businessnews.com.au | November 21, 2013 |
$
3
financial transactions
4.9bn Government
market in Australia
NEWS
Emerchants gets
its groove back
Bob Browning has embraced the challenge of
revitalising financial services firm Emerchants.
Dan Wilkie
[email protected]
WHEN the high-powered Australasia
Consolidated team led by Bob Browning
bought out John Battley’s financial services firm Emerchants for $28 million in
2011, investors were expecting big things.
Australasia featured prominent Western Australian business identities Mark
Barnaba, John Toms and John Willing on
its board of directors, which was chaired
by John Terpu.
“I was part of a group of guys that went
out looking for a company we thought had
a good business model and good growth
potential, but was perhaps capital constrained and needed a bit of management
support,” Mr Browning told Business News.
“Over the course of 2011 we must have
looked at 100 different companies, and I
used to joke that we looked at everything
from egg farms to wind farms.”
Today, Mr Browning, based in the US
since his time as chief executive of shipbuilder Austal, is the last one from the
Australasia team still at Emerchants,
which bills itself as a market leader in prepaid financial cards.
“They’ve all gone on to bigger and better
things,” he said.
“But I’ve really enjoyed this run and I’ve
gotten a kick out of watching the company
get turned around and start to kick goals.”
The turnaround, which Mr Browning
credited current chief executive Tom
Cregan with driving, is evident in Emerchants’ share price, which has risen from
around 9 cents in October last year to more
than 60 cents earlier this week.
Emerchants expects to facilitate more
than $160 million worth of transactions
this financial year, and has recorded an
average growth rate of around 30 per cent
since 2011.
“We’ve invested a fair amount of money
into systems and infrastructure to make
the thing run, and probably most importantly, he [Cregan] helped us get focused
on the right market segments, because he
knew which ones had the most potential
based on his experience in the US,” Mr
Browning said.
“Over the last 18 months we’ve been
trying to build up the business and we’re
now really starting to kick some goals in
volume.”
Emerchants has caught the eye of institutional investors along the way, and
multinational groups now take up about
35 per cent of its share registry.
The company also went to the stock
exchange in August to boost its coffers,
initially seeking to raise $3 million in an
uncertain market.
I’ve gotten a kick
out of watching
the company get
turned around and
LAST ONE STANDING: Bob Browning is the last remaining member of a
prominent group of Perth businessmen who bought into Emerchants more
than two years ago. Photo: Attila Csaszar
start to kick goals
- Bob Browning
Such was the demand for Emerchants
stock, however, that the company was able
to secure $7.5 million.
However, the expectations from investors and market watchers in 2011, and the
strategy pursued by Mr Browning, were to
use Emerchants as a platform to pursue
other opportunities in the financial services sector.
That outcome hasn’t eventuated, as
building the company to profitability has
taken more time than initially anticipated.
“We’re probably going to spend another
six months or so getting this company
really rocking,” Mr Browning said.
“We’re still in a cash-flow negative position; we expect to turn cash flow positive
and profitable certainly within the next 12
months, so that positions us then to start
to look for other acquisitions.”
Mr Browning said the company was targeting the government financial services
sector, particularly in Queensland, to drive
Emerchants’ future growth.
The Queensland’s government’s first
use for the card will be in disaster relief
– providing funds for individuals in need
through a pre-paid card.
A formal agreement with the Queensland government is expected over the
next few weeks, and Mr Browning said
Emerchants would look to leverage that
relationship into arrangements with other
states.
The government financial transactions
market, Mr Browning said, totals around
$4.9 billion across Australia.
“The way we measure our business, for
every dollar that’s loaded on our card we
make around 3.5 to 4 cents,” he said.
“So when you are talking about a market
of that size, it adds up very quickly.”