Austock in Intersuisse's sights

The article says Singapore-backed Intersuisse has outlined plans to buy Austock's stockbroking arm by entering an exclusivity agreement to acquire Austock's security and corporate advisory business. Any transaction depends largely on the outcome of due diligence scheduled over the next month.

According to the article, Intersuisse is a rival mid-size stockbroker that specialises in resource and energy stocks. It is backed by Singapore-based Phillip (Phillip Brokerage). Intersuisse says the acquisition would give it substantially increased scale and broader distribution to leverage Phillip’s franchise in Australia.

The article reports the transaction would leave Austock as a listed company focused on its profitable property trust and small life insurance bond business. It also notes the slimmed-down Austock is widely expected to emerge as a takeover target.

The article links the move to tough conditions in local markets for all stockbroking firms: continued low trading volumes on the ASX, a lack of corporate equity capital markets activity, depressed brokerage income, and delays or drops in capital market deals. Austock has also been reshaped by the financial crisis and customer collapses such as ABC Learning and Timbercorp.

Per the article, Intersuisse has exclusivity to pursue the acquisition but any deal is not final — it depends largely on completing due diligence over the next month. That means timing and certainty remain conditional until due diligence is concluded.

The article states Austock posted a net profit of $4.5 million for 2010–11, swinging from a loss in the prior period. It also reported that no dividend was paid for that year.

The article notes Austock repositioned itself over the past 18 months as a mid-to-small-cap broking firm and hired senior staff from major banks. It specifically appointed Paul Masi, the former head of Bank of America‑Merrill Lynch in Australia, as chief executive and made additional hires from Macquarie, Merrill Lynch and UBS.

The article highlights that low ASX trading volumes and a dearth of corporate equity activity have cut revenue across the broking industry, prompting consolidation and asset sales like this one. Everyday investors should be aware that such market conditions can lead broking firms to restructure, sell divisions or become takeover targets, which can affect services, research coverage and corporate activity in the market.