London-listed shipbroker Braemar is counting on its big global footprint to pull smaller shops into its orbit.
Opportunities exist for organic and inorganic growth, with a number of complementary opportunities being considered, the company said in its interim report on Wednesday.
Chief executive James Gundy told an earnings call on Friday: “For us, it’s very much about looking for business as a complement.”
“What I can say, first of all, is this business is consolidating for many reasons,” he added.
Gundy explained that one of the factors is the increased importance of compliance in a world complicated by sanctions.
This will increase costs for smaller brokers.
“So for them, it’s easy to go into a bigger group, where that cost then gets spread across the business,” he said.
Gundy said the group is using its experience to look for businesses to fill those gaps without any kind of overlap, as well as enhancing the bottom line through saved costs.
Chief operating officer Tris Simmonds added: “The big take-out is that once you’ve established a big enough footprint, it becomes easier to leverage that in either the same geographies with the same products or new products that we’re not involved in.”
“And a good example of that is we didn’t have a presence really in the Americas prior to doing the transaction with [US broker] Southport. Since then, we now have two offices in Houston, two offices in Florida, and we are about to open an office in Connecticut.
“We’ve got a small presence on the West Coast now. Once the footprint is established, it becomes so much easier to see the other opportunities that you may not have seen before,” Simmonds said.
The same thing applies to its sale-and-purchase business in South Korea, where has Braemar opened up a dedicated office.
Maintaining discipline
Chief financial officer Grant Foley said: “There’s lots of opportunities. We have a very disciplined approach when we look at opportunities and making sure that really what we’re looking for is one plus one equals three or more.
“It’s the information that we have, the sheer scale that we have,” he added.
In the six months to 31 August, Braemar logged net earnings of £2.1m ($2.7m), against £1.6m in the same period a year ago.
