Wellington West Holdings Inc. is preparing for an eventual initial public offering, but its CEO insists he won’t pull the trigger until the timing is right.

Charlie Spiring, CEO of the Winnipeg-based parent of Wellington West Capital Inc. , says the Wellington West parent will be in “full IPO readiness” by the middle of 2008. But with the recent underwhelming performance in the markets, the move could easily be postponed until some time in 2009.

“Our earnings are on a really good growth trend,” says Spiring, “our recruiting is on fire and we have no need for capital unless we nail a major acquisition.”

Another factor reducing pressure to go public is the company’s first-ever line of credit, a $38-million facility recently granted by CIBC.

“It’s always been the ‘bank of Charlie’ before,” Spiring says. “It’s nice to have some deep pockets [supporting Wellington West].”

He notes that one-third of the line will be used as a “standby facility” for its capital markets division, while the rest will be in reserve for possible acquisitions.

And Wellington West is on the hunt to acquire a mutual fund dealer after losing out on buying the mutual fund and securities dealers businesses of Berkshire-TWC Financial Group Inc. in mid-2007 to Toronto, Ont.-based Manulife Financial Corp.

“Our targets now are a couple of smaller dealers,” he says. “We’re going to buy guys with $400 million and $500 million worth of assets.”

Some of the key preparations for going public, Spiring says, have been retaining KPMG LLP as lead auditor and CIBC as lead underwriter on the proposed IPO.

“We want to be clear, concise and transparent,” he adds. “You don’t want anybody to poke a hole in any of your numbers. Having one of the biggest banks and one of the biggest accounting firms as partners are pretty bold statements.”

Spiring’s original goal was to raise $100 million, representing 20% of a $500-million company. But with rapid growth over the past year or so, internal forecasts call for the firm’s value to top $1 billion by 2010. That would mean raising about $200 million for one-fifth of the firm instead.

“It will look more like $200 million than $100 million,” he says. “We have some things to execute still; it’s not a given.”

A big part of Wellington West’s “public company in training” regimen is releasing financial results that are more detailed than many companies already in the public realm. Spiring unveiled a slew of double-digit performance figures at the company’s annual meeting in late November in Toronto.

As of June 30, Wellington West had assets under administration of $9.4 billion, up more than 34% from $7 billion a year ago. The company’s AUA was expected to crash through the $10-billion mark in mid-December, Spiring says.

Revenue for the fiscal year ended June 30, 2007, was $134 million, up $32 million from the previous year; earnings before interest, taxes, depreciation and amortization was up 45% to $28.5 million for the fiscal year; and net earnings rose 46% to $7.8 million.

That performance persuaded Wellington West’s board to pay out a dividend of $5.5 million, or $1.50 a share — an increase from $4.7 million ($1.40 a share) a year ago.

AGGRESSIVE PROJECTIONS

Wellington West also has released some aggressive projections. Its three-year forecast calls for the company to earn $80 million in EBITDA in 2010, almost triple the 2007 amount; for AUA to top $17 billion; and for assets under management to jump by almost 10 times to $3.5 billion.

Five years ago, Wellington West’s AUA had just cracked $2 billion, its revenue was slightly less than $20 million, its EBITDA was $1.5 million and its net earnings were $100,000.

Dan Hallett, president of Windsor, Ont.-based fund industry analysis firm Dan Hallett & Associates Inc. , applauds Wellington West’s strategy of releasing such detailed financial performance.

“It’s unusual, but it’s almost like a trial run,” he says. “I think it’s positive. It’s probably an indication Wellington West intends to go through with the IPO. It’s letting prospective investors and analysts start to follow the company and build a history in terms of its reporting and disclosure.”

Over the latter part of 2007, Wellington West’s recruitment efforts were yielding more than one broker a week — most of them with six-figure books — which makes Spiring very happy.

@page_break@“The runway for brokers joining us is huge right now,” he says.

Wellington West’s recent success in recruiting is “very impressive,” considering the current fierceness with which firms are competing for top-performing advisors, says Dan Richards, president of Strategic Imperatives Ltd. , a Toronto-based consulting firm to the financial services industry. In recruiting, he adds, success often breeds success.

“When you are perceived to have momentum going for you in recruiting top advisors, it reduces the risk of other advisors making the move to join,” says Richards. “At a minimum, it makes it easier to have initial conversations with brokers who haven’t made the move.

“When you have a critical mass of high-profile brokers join you, there’s a bit of a ‘What do they know that I don’t know?’ curiosity factor,” Richards adds. “Getting over the hurdle to that initial conversation is often the hardest part of the recruiting process.”

Kish Kapoor, Wellington West’s president, told the annual meeting that the company is working on executing a five-prong strategy to: accelerate recruitment in the full-service brokerage business; acquire a financial planning platform; partner with world-class investment managers; expand its asset-management expertise; and accelerate the success of its capital markets division by adding more skilled people to its teams in Toronto and Calgary.

Wellington West recently completed the purchase of the 50% stake of its capital markets division — formerly known as Harris Partners — that it didn’t already own.

Kapoor told those at the meeting that Wellington West promises to make the financial services business “fun” again.

“We’ll make it fun for our clients by keeping it simple, by making it personal and by giving them the freedom to enjoy what they have achieved,” he says. “We’ll make it fun for our partners by empowering them to be owners rather than being owned; and fun for everyone in this industry by inviting them to play a part in building something different by making them part of another great Canadian success story.” IE