Hanover poised for move into fresh fields

Andrew Schmidt

Hanover Group says its 35 per cent increase in June-year net profit to $105 million shows it is well positioned to move into funds management and investment banking.

The Eric Watson and Mark Hotchin-owned company's total assets rose to $1.82 billion from $1.74 billion a year ago, and nearly a quarter of those assets are in the fast-growing Australian property and consumer finance market.

New chief executive Andrew Schmidt said the results demonstrated that Hanover "has firmly established itself in the financial services space and is now ready to pursue the natural evolution of the business into investment banking style activities such as funds management, private equity and private banking services".

Hanover has said it is building funds management and investment banking divisions to complement its finance company operations.

Yesterday Schmidt said Hanover's funds management arm was about to launch its first product, an offering which gives exposure to four international equity market indexes, but is "capital protected" against unfavourable market movements. He said it would be launched in about a week.

"I think it will resonate with our investors. Certainly the feedback we got when we went out to them was that this is a product that they were looking to add to their portfolios and we think there will a significant broker uptake as well."

Last month Schmidt, who has worked for Credit Suisse in London, said Hanover's fledgling investment banking division would look for opportunities "down the line" as the Government invested more in infrastructure, particularly in the main centres, and had also set up a specialist mergers, acquisitions and private equity investment team.

Yesterday Schmidt said Hanover aimed to increase its asset base across all three "pillars" to $3 billion over the next three years.

Hanover has $1.3 billion worth of debenture stock on issue to about 35,000 investors. It aims to have its funds management arm managing $1 billion within three years.

"That target is relatively attainable via the alternative asset strategy that we've got rather than via traditional funds management."

Meanwhile, Hanover's finance company operation's profit rose 38 per cent over the year and was set for "stable growth" in the local market.

"In Australia we've been operating mainly in Queensland and that business has been growing very strongly. That has been a significant factor and will continue be a significant factor going forward."

Yesterday, Hotchin said Hanover had gone from strength to strength under Schmidt.