Good on Ya, Transfer Agents!

Sound Australian?  It should.  While not news to industry insiders, stock transfer services provided to roughly two thirds of America’s listed public companies and over half their registered shareholders are by Australian-owned entities.  Specifically Computershare, the largest transfer agent in the U.S. and the world, is – and has always been – based in Melbourne, Australia; and American Stock Transfer & Trust Company, with the second highest number of U.S. corporate clients, has been owned since 2008 by Pacific Equity Partners (PEP), Australia’s largest private equity firm.  What is the significance of this?  Is U.S. shareholder recordkeeping being “stolen away” by foreigners?!  Hardly.

First of all, as stated above, Computershare is the largest stock transfer agent in the world, serving approximately 13,000 corporations and 120 million registered shareholders in 20 countries.  It has significant stock transfer market shares in the U.S. , Canada, the U.K., Australia/New Zealand, South Africa and Hong Kong – among other countries.  In some places the share is well over 50%.  Computershare’s  global competency, in other words, is unquestionable and time-tested.

Secondly, in terms of total U.S. shareholders – registered plus those beneficially owning stock through brokers, banks, fund managers and stock ownership plans – Computershare and AST control a relatively small percentage of shareholder recordkeeping activity, because beneficial shareholders outnumber registered ones five to one.  Thirdly, while ownership of Computershare and AST is Australian, both agents have to conform to SEC, UCC and other applicable laws – including relating to audits – in order to be able to operate in the U.S.

And lastly, AST may not remain Australian-owned much longer.  In 2016 PEP retained Barclays to explore either an IPO of AST or its sale to another entity – investment firm, financial institution, transfer agent – to enable PEP to re-monetize its 8-year investment, hopefully at a profit.  $1 billion+ has been the rumored asking price for AST.  We guess in such scenario it will not be another Australian firm.

So the “down under” element in U.S. stock transfer is likely soon to diminish, still leaving mammoth Computershare as the dominant player.  Of course, if one of the other three big U.S. transfer agents merges or divests stock transfer (unlikely, but possible) that Australian-owned transfer agent market share, thanks to Computershare, could rise again.