DF Mainland happy to get out of bed for under $10m

By Deborah Hill Cone

Thursday 28th March 2002

Second-tier broker DF Mainland is spying small company opportunities left by the departure of blue chip broking giants such as Merrill Lynch and JP Morgan.

Major international firms have a policy that is the business equivalent of not getting out of bed for less than $10,000 a day - or rather not staying in a market for less than $10 million profit a year - but DF Mainland's profit expectations are more modest.

The firm, which specialises in investment banking work for non-top 40 companies, said the economics worked in its favour because it did not have an international parent that demanded such a high level of return.

"We have never really considered Merrill Lynch a competitor. They do not fish in the same pond. We can't service a Telecom but Merrill Lynch can't service a $50 million company," DF Mainland director Stuart Cairns said.

DF Mainland was set up by Mr Cairns and Rick Braddock as an investment bank in 1989 and in 1996 it increased its capital and became a corporate member of the Stock Exchange. It has worked on reinventions of companies such as the rebirth of Iddison as IT Capital, New Zealand Petroleum as Eldercare, Venture Pacific as Dorchester Pacific and CBS Business Systems as Evergreen Forests.

Mr Cairns said the company raised $2.5 million last year to buy a stake in Ord Minnett Securities. It already had shareholder capital of $2 million, he said.

Companies Office records show DF Mainland Securities is owned by DF Mainland Group, which has 4.2 million shares divided between 24 shareholders, mainly its founders and staff and their family trusts.

The company has three charges over it to property syndicator St Laurence Property and Finance created last August and September as well as a March 1999 BNZ debenture. Mr Cairns said the firm borrowed money from St Laurence before it raised the capital to buy Ord Minnett but it had now been paid off.

"At the moment there is no liability to St Laurence." The facility might be used for future acquisitions, Mr Cairns said.

The BNZ facility was an Astraclear facility used for settling trades.

DF Mainland now has 35 to 40 staff, excluding the Ord Minnett operation of which it owns a third along with fellow shareholders JP Morgan and futures specialist Jules Stefan.

Last year DF Mainland appointed former Sleepyhead general manager Alan Warner as managing director of the firm. John Southworth, formerly from ANZ Securities and more recently adviser to the successful Software of Excellence float, joined as head of securities last week.

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