Registry Deal Recalls Old Rivalry For Asx
The Age
Tuesday March 21, 2000
The Australian Stock Exchange is to take a 50 per cent stake in Perpetual Trustees' share registry business under a deal that marks round two of its competitive tussle with the country's largest share registry business, Computershare.
The ASX and Perpetual Trustees Australia yesterday announced the formation of a joint-venture company, ASX Perpetual Registrars, that will carry on the operations of Perpetual's existing share registry division. The ASX will subscribe $50 million for its stake, with Perpetual retaining the other half-interest.
``We believe there is an excellent opportunity for us to develop a business which merges Perpetual's ability to offer high-quality registry services to issuers with ASX's skills in delivering leading-edge financial services technology," said Mr Richard Humphry, managing director of the ASX, in announcing the move.
A key benefit for Perpetual will be access to ASX technology. Perpetual is now dependent on its major competitor, Computershare, whose technology it uses in its registry operations. But the ASX is in the multi-million-dollar process of developing its own share-registry technology, which it hopes will be operational by the second half of 2001, allowing the joint venture to compete on more open terms.
Rivalry between the ASX and Computershare first came to the fore last year, when Computershare threatened to encroach on ASX's dominance in the securities exchange arena. The share-registry giant matched ASX's bid for the Sydney Futures Exchange, and a lengthy, but fruitless, battle ensued.
Yesterday's deal finds the companies once again face to face, this time on Computershare's turf. Computershare holds around 55 per cent of the Australian share registry market - and also operates registries overseas - while Perpetual, which bought its registry business from Cooper & Lybrand and processed the Telstra2 placement, holds about 35 per cent of the domestic market. The other major operator is National Registries, while a handful of companies, including BHP and National Australia Bank, manage their own registries.
The transaction also finds the ASX - which, unlike most exchanges, already runs its own settlements system and is involved in options markets - taking a further step beyond the traditional role of an exchange. But a spokesman for the ASX, Mr Chris Hamilton, said the fact that the ASX would be competing with a company listed on its own boards did not present a conflict of interest. Compliance by Computershare with stock exchange requirements had been regulated by the Australian Securities and Investments Commission, not the ASX, since the SFE bidding war, he said.
As a result of its new relationship with the ASX, Perpetual will become the third company to be treated in this way, along with the ASX itself.
A spokesman for Perpetual, Mr Rohan Mead, said the joint venture would seek to expand its business both through competition for clients and through additional companies floating on the exchange. The joint venture has also flagged its intention to expand overseas. Its forecast revenue of $48million for 1999-2000 compares with Computershare's revenue of $174.2million for the year ended 31 December 1999.
Computershare yesterday said the announcement came as a surprise, but played down the threat it posed.
``It's one of our competitors doing something at the registry end, and we're not that fussed by it really," said Mr Stuart Crosby, Computershare's strategic business development manager.
``We're very confident in our own technology ... We've existed in a competitive environment in Australia for 21 years and we're very used to competition."
The new venture starts on 1 May and is subject to completion of due diligence and regulatory approval.
© 2000 The Age