Income Asset Management: client numbers jump 70%, momentum builds in new deal pipeline
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The business has a strong pipeline of new deal flow as it builds a leading platform in the fast-growing Australian bond market.
Listed fixed income investment group Income Asset Management (ASX:IAM) confirmed its leading position in Australia’s corporate bond market with the release of its quarterly trading update this morning.
The results showed the business was able to navigate through a number of challenges in Q4 – most notably the Omicron outbreak – to post its fifth straight increase in quarterly revenues.
The result rounded out a strong first half for IAM, where half-year revenues for FY22 came in at ~$4m – an increase of 66.8% from H2 FY21.
In addition, the company outlined consistent results across each of its core revenue channels, underpinned by a sharp increase in new clients which rose by 70% over the quarter, reflecting “strong marketing and sales momentum”.
Strong growth outlook
As a leading fixed income investment provider in the Australian market, IAM provides a suite of client services including cash broking and funds management.
Among the quarterly highlights was the group’s Capital Markets division, which completed three successful placements in the quarter and booked a 60% lift in placement fees
Deal flow included a $20m extension to an existing debt placement for listed finance provider Pioneer Credit (ASX:PNY).
Surge in turnover
Along with the boost in new client numbers, total assets under management (AUM) increased by 74% while bond trading volumes rose by 40%.
The company is also optimistic that its spate of new client wins – most of which occurred in November – will result in a “surge in turnover” as trading activity picks up as new clients are introduced to the breadth of fixed income investment options on IAM’s platform.
Looking across the business, the company made an important strategic pivot in its broking service during the quarter, moving away from lower-margin retail deposits and towards treasury services for larger corporate clients.
That realignment has seen the business “strengthen its relationships with institutional clients, including a commercial agreement with Integrated Portfolio Solutions (IPS) to provide cash and bond trading services to IPS’s clients”, IAM said.
And IAM also stayed busy on the capital allocation front, acquiring a 25% strategic stake in fund manager Tactical Global Management (TGM), which saw IAM boss Jon Lechte also join the TGM board .
TGM currently has funds under management of $27bn, and will provide an important complementary partnership to IAM’s operations through its compliance processes and funds management expertise.
In summary, the December quarter was one where IAM consolidated its first-mover advantage in the domestic market with a multi-channel fixed income service.
And looking ahead, Lechte said the business is primed for further growth as it capitalises on its position in the market.
“Since we fully established IAM in February 2021, our ability to source new-issue bonds and loans has ramped up faster than we could sign new clients,” Lechte said.
“Right now, we still have a healthy pipeline of new issues (both bond and loan format), and the chance of placing them has improved significantly with a strong flow of new clients following on from our October marketing campaign,” he added.
In the near-term, IAM is targeting strong growth from its platform as a small-parcel bond provider to financial advisors, after establishing product market fit for its ‘model bond portfolio’.
“IAM’s balance sheet remains strong, with healthy cash reserves to support continued investment in our ability to be the best fixed income provider on the market,” Lechte said.