Bell Potter Securities is casting around to bulk up, and the broking and wealth management business of the beleaguered listed Wilson HTM Investment Group would be a logical fit.
Wilson operates the broking and wealth management business as well as a funds management division, Pinnacle Investments, and sources say its board has become increasingly keen to offload the loss-making broking unit.
One industry source said the Wilson board had a “practically negligible interest in the broking business and believe the future of WIG (Wilson) is Pinnacle”.
“Private wealth would be a very juicy add-on for Bells and a simple integration, and a deal with Bells would be as good if not better for Wilson’s advisers,” the person said.
Wilson’s wealth management and broking division booked a before-tax loss of $6 million in the 2012-13 year, with wealth management accounting for $4.6 million of that.
Bell Potter managing director Alastair Provan denied the firm was looking to take on Wilson’s broking arm and said he had not been in talks with Wilson’s management.
However, he said Bell Potter was always on the lookout for suitable acquisitions.
It is unlikely that cash would change hands in such a deal.
“The Bells are very good buyers,” a second industry source said. “They would take the (Wilson’s) broking business on and say ‘we will take the liabilities off you and work them through’.”
Any move would require the backing of Deutsche Bank, which holds about 19.8 per cent of parent Wilson HTM Investment Group, and founder Steve Wilson, who has about 18 per cent.
Consolidation across Australia’s wealth management industry is seen as inevitable by senior industry players.
Bell Potter is in a strong position to buy and has been the most active market player in soliciting rival brokers to sell their businesses.
“If you are sub-scale or close to sub-scale, either you will go back to a partnership model or become part of a bigger group,” one senior broker said. “Consolidation must happen to defray the overhead running costs.”
A month ago, listed financial services company Treasury Group led a tilt at Wilson, sounding out a handful of shareholders in an attempt to buy their stakes at 42 cents a share. The stock closed at 48 cents on Friday, after dipping to lows of 17 cents in June.
It has been a tough 18 months for Wilson, with several rounds of redundancies and a legal dispute with Ord Minnett over poachings. In July, Wilson’s chief executive Andrew Coppin resigned to free himself to pursue a buyout, on the same day the company dismissed allegations of misconduct, saying they were unsubstantiated.