Computershare (ASX:CPU): The Unsung Hero of Market Infrastructure

Although Computershare (ASX:CPU) may not be a name that immediately comes to mind when discussing the big names of the stock market (i.e. the big banks or miners), it has long been deeply entwined in the infrastructure behind the scenes supporting capital markets. It is an unsung hero keeping the monetary system moving safely and working seamlessly.

Computershare is one example of such a company. And the $24bn company gained over 60% in the last 12 months, much of which was made up when it released its 1H25 results a couple of weeks ago, leading to a 15% intraday gain.

 

 

The Journey from Melbourne to Global Dominance

Computershare traces its origins to late 1970s Melbourne. Founder Chris Morris started the company after identifying an opportunity to offer outsourced financial services to businesses seeking to manage their shareholder records.

The Rich Lister (worth $1.47bn according to Forbes) was involved with the company for a very long period of time, as CEO up to 2009, then chairman for 6 years, then another 6 years as a non-executive director. In 2021, he gave up his board seat and now dedicates his time to his personal business interests (held under the Morris Group).

Computershare’s success story is a tale of Australian genius. Founded in 1978 by Chris Morris after identifying an opportunity to offer outsourced financial services to businesses seeking to manage their shareholder records. It was well-timed—the corporate governance environment was getting more complex, and companies needed trusted partners to manage their burgeoning numbers of shareholders. By the early 1990s, Computershare became the registrant and transfer agent for the fast-emerging dominant share registry in Australia, conducting records on many of the major companies listed on the ASX.

It was not until the late 1990s and early 2000s that Computershare began an aggressive strategy of global expansion. By acquiring several companies, the firm expanded into new markets, especially in North America, Europe, and Asia. It purchased important businesses like Royal Bank of Scotland’s registrar services, Equiserve in the United States, and Georgeson Shareholder Communications. These actions solidified its place as a global force in share registries and financial services. Computershare now manages more than 75 million customer records across the globe to process transactions and maintain company records, the scale of which is an astounding feat and its place as integral to global market infrastructure.

Today, companies large and small rely on Computershare, which maintains offices on five continents in 20 countries: Australia, the UK, Ireland, the US, Canada, the Channel Islands, South Africa, Hong Kong, New Zealand, Germany, and Denmark. Formed with more than 12,000 employees, it serves some of the largest listed publicly traded firms around the globe, while leading in share registration needed in capital markets, corporate trust services, employee equity plans, and global capital markets.

Computershare does a lot of the heavy lifting, but it often flies under the radar of big-name financial institutions for these massive contributions. This blog will highlight the importance of this functionality, how it has evolved, and why it remains vital to the operation of modern-day financial markets.

 

Core Services: The Backbone of Financial Operations

Computershare is a financial services company that provides a variety of services, each essential to the capitalisation of financial markets. They ensure smooth transactions in compliance with regulatory requirements and the integrity of shareholder data.

Transfer Agency and Share Registration

Computershare is primarily known for transfer agency and share registry management services. It’s a middleman between public companies and their shareholders, ensuring that records of ownership are accurate and up-to-date. For corporations, keeping records of their shareholders can be a difficult process. Computershare makes this process easier by administering share transfers, dividend payments, shareholder communications, and corporate actions such as stock splits or mergers.

Employee Equity Plans

Computershare manages employee share schemes and stock option plans for some of the world’s largest companies, simplifying the process for employees to invest in their firms. With its leading technology and compliance capabilities, Computershare helps companies execute employee equity plans in a streamlined manner, while also offering simple portals for employees to manage their holdings. These initiatives are fundamental in creating employee engagement, retention, and financial empowerment, as they enable staff members to share in their company’s success.

Corporate Trust Services

Computershare is a trusted resource for corporate trust solutions for complex financial transactions, with a diverse client base that includes public and private corporations, asset managers, and government institutions. As a result, it is known and trusted by financial institutions and corporate entities looking to execute sophisticated financial deals to assure integrity, reliability, and security.

Global Capital Markets

As we move towards globalisation, most companies today are operating across diverse markets and jurisdictions. They are a global leader in providing services, taking care of the mechanics of holding investments such as securities in cross-border movements, and around the world. These services include dual listings, cross-border share transfers, and international custody solutions, providing companies with the tools to manage their investor base across multiple jurisdictions. Computershare’s global reach provides additional flexibility when managing assets for investors, allowing you to more easily buy, sell, and transfer shares internationally.

 

Commitment to Innovation and Security

In the 21st century, when cyber threats and data breaches are a daily occurrence, Computershare prioritises data security and privacy. Their team has built a solid process consisting of compliance as well as audit, risk management, and disaster recovery programs to guarantee that its client’s information is kept in good hands. It also continually implements cutting-edge security technologies to mitigate evolving cybersecurity threats to its services. Their commitment to security is the basis of the company’s reputation as a trusted and reliable partner in the financial ecosystem.

As a global financial services giant, they rely on proactive security strategies to protect both company operations and clients from potential data pitfalls as standards for data protection in a global context get more complex and demanding. With its investment in the latest technologies and its commitment to security, the company continues to be a leader in providing secure financial services.

 

Financial Performance and Market Presence

The most recent closing price for Computershare (ASX:CPU) was A$41.87. This represents a P/E of 19x for the next couple of years, although its PEG is 2.5x and the mean target price amongst analysts if $36.76. Although the analysts are expecting a 10% retreat in revenue, they expect bottom line growth from $1.86 in EPS in FY24 to $2.13 in FY25 and to $2.19 in FY26.

But of course, analysts doubted CBA and it continues to grow and grow. Investors loved CPU’s 1H25 results, and why wouldn’t they? The company’s revenue was $1.5bn, 6.4% higher than 12 months ago, its EBIT (excluding MI) was $171.2m, up 28%, and its EPS was 18.7% higher. The company paid a dividend of 45 cents per share, up 12.5%. The annualised yield was only 2.1%, but it seems investors were happy that the dividend was increased by a percentage in the double digits.

The fact that the company is able to do well in a volatile market, and in spite of doubtful analysts, indicates its financial strength. Computershare also increased its global presence with strategic acquisitions. The platform can enter both developed and emerging markets as well due to its geographical reach, helping it to provide services relevant to the needs of the growing diverse clientele.

 

The Future of Computershare

As the financial services industry evolves, it is investing in technology to meet new challenges and seize opportunities. The decision of an organisation to proactively adopt AI-enabled analytics, process securities using blockchain, and deploy cutting-edge cybersecurity is not merely a cosmetic change; it is also a method for increasing operational efficiency and greater transparency.

Computershare will be on both the new and existing clients’ wish lists due to data-driven forecasts enabled through AI technologies, increased transparency in transactions through blockchain adoption, and reduction of fraud risks that foster trust between the company and clients.

In conclusion, Computershare is a company that is set to do well in a very rapidly changing financial environment. Thus, the company’s focus on technology, security, and global growth positions it to become that much more successful in helping its clients with innovative, sustainable, and secure solutions for years to come.

 

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Frequently Asked Questions (FAQs)

• What is Computershare’s primary function in the financial industry?

  Computershare provides services in areas including transfer agents, employee equity plans, corporate trust, and global capital market solutions to help keep financial markets operating smoothly.

• How extensive is Computershare’s global presence?

  Computershare serves clients in 22 countries, employs over 12,000 staff, and maintains more than 75 million customer records.

• How does Computershare ensure the security of its data?

  The company has strong compliance, audit, risk management, and disaster recovery programs in place to ensure data integrity and privacy.

• What recent acquisitions has Computershare made?

  Some of these included Computershare’s agreement in April 2024 to acquire BNY Trust Company of Canada, thereby expanding its corporate trust services into the Canadian market.

• How does Computershare support employee ownership programs?

  Computershare manages employee equity programs that provide employees the opportunity to share in the success of their company while also promoting ownership and loyalty within the organisation.