Moelis Australia has posted record earnings for FY18, more than doubling its asset management EBITDA to $52.5 million from $23.4 million in FY17.
Asset management was the clear standout for the group, where 70 per cent of revenue was recurring in nature.
Moelis Australia this week announced a group EBITDA (earnings before interest, tax, depreciation and amortization) of $57.5 million, up 38 per cent on FY17, and recorded a 35 per cent increase in NPAT to $39.3 million. Total AUM increased $800 million in FY18 to $3.7 billion.
“Whilst 2018 was a challenging year in financial markets, owing to market volatility and a growing influence globally of political and regulatory uncertainty, it proved to be another year of overall strong performance and growth for Moelis Australia,” the group said.
At this time last year, we highlighted our concerns regarding the outlook for markets and the overall economy. Consequently, we operated with caution when allocating capital and thus maintained a strong balance sheet, highlighted by approximately $87 million in cash at year’s end.
“Our strong cash balance positions the business well moving into 2019. We cannot control market volatility, regulatory or political uncertainty, nor the strength of the economy. However, we can manage the way we operate in a changing financial environment.”
With a strong real estate focus (76 per cent of AUM) and credit-based investments (16 per cent of AUM), Moelis has expanded significantly over the last year after obtaining a business licence in China. The group has since opened a Shanghai office and recruited a number of China-based executives and a managing director.
Speaking at the group’s AGM last year, Moelis Australia CEO Andrew Pridham said having a physical presence in China is an important strategic step which should assist the servicing of the group’s many China based clients.
“Our effort in focusing on attracting clients based offshore in markets such as China, Vietnam, Malaysia and South Africa is delivering results,” he said.
“We believe that the inflow of foreign investment capital is an important benefit to Australia as it assists in the financing and investment into important areas of the economy at a time when capital is becoming increasingly difficult and expensive to source.”
In 2018 the company increased its focus on credit, originating $300 million in loan assets across a variety of wholesale and consumer loan markets.
“The rate of our credit origination has been moderated by our overall cautious view of the economy, and in particular the Australian residential sector,” Moelis Australia CEO Andrew Pridham said.
“However, despite our high underwriting standards and overall caution, we continue to see significant opportunity in credit origination across many parts of the economy.
“We believe that 2019 will continue to present opportunities to deploy a combination of balance sheet capital and the expansion of credit related investment funds for clients seeking stable income producing investments with lower risk and volatility characteristics than equity related investments.”