the pure independent research model, away from an investment bank and proprietary trading desk”.

He is less certain about the market outlook. “There is still a lot of uncertainty in the world, a lot of uncertainty of what happens in Europe and the recovery in the US. My view is that analysts are probably slightly high on corporate forecasts right now. And on the market, it’s probably in a trading range from 4000 to 5200 for the next 18 months.”

source : www.theaustralian.com.au

Random News

• State Bank of Indore staff protest proposed merger with SBI
• Patient Money: Making Home a Safer Place, Affordably
• Cheers Hail New Nordstrom's Opening
• Continue reading "Bank of America will close 10 percent of branches"
• Autoliv, EFI Electronics win Shingo prizes
• Bhatt hints at SBI rights issue, says no urgency
• Neutral colors help sell a home
• Southwest bids $170 million for Frontier Airlines
• Are stocks a loser's bet?
• NIB warns of unsolicited share buying

Details :
Submited at Saturday, July 31st, 2010 at 12:19 am on Healthcare Industry by madison
Comment RSS 2.0 - leave a comment - trackback