A veteran banker with 17 years in the industry, Andrew Pridham has joined JPMorgan as its head of investment banking for Australia. The long time UBS banker had run investment banking there, as well as the regional real estate group, before sprouting out a couple of years ago to create his own boutique firm, First Provident. Here he talks about why he traded boutique for global investment bank, and explains the opportunities he sees.
Can you tell us a bit about your boutique First Provident, what was achieved and why you decided to move on and join JPMorgan?
Pridham: I haven't really moved on, I've moved the business to JPMorgan. The history of First Provident is that when I moved back to Australia a few clients said to me "would you mind having a look at this, would you be interested in having a look at that." It developed to a point where I was busy doing things. To list some of the transactions we advised on last year - we advised Centro when it made an unsolicited bid for AMP Shopping Centre Trust, advised Investa when it made a bid for Principal Office Trust, advised Centro again on an acquisition of US shopping centres and raised money for them, and this year, we are one of the lead advisers on the Westfield merger.
Whilst First Provident was very successful, we were attracted to JPMorgan for a whole range of reasons. I think that whilst running a boutique business gives you significant freedom, you do lack the ability to assist clients in all aspects of what they're trying to achieve. By that I mean being able to raise equity for them in a meaningful way, to be able to find them acquisitions offshore and so forth. My team at First Provident discussed the opportunity and decided we could do so much more for the clients of JPMorgan, which has a fantastic research and global investment banking platform. They're a very good name in this market and I just felt it was a great opportunity to put some of the relationships that First Provident had together with everything JPMorgan has. It was a case of one plus one equalling three. That was really the motivation.
Personally, I was also very excited about the prospect of once again running a full service investment banking business. I was convinced that the JPMorgan platform was ready to bloom and that I could assist in this process.
So JPMorgan actually bought out your boutique?
I owned 100% of the business. So if I come here, the business comes here.
What are you views on the current investment banking environment in Australia?
I think we're in an equity cycle and the Australian economy is very strong, firing on all cylinders. You have an environment with low interest rates, low inflation, high employment, so I think things are very positive. My expectation is that it will continue to be a very good market for investment banking. Clearly the market is very competitive in Australia. This is what our focus is and will continue to be, to ensure that we can be top three in the meaningful market segments, preferably number one.
You built a very successful real estate investment banking platform with UBS, is the plan to do something similar with JPMorgan?
When I was at UBS in Australia, I ran the whole of investment banking, so I focused on the total business. In terms of real estate, this is my specialisation. I have brought with me two ex-UBS bankers who were in the real estate side who are very good. There are obviously great people at JPMorgan on the real estate investment banking and we also have very strong research.
One of JPMorgan's strong points for me is the research, which is very strong. I've also spoken to a number of my clients before I came here and they've been very supportive and enthusiastic about me joining. We'll build on that and I would be very disappointed if we could not build a very strong real estate business.
What parts of the JPMorgan investment banking business will you hope to improve in Australia, what are you looking to hone in on in the first one hundred days?
Equity origination will be my initial focus. I'm very keen to get this as strong as the debt side, where we are very strong. If we see there are areas we can be stronger in, where we are under resourced, I will address that and make sure we have a competitive team on the ground. I am confident that JPMorgan has all of the ingredients for success - my role is to make sure we achieve our potential. Let me be very clear on one point: JPMorgan aims to grow in Australia. My focus is growth.
Has the REIT (Real Estate Investment Trust) business in Australia topped out or is there room for more growth?
I've been working in this area since the late 1980s and every year it has pretty much got better in terms of investment banking business. It's obviously goes in cycles between IPOs, placements, and M&A. At the moment we're going through a phase where there is a lot of M&A activity.
At First Provident, we were one of the lead advisors on the Westfield merger, for example. I think those sort of transactions will continue but I also expect there will be some more IPOs in the second half of the year and some more equity raisings by the various property companies that will allow them to make some acquisitions and get on with business.
The key point is that there is still strong demand from investors for securitised real estate investment. Our role is to assist in satisfying this demand with product.
What is your outlook on the residential side of the Australian property market, is it something that will fall or rise?
Broadly speaking, prices have stabilised and they are no longer rising at the rate they were. I would think generally markets don't just sit still, they either move one way or the other. I certainly don't see any major corrections, the sort of things that occurred in the late 1980s. Nor can I see massive rises in residential prices.