IAM confirms its position as a market leader in Australian fixed income, as revenue rips higher
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The company is launching into 2022 with 100% revenue growth and a streamlined three-division business model.
Fixed income specialist and funds management firm Income Asset Management (ASX:INY) confirmed its accelerating momentum this week with a strong half-year trading update.
Along with strong top-line growth, the IAM executive team executed on a business transformation that positions it with three complementary divisions providing sophisticated advice across the fixed income space.
That flowed through to a 100% lift in group revenues from the prior year period, to $3.9m.
Excluding a prior year R&D grant, underlying revenue growth was even stronger at 287%.
The revenue increase now marks five straight quarters of growth for the company – a feat achieved while along bringing total expenses down by 13% while investing in marketing, software and compliance services to establish its business model.
While expanding its sales growth, IAM also completed a major group restructure with new teams across management, sales and operations.
With an expanded sales team, the group now has all the pieces in place to support its market-leading fixed income product suite.
The company closed out the December half with a healthy cash balance of $6.87m, as it looks to scale up with a three-division strategy across its fixed income product suite.
Platform for growth
IAM’s restructure leaves it with a streamlined model across fixed income capital markets, cash investments and funds management.
The capital markets division is a leading Australian platform for structuring and facilitating debt investments for wholesale investors, corporate clients and family offices.
The company provides bond trading and bond issuance services, in collaboration with major investment banks. It also offers investment recommendations and portfolio optimisation through its partnership with leading research firm BondAdvisor.
Reflecting its strong pipeline of new deal flow, the division booked a 127% increase in placement fee revenue and a 53% lift in trading revenue.
“The division’s bond trading volumes rose 115% compared to the previous period with over $1.6bn AUD, USD, GBP, EUR bonds traded,” IAM said.
Highlights in IAM’s fund management division were led by its 25% strategic investment in Tactical Global Management.
Established in 1998, TGM provides overlay management services on $29 billion of client funds across 33 bespoke client portfolios, “with average client tenure of seven years”, IAM said.
The company is also driving growth through its strategic partnership with Fortlake Asset Management, which offers services to a number of ASX-listed financial services providers.
Demonstrating its strong growth, Fortlake has already grown contracted AUM to more than $1 billion in after just one year of operation – “four years ahead of its schedule, with inflows averaging more than $50 million a month”, IAM said.
Rounding out its corporate structure, the group’s cash markets division “lifted broking revenue by 4%, with its new focus on fewer, larger high quality mandates, and treasury services provided to intermediaries, corporates and advisory firms”, the company said.
In aggregate, IAM has now established a platform for strong growth as it scales up.
“IAM is now well placed with a specialised team to challenge the industry on its widespread anticompetitive behaviour with ethical and transparent fee services, coupled with enhanced trading and client management software”, CEO Jon Lechte said.
This article was developed in collaboration with Income Asset Management, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.