Fixed Income specialist Income Asset Management (ASX:IAM) has announced a bumper year for FY22 – there’s a fair bit to unpack, but the numbers are telling an overwhelmingly happy story.
The company reported operating revenue rose 114%, as total assets under advice passed $2 billion and placement fees increased 216% year-on-year (YoY) to $3.3 million, while revenue for the year increased to $7.38 million from $4.29 million in 2021, driven by positive contributions across the group.
Revenue excluding government grants increased 114% YoY to $7.18m. Year to date Cash assets exceed $1.3bn the highest point for the group.
Significant DCM transactions
In FY22, 12 debt capital markets (DCM) transactions for issue size of $1.39 billion were completed where IAM Capital Markets was the lead manager, cornerstone arranger or provided the primary investors.
The DCM pipeline for Q1FY23 has 7 live deals of significance with the revenue opportunity very significant, should the market conditions allow.
IAM said the range of types of transactions and source of deals is encouraging as the company becomes a trustworthy partner for many corporates issuing bonds and institutional investors.
Capital markets trading revenue increased 108% YoY to $2.95m from $1.42m in 2021. IAM Cash Markets brokerage revenue increased 5.8% with total cash assets passing $1.3bn in August 2022.
Secures significant deals in FY22
IAM Capital Markets won a $160m non-discretionary investment mandate for a leading not-for-profit.
New clients grew 192% YoY with strong demand from the financial advisor market, including 8 financial planning groups transferring from a major bank with the long-term value adding trend continuing.
For FY22 IAM had two material investments including investing $3.86m for its 25% stake in Tactical Global Management, a global fund manager with $26 billion in overlay strategies.
It also owns 25% of Fortlake Asset Management, providing a total of $917k fully repayable loan facility to support its growth.
Fortlake and Trustees Australia (an IAM business) are finalising preparation for the listing of the first Fortlake ETF into the market in September 2022. The investments are now valued at $6.19m on its balance sheet.
Recovering from challenging fixed income environment
IAM CEO Jon Lechte said the first six months of the financial year saw great growth in clients, assets, and trade volume.
However, in H2 there was the historic unison of equity and bond market routing from geopolitical and inflation concerns sweeping markets.
Lechte considered it one of the most challenging conditions for fixed-income markets in a generation.
“As we approached the final months on FY22 we saw markets re-opening up, client growth and pipeline of transactions grow significantly, setting us up for a strong and profitable FY23,” he said.
“The debt capital markets pipeline is now getting to market and, should market conditions allow, will accelerate revenue growth through both the fees earned and the turnover generated to a cash flow profit through FY23.”
Lechte said additionally the company was seeing a great pickup in enquiry, driven in part by solid Investment grade credits, now trading well above 6% providing a solid return for income investors for the first time in several years.
“Our divisions, being Capital Markets, Funds, Cash Markets and Trustees Australia were effectively brought together in 2021 to provide a strong suite of investment alternatives for clients and advisers,” he said.
“There is great overlap and interdependence between these divisions which in time will all produce recurring, annuity style income, along with the upside performance that a thriving Capital Markets business can bring.”
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.