Barrenjoey’s valuation dips as expenses saddle investment bank

afr.com:

Barrenjoey’s accounting valuation has taken a slight hit after major shareholder Magellan reduced its carrying value of the investment bank by 7 per cent to $124 million, from $133.2 million a year earlier.

The latest appraisal of the start-up investment bank comes after it brought new divisions online in the last 12 months – including fixed income, derivatives, private capital and prime brokerage services – and hired senior bankers to win market share amid a slow year for deals.

Brian Benari, chief executive of Barrenjoey Capital Partners, said revenue was up in subdued conditions. Louie Douvis

Magellan, which holds a 36 per cent stake in Barrenjoey, said the bank had “largely completed” its build-out of new business activities. The investment manager said Barrenjoey’s “establishment costs” were expected to decline in the 2024 financial year.

Magellan’s carrying value of Barrenjoey differs slightly from the company’s market value, which was estimated at $825 million in May last year, when co-investor Barclays tipped $75 million into Barrenjoey. The British bank increased its stake to 18.4 per cent from roughly 10 per cent. Barrenjoey staff hold the remaining 45.4 per cent of the business.

Chief executive Brian Benari said revenue was up despite weaker conditions for big-ticket mergers and acquisitions or initial public offerings.

“We are delighted with how Barrenjoey has navigated 2023. Revenue is up in subdued market conditions, expenses are controlled, and we delivered an operating profit again,” Mr Benari said.

He reiterated that operating profits were hamstrung by start-up costs, but is optimistic that Barrenjoey’s build-out was done.

“We delivered an after-tax loss as a consequence of these establishment costs,