Oberon Investments Group plc (AQSE:OBE) Chief Executive Officer Simon McGivern caught up with DirectorsTalk for an exclusive interview to discuss their results, the divisions within the business, how growth has been achieved, the market environment and what investors can expect over the next 6 months.
Oberon Investments Group is a boutique investment management, wealth planning and corporate broking group. Today the company announced its results for the six months ended 30th of September 2021 and joining me to discuss those results is CEO Simon McGivern.
Q1: First off, congratulations on a strong set of results. Simon, can you just run us through the highlights?
A1: The encouraging thing was that performance was good across all divisions and probably better than that, a lot of the growth was organic, so we made a couple of small acquisitions last year. We’ve got a very good platform now, so thanks to a lot of hard work from the portfolio managers, investment teams and massively as well our teams in Essex.
Assets under administration is a core KPI for us, that was up 141% over the £750 million mark. We’ve also announced that growth has carried on post-paced period. We made our maiden profit, which is always encouraging, this six months and that was EBITDA of £295,000 with a PBT of £128,000.
I think the key there is we’re incredibly operationally geared so apart from the staff costs, we’ve got a relatively high fixed overhead so as revenues grow, obviously profit grows exponentially.
I think really the growth is encouraging, the structure is encouraging, we’ve invested a lot in our wealth management systems and a lot in the compliance and operational side, which is our bedrock. We’ve got growing investment teams, great performance in the model portfolios and across our clients’ portfolios and we’ve also got our nascent corporate broking team which have had a very good start to life.
So, I think we’re very happy with everything at the moment.
Q2: Can you just explain for us the different divisions within the business?
A2: The core of the business is investments and wealth management.
So, we’ve got under the brand, we listed earlier in the year on AQUIS, we’ve got Oberon Investments itself, we’ve got the Hanson Investment Management brand and those who look after clients’ portfolios on a discretionary and advisory basis, and we do execution only dealings as well.
We also have a wealth planning division, Smythe House, which we did acquire earlier in the year, and they provide some relationship-driven financial advice so high net worth effectively.
Apart from that, on the other side of the wall, we’ve got Oberon Capital and that’s our corporate advisor and brokering division and that’s got a private ventures division and the public market side. The genesis of that was really had a lot of high-net-worth clients who had interesting businesses and we’ve got the listed public side, which, again, it’s led by Mike Seabrook and is doing very well in itself.
Q3: Now, just looking at the results, you’ve achieved considerable growth in your investment management business. Can you explain for us how you’ve achieved this and why clients choose to invest with OBE?
A3: First of all, I think we’ve got a slightly different approach from some of the others in the market, our number one focus, and we mean this, is we listened to what our clients want, and they tell us what they want and that seems to be different from lots of maybe the larger competitors we’ve got are doing.
We focus on traditional contact with the clients, they get to speak directly with their portfolio managers, we’ve got a brilliant, fantastic personal customer service so we’ve got our main offices in Mayfair in Curzon Street, our operations team operate out of Essex, a really well experienced team, run by Nick and Mitchell and it just combines very well.
We can talk to the clients, have very close contact to them, clients get to speak directly to the guys running the money, if they’re wanting to deal, they can speak directly to the dealers and really, it’s at the age-old service industry where clients are telling us what they want and we’re providing it. So, we’ve got very good organic growth and, as a result, we’re getting a lot of referrals from clients, introducing friends and other high-net worth’s so that’s good.
We’ve invested a lot of money in our new systems. When we started, we inherited a legacy system, but we’ve just upgraded everything to improve the texts for clients, so they get immediate access to portfolios etc.
Again, we’ve had some brilliant team, we got some great investment managers join us, I think we’ve created a really fun environment so we’re finding people that may be joining us from places where they’re not enjoyed it. So, I think a lot of the city, of our competitors, are trying to create relationship managers and almost remove the client’s contacts with their fund managers and we’re going to be opposite way, so I think we’re creating a happy team here and that shines through, and the clients see it really.
The KPI on that one is that we’re getting organic growth, it really is very much growth in AuA, Assets under Administration, from clients talking to other clients and it’s going at a very fast pace.
Q4: What is the market environment like for your business at the moment?
A4: At our end of the market, it’s very good. I think it goes back to the fact that we’ve got a niche, we’ve got a huge market to grow into, the traditional larger companies are trying to introduce these rather funny structures that clients don’t want. We are getting a lot of clients from the traditional fund managers.
I met a very fun industry expert the other day who recently likened our business to a young Rathbones or one of the early-stage companies where we’re growing very fast, we’ve got our core businesses, we’ve got very good model portfolios, we discretionary fund management where you stock pick, and our performance has been fantastic, but we also provide a B portfolio.
A lot of our particularly high-net worth and ultra-high net worth are looking for interesting special situations so our private ventures division is growing a very good track record and we’re looking at the EIS products, so we run two VCT’s. So, our main core business is capital preservation, but we also have the USP, we can offer interesting different investments and as long as it matches the risk profile of our clients, it gives them something very different to what they have elsewhere.
So, we’re in a good market, we’ve got very good sticky clients, we don’t tend to lose any clients and it’s just a very good market. The wealth market is growing and growing, I think you’ll find a lot of people are more sophisticated, some want to go to the low-end, low-cost side where it’s very soft touch. Our clients tend to want a bit more service, they like speaking to dealers so they know what’s going on in the market, they like knowing their portfolio managers, how their companies are going.
During COVID was actually a strong period for us because there was uncertainty and clients wanted direct contact with their fund managers and to be reassured about the environment.
So, really, we’re definitely very optimistic about certainly the nearer and midterm future.
Q5: Just looking at the future, what can investors expect from Oberon Investments Group in the next six months?
A5: Investors as not our clients, I think that the numbers speak for themselves, we’re growing fast and that’s continued since the end of September.
We’ve got quite good visibility, certainly on the Oberon Capital side of growth so that’s going very well and AuA continues to go up at a pretty fast pace.
We’re not aggressively looking for any acquisitions at the moment, but opportunities have arisen. I think we’ve got a good track record of acquiring teams or businesses at the very good valuation, but I think mainly organic growth is going to be driving things. We don’t see things slowing down particularly, and we’ve got a huge market to go into, we’ve got some great connections, a brilliant Board and advisors so I’d like to think there’s a lot of momentum behind us really.