In another scale play for the advice industry, high-net-worth advice firm Koda Capital will merge with Perth-based Redwood Wealth Alliance.
Founded in 2014 by the former chief executives of MLC and JBWere, Steve Tucker and Paul Heath, Koda has 46 partners including 38 advisers who manage $10 billion in client funds.
Rather than expand directly in the WA market, Koda felt the better solution was to merge with an appropriate partner.
“We always were looking for the right cultural fit and the right team of talent that we felt could take the Koda toolkit and then approach that market,” Heath tells Professional Planner.
“We use the word ‘merge’ very deliberately. All of the team at Redwood are going to become shareholders in Koda. They’re not cashing out; they’re maintaining a material holding in the business via a holding in Koda.”
Redwood shareholders will join Emigrant Partners who also bought a stake in Koda earlier this year.
Redwood managing director Paul Begley says Redwood has been on a journey to create a legacy for the firm’s clients and team members.
“Engaging in a transaction like this it was important for us to continue on that journey,” he says.
Four years in the making
The companies met four years ago, but the timing for a merger never really worked until collaboration on projects in the past year created a catalyst to join forces.
“The Koda team and ours operate with a growth mindset,” Begley says.
“In that respect, we look for opportunities to learn from the best in the industry.
“Having an understanding of what their vision was has meant we’ve stayed in close contact over that period of time.”
That opportunity to collaborate also helped give Redwood insight into the working culture of Koda and the professional approach the company takes.
“It became quite obvious through those interactions that the Koda team were of quite similar DNA to Redwood,” Begley says.
Established 26 years ago, Redwood is comprised of 20 staff including seven advisers. The firm was not shopping around for any merger or acquisition opportunities, but interest from another party earlier in the year provoked consideration over how a partnership may work.
“We were not interested in selling but it made us lift our eyes a little bit and consider how the right partner might enable us to advance our objectives,” Begley says.
Redwood will become part of the broader Koda organisation and key Redwood personnel will hold partnership equity in Koda.
“We’re a business that has a very clear strategy, and in that strategy we had some fairly meaningful strategic initiatives that we wanted to advance to be able to provide better services to our clients, but also a better opportunity for our team members,” Begley says.
Heading west
Tucker and Heath both hail from Perth and Begley says the pair’s understanding of the Perth market gave Redwood confidence.
“From our perspective that Perth connection was important. We’re a long way away and we knew that we were going to get the support that would be necessary along our journey,” he says.
Heath downplayed the connection but praised the opportunities in the Western Australian market.
“[The WA connection] played a role, but it wasn’t the most important role,” he says.
“I began my career as an adviser in the Perth market. Steve perhaps has broader connections than me, but we both feel we understand that market.”
Heath says the vibrant private and listed business markets in Western Australian have always presented an attractive opportunity for the wealth manager.
“BHP, Rio and Woodside are [located] there, all of the large law and accounting firms that would often act as referral partners for us are there,” he says.
