Steadfast reveals plan to float
Broker cluster group Steadfast has unveiled a strategy that will see the group transform over the next few years into a public company.
Members voted on Saturday before the opening of the Steadfast Convention in Brisbane to develop an initial public offer to overlay the present Steadfast structure, in which members own their own brokerages. They also overwhelmingly approved the formation of a new premium funding company to be owned 50/50 with Macquarie Bank.
QBE will assist Steadfast to make the transition, and is understood to have offered up to $200 million in funding to make the transition to a public company possible. QBE Chief Frank O’Halloran has also signalled his desire to take a 14.9% equity position in the new company – the same strategic stake the insurer holds in rival cluster group Austbrokers.
Allianz CEO Terry Towell is also understood to have offered financial backing and to have also indicated his company would take a similar strategic stake.
The moves by Steadfast are in reaction to developments in the broking industry that have seen Austbrokers negotiating an alliance with IBNA – which has not yet been finalised – the strong drive by WA conglomerate Wesfarmers to buy brokerages complementary to its OAMPS subsidiary, and the recent formation of a broking company led by experienced aggregator Kingsley Lamont.
Wesfarmers is also in the Steadfast strategy, offering to buy any Steadfast brokerages that want to exit the group before June 30 or at some later date. It’s understood 11 Steadfast members have asked for more details on what Wesfarmers is offering.
Steadfast Chairman Robert Kelly says 76% of the 208 members attending the meeting backed the plan to form a public company that will “acquire various percentages [of members’ business] over various periods so anyone can sell all or part of their business at any time”.
Ownership will then be transferred to a “hub” in which members will be able to acquire available brokerages in various percentages.
In effect, little will happen to the group in the immediate future, with Mr Kelly saying it’s possible the present independently owned model could continue to exist alongside the new public company structure. As brokers choose to exit the industry over the next five to 10 years, “they would have a vehicle to enter and exit”.
“The strategy we’re following gives us time to evaluate the situation,” he said.
He says the personal intervention by Mr O’Halloran was “overwhelmingly positively received”, and Steadfast will be taking up his offer to help the group formalise its future structures.
The interest by QBE and Allianz to take up shareholdings is not expected to result in insurers joining a future Steadfast board – this is not the insurers’ desire.
“I don’t think any of Steadfast’s other strategic partners should draw any inferences from [the QBE and Allianz strategies],” Mr Kelly said. “Clearly they want to ensure the retention of an independent distribution network to stay at the forefront of the Australian market.”
“This is also the wish of the Steadfast board and shareholders.”
Members voted on Saturday before the opening of the Steadfast Convention in Brisbane to develop an initial public offer to overlay the present Steadfast structure, in which members own their own brokerages. They also overwhelmingly approved the formation of a new premium funding company to be owned 50/50 with Macquarie Bank.
QBE will assist Steadfast to make the transition, and is understood to have offered up to $200 million in funding to make the transition to a public company possible. QBE Chief Frank O’Halloran has also signalled his desire to take a 14.9% equity position in the new company – the same strategic stake the insurer holds in rival cluster group Austbrokers.
Allianz CEO Terry Towell is also understood to have offered financial backing and to have also indicated his company would take a similar strategic stake.
The moves by Steadfast are in reaction to developments in the broking industry that have seen Austbrokers negotiating an alliance with IBNA – which has not yet been finalised – the strong drive by WA conglomerate Wesfarmers to buy brokerages complementary to its OAMPS subsidiary, and the recent formation of a broking company led by experienced aggregator Kingsley Lamont.
Wesfarmers is also in the Steadfast strategy, offering to buy any Steadfast brokerages that want to exit the group before June 30 or at some later date. It’s understood 11 Steadfast members have asked for more details on what Wesfarmers is offering.
Steadfast Chairman Robert Kelly says 76% of the 208 members attending the meeting backed the plan to form a public company that will “acquire various percentages [of members’ business] over various periods so anyone can sell all or part of their business at any time”.
Ownership will then be transferred to a “hub” in which members will be able to acquire available brokerages in various percentages.
In effect, little will happen to the group in the immediate future, with Mr Kelly saying it’s possible the present independently owned model could continue to exist alongside the new public company structure. As brokers choose to exit the industry over the next five to 10 years, “they would have a vehicle to enter and exit”.
“The strategy we’re following gives us time to evaluate the situation,” he said.
He says the personal intervention by Mr O’Halloran was “overwhelmingly positively received”, and Steadfast will be taking up his offer to help the group formalise its future structures.
The interest by QBE and Allianz to take up shareholdings is not expected to result in insurers joining a future Steadfast board – this is not the insurers’ desire.
“I don’t think any of Steadfast’s other strategic partners should draw any inferences from [the QBE and Allianz strategies],” Mr Kelly said. “Clearly they want to ensure the retention of an independent distribution network to stay at the forefront of the Australian market.”
“This is also the wish of the Steadfast board and shareholders.”