Graham Morrow, arguably the inventor of implemented consulting in the 1980s, has received backing from the Kinghorn family to buy a majority stake in an asset consultant with $11 billion under advice.
Morrow’s existing company, Sigma Alpha International Limited, which is now majority-owned by the Kinghorns, has bought 58 per cent of CPG Research & Advisory, the firm formed in 2008 by the merger of boutique consultancies Grove Research & Advisory and Counterpoint Group.
Morrow and the Kinghorns, who famously floated their RAMS Home Loans business just before the global liquidity crisis hit the Australian sharemarket in 2007, have bought out the private equity interests behind Grove, as well as those of all CPG executives.
“The Kinghorns bought into Sigma Alpha – which I’d had for ten years not really doing much with it, just bits of corporate super and insurance advice work – because they wanted a cleanskin company for their first foray into superannuation and funds management,” Morrow said yesterday.
“[The Kinghorns] then looked at building the business organically – which was fine by me, I’m a guy that likes knocking on doors – but finally they decided a firm with an existing book of business was an even more exciting prospect.”
The only other shareholder of CPG is now WA Local Financial Services Pty Ltd, a company associated with WA Local Government Super Plan, which retains a 42 per cent stake.
CPG will become a subsidiary of a new company, Sigma Group Australia Linited, which Morrow said would develop an implemented consulting product, using CPG’s investment research. Morrow will be Sigma’s group managing director, while Ken Boag, of Tower and Rice Warner renown, will be chairman. Two other “prominent actuaries” have been hired as general manager and head of the Melbourne office respectively, Morrow added.
CPG itself will remain a fee-for-service asset consultancy, and Morrow said it would continue to publish its implemented consulting performance survey.
CPG’s consulting director, John Parrish, stressed that CPG would be Chinese-walled off from any product-related activities of its new owner.
Morrow said that all CPG executives, which include managing director Simon Ibbetson and director Brett Westbrook from the Grove side, and Counterpoint’s co-founders Parrish, Peter Williamson and Philip Chow, would be retained.
“Those guys are key, and the quality of their research is superb. They put no money into CDOs, unlike other advisors I won’t name. Not many people know, but the average fixed income portfolio of their clients has been trucking along at 10 per cent compounded per annum, and the balanced funds of their very large clients at 2.5 per cent per annum,” Morrow said.