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Speaker 1: The information provided in this program is of a general

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Speaker 1: nature and is not intended to be personalized financial advice.

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Speaker 1: We encourage you to seek appropriate advice from a qualified

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Speaker 1: professional to suit your individual circumstances. Private equity funds are

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Speaker 1: behind the biggest of business buyouts, often worth billions of dollars.

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Speaker 1: They've been around for decades, but they're still faced with

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Speaker 1: the perception problem.

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Speaker 2: And I think part of the problem with that is

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Speaker 2: it was sort of a perception created in the early

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Speaker 2: days of private equity in the late eighties and particularly

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Speaker 2: in the US.

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Speaker 3: You know, you hear, you know, all the Wall Street.

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Speaker 2: Stories, you know, barbarians at the gate and all this

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Speaker 2: type of thing.

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Speaker 1: International private equity funds are involved in the ownership of

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Speaker 1: many big New Zealand businesses, including the All Blacks, Bluebridge, Fares,

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Speaker 1: Waste Management, Media Works, and the retirement village company MetLife Care,

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Speaker 1: which was a one point three billion dollar deal in

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Speaker 1: twenty twenty. Pacific Equity Partners is easily the most prominent

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Speaker 1: player in private equity down Under, buying and selling businesses

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Speaker 1: as Bergas, Hoyt Cinemas, Tegel, the Chicken Company.

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Speaker 3: Teagle Guaranteed Fresh.

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Speaker 1: Chicken Griffin's, the maker of biscuits, and Peter's ice cream,

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Speaker 1: Australia's tip top equivalent. According to Deloitte, there were one

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Speaker 1: hundred and forty nine buyouts across Australia in New Zealand's

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Speaker 1: last year, worth nine point four billion US dollars in total.

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Speaker 1: That fell from the previous years two hundred and five

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Speaker 1: deals worth eighteen billion dollars, although that year included Blackstone's

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Speaker 1: six point six billion US dollar acquisition of Crown Resorts.

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Speaker 1: Blackstone is one of the global pe giants, alongside KKR,

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Speaker 1: Apolo and the Carlisle Group. They all want to clip

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Speaker 1: the ticket on the revenues of successful private companies that

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Speaker 1: are not listed on public stock exchanges. Historically, private equity

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Speaker 1: funds have outperformed the S and P five hundred, although

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Speaker 1: the data sets often differ, so it's kind of like

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Speaker 1: comparing apples with oranges. There is a trade off too.

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Speaker 1: Private equity funds require investors to lock away their funds

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Speaker 1: for five to ten years, making it an illiquid investment option,

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Speaker 1: but firms like pp are trying to increase access to it,

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Speaker 1: with new funds being pitched to retail investors. As we speak,

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Speaker 1: that's what it's Managing director. Cameron Blanks was doing in

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Speaker 1: New Zealand this month trying to put a face to

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Speaker 1: private equity. Cameron, good to see, thanks much coming in.

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Speaker 3: Well, thank you very much for inviting me.

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Speaker 1: Madisone anytime. I want to talk about private equity and

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Speaker 1: PP's role in it, but just on the macro about

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Speaker 1: what is private equity, how it's perceived. Can you describe

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Speaker 1: to me where you believe the private eath quity market

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Speaker 1: globally and also in Australia and New Zealand where it's

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Speaker 1: at currently.

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Speaker 2: Yeah, Well, I think if you go back to the

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Speaker 2: origins of private equity, it was all started in the

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Speaker 2: mid eighties in the US organized private equity where people

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Speaker 2: would raise funds from large institutional clients. So evolved out

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Speaker 2: of there. We're now forty years into that journey. If

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Speaker 2: you think about the evolutions of the private markets. So

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Speaker 2: it's a large asset class today, about twelve and a

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Speaker 2: half trillion in the global private markets if you think

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Speaker 2: at a macro level, and some very large managers of

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Speaker 2: money globally, So that's the sort of the global context.

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Speaker 3: Returns have been very good.

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Speaker 2: It's absolutely been outperforming public markets and outgrowing public markets.

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Speaker 2: But obviously when you come down to the individual countries

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Speaker 2: and regions, you get some nuance in that story. So

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Speaker 2: you know, I can get into a bit more of

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Speaker 2: that context if that would be helpful.

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Speaker 1: Well, how might you give us some anecdotal evidence of

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Speaker 1: what you've seen at PP in the Australia New Zealand markets?

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Speaker 1: How many deals have you done and say the past

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Speaker 1: year and compare that to say the past decade.

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Speaker 2: Yeah, so look, we've been in this market, the Australian

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Speaker 2: and New Zealand market. Our very first deal was in

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Speaker 2: New Zealand. It was a corporate carve out from the

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Speaker 2: Pair and Apple board of a business called Free Court

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Speaker 2: in nineteen ninety eight. So twenty six years later, we're

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Speaker 2: seeing a very active market.

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Speaker 3: Still four deals. We've typically we look at.

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Speaker 2: About one hundred to one hundred and twenty deals a

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Speaker 2: year and we go through a filtering process of assessing

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Speaker 2: those like a lot of that one hundred and twenty

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Speaker 2: they're not necessarily for us, and we know that reasonably soon,

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Speaker 2: so we end up with a core opportunity set of

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Speaker 2: maybe twenty twenty five opportunities that we're looking at every year,

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Speaker 2: and we'll probably do two or three a year, and

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Speaker 2: that's really been the same cadence all the way through

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Speaker 2: for us. You know, markets go up and down, but

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Speaker 2: a lot of it's about the situations that we're investing in.

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Speaker 2: There are periods, obviously where it's a little slower than others.

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Speaker 2: I think twenty twenty two, late twenty two and twenty

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Speaker 2: three were particularly slow given the rise in interest rates,

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Speaker 2: and it was very hard for buyers and sellers to

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Speaker 2: come to a meeting of the minds around value. But

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Speaker 2: generally that's the cadence of deal flow that we do

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Speaker 2: see and have seen for a long time.

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Speaker 1: Do you feel like we're out of that now, the

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Speaker 1: fact that this economic cycle is finishing, that interest rates

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Speaker 1: are set to lower, albeit at a sort of neutrally

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Speaker 1: higher level. Are you seeing a bit more opportunity in

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Speaker 1: terms of people looking to sell to you, but also

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Speaker 1: easy exits out of businesses that you've already bought.

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Speaker 3: I think that's exactly right.

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Speaker 2: It's just time for buyers and sellers to come to

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Speaker 2: an agreement around prices. Is It does take time, and

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Speaker 2: I think when you see big changes in interest rates,

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Speaker 2: it's harder for people to have thatception around what's fair value.

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Speaker 2: So we're definitely seeing more activity and more preparation for

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Speaker 2: activity going on now. So I would say, you know,

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Speaker 2: restoring to normal is on its way.

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Speaker 1: Private equity players are often I've heard referred to as vampires.

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Speaker 1: They go into businesses and they suck the life, suck

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Speaker 1: the blood out of them. They cut costs, they typically

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Speaker 1: cut staff. Then you sell the business for a gain

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Speaker 1: because you've made efficiencies within it. Is that true? Is

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Speaker 1: that what you do? Camer Well?

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Speaker 2: I think we certainly don't think that's a good characterization

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Speaker 2: of private equity, but we have, we do hear that

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Speaker 2: all the time, and I think part of the problem

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Speaker 2: with that is it was sort of a perception created

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Speaker 2: in the early days of private equity in the late

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Speaker 2: eighties and particularly in the US. You know, you hear

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Speaker 2: you know all the Wall Street stories, you know, barbarians

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Speaker 2: at the gate and all this type of thing. So

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Speaker 2: it is a character of our industry, unfortunately, and we

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Speaker 2: do have to answer those questions.

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Speaker 3: More often than we'd like to. But the reality is.

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Speaker 2: For a private equity firm to have a sustainable business,

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Speaker 2: we need to be buying businesses and making them better

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Speaker 2: and then having a very clear growth story for the

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Speaker 2: next buyer, because if you're just dressing things up for sale,

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Speaker 2: asset stripping, not adding value, and not creating sustainable profit

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Speaker 2: growth in the businesses that you're buying, you don't have

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Speaker 2: a very sustainable business model and you will go out

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Speaker 2: of business. So the high quality private equity firms that

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Speaker 2: have been around for a long time have understood that

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Speaker 2: they truly need to buy businesses with a view to

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Speaker 2: adding value and building a better business for the next

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Speaker 2: owners to take on the next journey.

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Speaker 1: But fear to say, even decades later private equity and

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Speaker 1: it seems everyone is still painted with the same brush,

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Speaker 1: fairly or not, there is a perception for there.

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Speaker 2: You'd say, Look, I think you know, perception is reality sometimes,

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Speaker 2: as people say, But I think if you really dig

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Speaker 2: into the reality of the way that private equity firms

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Speaker 2: have been around a long time ago about their business,

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Speaker 2: I think reality is quite different to that perception.

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Speaker 1: Have you heard of Charlie Munger's horse analogy when it

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Speaker 1: comes to private equity, and no, I have not able

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Speaker 1: to share it with you. Sure he referred to it

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Speaker 1: as a farmer who had a great horse, but often misbehaved,

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Speaker 1: had some issues. So he went to the bit and said,

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Speaker 1: I don't know what to do with this horse. It's

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Speaker 1: a great horse, but every now and then it just

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Speaker 1: has some behavior behavioral issues. The bit says, I have

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Speaker 1: the easy answer for you. When it behaves well, sell it.

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Speaker 1: He says, that's what private equity does with businesses.

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Speaker 2: What do you make of that, Well, I mean, I

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Speaker 2: think you can have a lot of interesting stories. The

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Speaker 2: way that we think about it is if you're consistently

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Speaker 2: selling businesses that don't perform for the next owner, then

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Speaker 2: you will get a reputation for not selling businesses that

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Speaker 2: have sustainable profits in them, and therefore you will not

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Speaker 2: have a sustainable business. So, you know, our view is that,

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Speaker 2: you know, as we're building these businesses and thinking about

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Speaker 2: how to build them in a sustainable way, we need

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Speaker 2: to make sure that the next buyers have good experiences,

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Speaker 2: so we become known as a good seller of businesses

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Speaker 2: as well, so we have a sustainable business. So interesting story,

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Speaker 2: good anecdote. But I think, you know, I think the

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Speaker 2: private equity firms that have been around for a long

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Speaker 2: time understand the needs to keep building sustainable businesses would

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Speaker 2: be what I would say to that.

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Speaker 1: And when you're pitching this to investors, you most private

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Speaker 1: equity firms typically rely on their IRR. Their internal rate

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Speaker 1: of return yours is twenty eight percent since inception. I

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Speaker 1: believe that's still correct. Cool Warren Buffett to use a

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Speaker 1: similar person who does not particularly like private equity firms,

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Speaker 1: he says that that is dishonest to use the IRR

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Speaker 1: because your assets a never marked to market in a

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Speaker 1: downcycle like public markets are, so they always look good.

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Speaker 1: Can you explain to me the formula of your internal

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Speaker 1: rate of return? What goes into it? And is it

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Speaker 1: really a femish ye?

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Speaker 2: Well, the twenty eight percent that you just quoted is

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Speaker 2: the average delivered ir in a fund, So there is

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Speaker 2: no marks or anything like that. These are funds that

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Speaker 2: have been raised, deployed, and then returned to their investors,

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Speaker 2: so that number doesn't include any marks at all. So

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Speaker 2: we have delivered that return to investors and you know

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Speaker 2: it is a honest, sustained number over a long period

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Speaker 2: of time. So again, a lot of characterizations and people

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Speaker 2: say a lot of things, but that's certainly not our experience.

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Speaker 1: PP likes large late stage buyouts. What is that? Can

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Speaker 1: you give me an example of one of those that

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Speaker 1: was executed perfectly by PEP.

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Speaker 3: Yes.

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Speaker 2: So, look, there's obviously a large part of the private

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Speaker 2: markets you know that people think about when they think

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Speaker 2: about private equity is often venture capital or growth capital

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Speaker 2: for companies that are privately held by individuals or a

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Speaker 2: group of individuals.

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Speaker 3: That are looking for capital to grow.

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Speaker 2: That's certainly not what we do at PP. We are

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Speaker 2: really focused on what we call late stage buyouts. So

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Speaker 2: these are big established businesses that have market leading positions

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Speaker 2: that have sort of lost their way, either on the

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Speaker 2: public markets or as divisions of big multinational companies or

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Speaker 2: the like, that we can carve out or take private,

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Speaker 2: give a new lease of life, typically with new management,

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Speaker 2: and have them go and execute a very strategy of

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Speaker 2: doing two or three things differently than they've done in

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Speaker 2: the past to work towards doubling the profits of those

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Speaker 2: businesses in a sustainable way, as we've spoken about. So

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Speaker 2: that's the style of private equity that we do. But

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Speaker 2: it's very important, you know, when people are trying to

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Speaker 2: understand their industry, to understand what stage of a company's

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Speaker 2: life that they invest in and how do they go

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Speaker 2: about generating returns for their investors, because not every private

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Speaker 2: equity firm is doing the same thing or participating in

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Speaker 2: the same part of the cycle of the industry.

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Speaker 1: Two or three things to double profits, I mean, tell

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Speaker 1: us what they are, because either one would do them

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Speaker 1: if they could.

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Speaker 2: Seems like well, a really easy example to explain is

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Speaker 2: Teagle Chickens, which is a great New Zealand brand. Now

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Speaker 2: this is a deal from a long time ago. We've

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Speaker 2: long since gone from Teagle Chickens and we own the

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Speaker 2: business for two or three years, but this was a

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Speaker 2: corporate carve out from Heines. So New Zealanders may or

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Speaker 2: may not remember, but for many years Tiger was owned

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Speaker 2: by Heines. It was the only chicken business that they

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Speaker 2: owned globally. And the way that the incentives worked within

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Speaker 2: the broader Heinz system was really US centric, where every

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Speaker 2: percent of market share in the US is really important

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Speaker 2: profitability of Heines. So if you think about tomato, sauce

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Speaker 2: and all of those things that Heines are known for,

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Speaker 2: their whole management incentive structure is around market share. So

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Speaker 2: what had happened down here in New Zealand on their

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Speaker 2: only chicken business globally is the management team was incentive

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Speaker 2: on market share, so they kept on spending capital on

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Speaker 2: growing out the capacity of chickens that they could produce

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Speaker 2: to put into the market. Well, we all know what

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Speaker 2: happens when you produce a lot of volume, Well, price

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Speaker 2: goes down and a supply and demand. And so the

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Speaker 2: management team of Teagele were getting their bonuses because they

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Speaker 2: were increasing their market share, but their profitability was going down.

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Speaker 3: But it didn't matter.

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Speaker 2: Because you had the wrong incentives in place and a

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Speaker 2: far flung business in the broader Hinds network. So a

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Speaker 2: big part of the thesis around that acquisition, as an example,

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Speaker 2: was to stop doing that, to buy the business, to

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Speaker 2: stop increasing volume, and to ultimately realize about a price

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Speaker 2: by value adding in the chicken, so going up the

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Speaker 2: supply chain, so you were then delivering a packaged you know,

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Speaker 2: smoke chicken or whatever the product the value add was,

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Speaker 2: and invest in that rather than just continue to pump

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Speaker 2: chicken into the market.

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Speaker 1: How did you find out about this? How did you

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Speaker 1: find out about the effectively ill advised and sent of

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Speaker 1: structures and how it was impacting their margin? Do you

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Speaker 1: have people come to you and tell you the stuff.

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Speaker 2: Yes, yeah, yeah, I mean, look, we've been in the

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Speaker 2: market for a very long time. We're one of the

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Speaker 2: biggest pools of capital in the market. I think we

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Speaker 2: were actually tracking the Heines sort of story for about

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Speaker 2: seven years before we executed that deal. We would fly

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Speaker 2: to the US and talk to head office about one day,

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Speaker 2: would they sell their subsidiaries down in this part of

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Speaker 2: the world. What the catalyst for that deal was was

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Speaker 2: there was if you remember, it was around about the

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Speaker 2: time that there was an avian bird flu up in

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Speaker 2: Hong Kong which started to spook the world about you know,

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Speaker 2: the losing birds and obviously chickens through the AVM bird crisis.

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Speaker 1: No I really wanted to eat then well, and.

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Speaker 2: Also the companies were very worried about their flocks getting

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Speaker 2: wiped out and the like. So we did a big

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Speaker 2: study about this as part of our due diligence of

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Speaker 2: whether this was a good business to buy out that

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Speaker 2: there's no migratory birds that come into New Zealand. You

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Speaker 2: have a very biosecure framework in New Zealand, so the

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Speaker 2: chance of av and bird flu coming into New Zealand

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Speaker 2: was very low. Yet you had a business in hind

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Speaker 2: that was headquartered in North America.

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Speaker 3: That was very worried about this.

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Speaker 2: So they were actually willing to sell their chicken business,

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Speaker 2: their only chicken business, in the middle of an av

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Speaker 2: and bird flue at a relatively attractive price. So that's

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Speaker 2: a classic example of what happens within these large global

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Speaker 2: organizations where decision making is made around non core subsidiaries

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Speaker 2: that are relatively irrelevant in a relatively irrational manner.

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Speaker 3: And it's a great example of.

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Speaker 2: The types of opportunities that we focus on within PP.

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Speaker 1: So you go pretty deep on your due diligence.

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Speaker 2: Absolutely, I mean it's everything. It's about asset. Ultimately, we

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Speaker 2: only do three things. We decide what to buy, and

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Speaker 2: that's through very deep due diligence on the asset and

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Speaker 2: the market dynamics and the position of the business in

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Speaker 2: the market. Who to run it. The CEO of that

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Speaker 2: business was very important, as a guy called ron Bella,

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Speaker 2: a great New Zealander. You know, Ronnie's a great guy,

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Speaker 2: and we loved investing behind Ronnie, supporting him in executing

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Speaker 2: that strategy. And then ultimately we get to decide when

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Speaker 2: to sell an asset. Unlike the listed markets, you're always

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Speaker 2: for sale. With a private asset, you can decide when

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Speaker 2: to sell the business. So it's those three things that

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Speaker 2: we really do. What to buy, who to run it,

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Speaker 2: and when to sell it. And that's fundamentally the job

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Speaker 2: of a private equity executive.

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Speaker 1: Specifically on what to buy. We will talk more about

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Speaker 1: exits and that strategy in a minute, but it seems

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Speaker 1: like PP has very much liked FMCG. You had Chickens here,

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Speaker 1: you're Chicky here and Bicky across the ditch with Griffin's biscuits.

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Speaker 1: Is that preferred still or are you looking at other things?

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Speaker 2: Look, I think what we don't like is businesses with

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Speaker 2: uncontrollable risks in them that we can't control from a

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Speaker 2: management perspective. So it's more about finding businesses that don't

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Speaker 2: have that characteristic. So more recently we've been investing in education,

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Speaker 2: in healthcare FMCG obviously, or business services or things where

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Speaker 2: we feel like it's actually management execution that delivers the

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Speaker 2: profit growth as opposed to trying to ride some new trends. So,

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Speaker 2: you know, PPS not chasing AI, although we're very interested

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Speaker 2: in AI and what it can do for our portfolio companies.

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Speaker 2: We're not looking for AI investments and we never have

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Speaker 2: been a trend based investor. It's about finding good, stable

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Speaker 2: businesses with clear strategies that can double the profits of

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Speaker 2: those businesses.

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Speaker 3: It's really that simple.

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Speaker 1: On the exit side, on the way out, have you

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Speaker 1: ever been impacted by a liquidity of it. We've either

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Speaker 1: been forced to revalue something low or forced to sell

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Speaker 1: it well.

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Speaker 2: Typically we've always sold businesses at an average of about

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Speaker 2: thirty percent premium to our valuations. And again it's very

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Speaker 2: important on the valuation side to differentiate from venture capital

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Speaker 2: and growth capital compared to late stage buy out. The

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Speaker 2: motivations for venture capital and growth capital is to write

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Speaker 2: up very high valuations because they're doing rounds of funding,

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Speaker 2: where when you need new funding it comes in at

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Speaker 2: that valuation. Very different dynamic in late stage private equity,

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Speaker 2: where we focus where there isn't a rounds of funding.

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Speaker 2: We buy one hundred percent of the business and then

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Speaker 2: we own it and then we sell it when we choose,

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Speaker 2: and at that point in time we get a performance fee.

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Speaker 2: We don't get any sort of compensation based on the

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Speaker 2: valuations on the way through, and we don't care what

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Speaker 2: those valuations are We never used to even do valuations.

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Speaker 2: We just hold the businesses at cost until we sold them.

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Speaker 1: Well, then, how would you not to sell it if

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Speaker 1: you didn't know what value you were going to get.

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Speaker 1: Would you value it around the time of particul sale.

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Speaker 2: Well, obviously we don't value the assets. The market values

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Speaker 2: the asset. The buyers value that.

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Speaker 1: It's a market, it's private.

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Speaker 2: But whatever we think the value is is irrelevant. It's

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Speaker 2: what the buyers think is the value. So our valuations

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Speaker 2: are totally irrelevant. We don't even think about them. The

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Speaker 2: only reason we do them is because we have pension

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Speaker 2: fund investors that have members who are coming in and

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Speaker 2: out of their pension funds and they need evaluation, so

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Speaker 2: they have asked us to do valuations for them. We

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Speaker 2: take them very seriously because it's our fiduciary responsibility. But

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Speaker 2: we actually want to have those valuations at a at

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Speaker 2: a level that we know we can find buyers to

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Speaker 2: pay more than that. We're exiting at about thirty percent

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Speaker 2: premium to our current valuations.

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Speaker 3: It's really important.

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Speaker 2: That's the dynamic in late stage private equity, different dynamic

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Speaker 2: in venture capital and growth capital, and that's the area

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Speaker 2: where people go all the private equity evaluations are rubbish.

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Speaker 2: They true in the venture capital and growth based, not

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Speaker 2: true in late stage buyer. This is where all this

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Speaker 2: nuance about our industry. It's really important to do your

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Speaker 2: research and understand how our industry works.

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Speaker 1: I yes, you don't care about valuations, but what do

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Speaker 1: valuations look like at the moment. They had a pretty

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Speaker 1: incredible way through the cheap money era. I imagine now

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Speaker 1: valuation of private businesses is looking at it tough as

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Speaker 1: the margins struggle.

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Speaker 2: Well, I mean again, we're dealing in late stage private

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Speaker 2: equity with big, boring businesses, so you know, tissue businesses,

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Speaker 2: ice cream businesses, you know, hospitals, education businesses. So we're

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Speaker 2: not in these sort of very highly valued tech type. Well,

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Speaker 2: so the valuations when you look at the multiples, you

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Speaker 2: may have gone from an average of twelve times profits

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Speaker 2: to ten times profits.

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Speaker 3: But actually when you look at the sort.

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Speaker 2: Of compression of multiples is not anywhere near as much

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Speaker 2: as you think when you think in the industrial sort

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Speaker 2: of more traditional parts of the markets, and so you know,

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Speaker 2: those valuations obviously the way that we think about and

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Speaker 2: applied to the profits that we're making in the businesses.

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Speaker 2: So if we're doubling the profits of the businesses, whether

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Speaker 2: the valuations have gone from twelve to ten or twelve

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Speaker 2: to eleven, the value of the businesses.

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Speaker 3: Have still grown dramatically.

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Speaker 2: Just because the multiples come down by a turn doesn't

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Speaker 2: really make that much difference.

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Speaker 1: So what are you doing in New Zealand? Are you

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Speaker 1: looking for businesses to buy? Are you asking investors for funds?

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Speaker 2: All of the above And we're always doing all of

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Speaker 2: the above. We're here in New Zealand a lot it,

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Speaker 2: you know, from our perspective. Even though we have one

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Speaker 2: office in Sydney, as I referenced before, our very first

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Speaker 2: deal was here in New Zealand. And then over the

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Speaker 2: twenty six years that we've been in existence, we've probably

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Speaker 2: deployed about a third of our capital in New Zealand.

406
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Speaker 2: So it's a very active market for us. And you know,

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Speaker 2: we continue to invest very heavily in New Zealand. We

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Speaker 2: love it as an investment destination, we love it as

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Speaker 2: a country, and we you know, are expanding our ability

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Speaker 2: to raise capital from New Zealand individuals as well, which

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Speaker 2: we're really excited about.

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Speaker 1: What's a New Zealand business You would love to buy.

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Speaker 1: Oh that's a no, it's not you'd have a wesh list.

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Speaker 2: Well we do, I mean I think we you know,

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Speaker 2: we're situational investors. So what we learned early on in

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Speaker 2: our existence is it's like, you know, walking down a

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Speaker 2: road of beautiful homes and say, I'd love to own

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Speaker 2: that one, but it's not for sale because the person

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Speaker 2: living in the home.

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Speaker 3: Doesn't want to sell it.

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Speaker 2: And that's what we've learned about, you know, private equity investing,

422
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Speaker 2: is the vendor wants to actually sell, so, you know,

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Speaker 2: to actually go and search around with a list, you know,

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Speaker 2: in our minds, is a bit of a waste of time.

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Speaker 2: We'd much prefer to make sure that we know what

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Speaker 2: a vendor is thinking before we before we really start

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Speaker 2: to work on an opportunity.

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Speaker 1: Everyone's willing to sell at the right price.

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Speaker 2: Though, but are you willing to buy at that price?

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Speaker 2: So this is this is this whole dynamic that we

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Speaker 2: were talking about before, which is about buyers and sellers

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Speaker 2: having a common view on value and ultimately a vendor

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Speaker 2: does need to decide to sell before we can buy.

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Speaker 2: So yeah, we don't we don't stylistically run around with

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Speaker 2: lists or thematic things where's actually situational investors?

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Speaker 1: Are you finding that when these vendors do to you

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Speaker 1: and they are willing to sell their business and allow

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Speaker 1: you to buy it, and you having to factor and

439
00:25:04,920 --> 00:25:08,440
Speaker 1: more features to deals now, like promises to not cut

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00:25:08,520 --> 00:25:13,200
Speaker 1: staff or to move manufacturing, or more executive earnouts for example.

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00:25:14,920 --> 00:25:17,240
Speaker 2: Look, it's been I think if you think about the

442
00:25:17,359 --> 00:25:24,359
Speaker 2: context that private equity is investing into, it's been reasonably consistent.

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00:25:24,480 --> 00:25:27,480
Speaker 2: You know, we're a private buyer of businesses and the

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00:25:27,600 --> 00:25:31,000
Speaker 2: vendors typically are trying to maximize the price that they

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00:25:31,040 --> 00:25:33,720
Speaker 2: can sell the asset. If they're selling one hundred percent

446
00:25:33,760 --> 00:25:37,120
Speaker 2: of the asset, then it's really all about price. And

447
00:25:37,200 --> 00:25:41,679
Speaker 2: so you know, we're not running around and trying to

448
00:25:41,720 --> 00:25:44,600
Speaker 2: buy things cheaply. We're happy to pay full and fair

449
00:25:44,640 --> 00:25:47,800
Speaker 2: prices for good businesses that we think we can make

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00:25:48,960 --> 00:25:49,760
Speaker 2: to build.

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00:25:49,560 --> 00:25:50,640
Speaker 3: Into a better business.

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00:25:51,160 --> 00:25:59,120
Speaker 2: So generally know there are circumstances where a vendor will

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00:25:59,119 --> 00:26:02,320
Speaker 2: actually look to all their equity with you and continue

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00:26:02,320 --> 00:26:05,520
Speaker 2: the ownership. So at that point in time, the dialogue

455
00:26:05,560 --> 00:26:08,560
Speaker 2: actually goes to what can we do to add value

456
00:26:08,760 --> 00:26:13,000
Speaker 2: to that business and how can that vendor come along

457
00:26:13,040 --> 00:26:15,480
Speaker 2: on the next leg of the journey for us. So

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00:26:15,520 --> 00:26:22,119
Speaker 2: that's more those sorts of deals opportunities that come with

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00:26:22,200 --> 00:26:25,159
Speaker 2: a few other conditions along the way, but typically they

460
00:26:25,160 --> 00:26:27,720
Speaker 2: are asking us to come in and add value to

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00:26:27,760 --> 00:26:28,480
Speaker 2: those businesses.

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00:26:28,520 --> 00:26:29,880
Speaker 3: So it's a mutual.

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00:26:29,600 --> 00:26:32,320
Speaker 2: Dialogue of getting on the same page about the strategic

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00:26:32,400 --> 00:26:34,600
Speaker 2: plan for the next leg of the journey.

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00:26:34,920 --> 00:26:37,880
Speaker 1: Favorite business you've bought and sold out of how much

466
00:26:37,920 --> 00:26:38,800
Speaker 1: money did you make on it?

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00:26:38,880 --> 00:26:42,720
Speaker 2: Yeah, Look, my personal favorite is a business called in Telehub.

468
00:26:43,880 --> 00:26:46,520
Speaker 2: It's a business we actually still own, but we've sold

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00:26:46,600 --> 00:26:50,440
Speaker 2: to what we call as a single asset continuation fund

470
00:26:51,240 --> 00:26:52,520
Speaker 2: which we manage.

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00:26:52,200 --> 00:26:54,560
Speaker 1: As well yours right moving it into.

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00:26:54,520 --> 00:26:57,520
Speaker 2: A lot although we sold fifty percent of it to Brookfield,

473
00:26:57,640 --> 00:27:00,560
Speaker 2: so there was absolutely a new investor came in and

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00:27:00,600 --> 00:27:04,680
Speaker 2: valued the business and it's a terrific business. So it

475
00:27:04,720 --> 00:27:07,480
Speaker 2: was a combination of a corporate carve out from Origin

476
00:27:07,640 --> 00:27:11,520
Speaker 2: Energy and a corporate carve out from Mercury Energy here

477
00:27:12,040 --> 00:27:16,800
Speaker 2: of their smart metering division. It's a business that, particularly

478
00:27:17,040 --> 00:27:20,240
Speaker 2: in Australia, is going through a rapid period of growth

479
00:27:20,359 --> 00:27:24,240
Speaker 2: as Australia catches up to New Zealand with the deployment

480
00:27:24,240 --> 00:27:28,000
Speaker 2: of their smart meters, and so this business is incredibly

481
00:27:28,040 --> 00:27:30,359
Speaker 2: well positioned to be right at the center of the

482
00:27:30,480 --> 00:27:34,800
Speaker 2: energy transition in Australia and is a very big business with.

483
00:27:34,840 --> 00:27:36,280
Speaker 3: A huge amount of opportunity.

484
00:27:36,320 --> 00:27:42,400
Speaker 2: It's an absolute delight to have monetized the first leg

485
00:27:42,440 --> 00:27:46,320
Speaker 2: of the journey through selling fifty percent to Brookfield, but

486
00:27:47,320 --> 00:27:50,159
Speaker 2: enjoying the next leg of the journey with Brookfield to

487
00:27:50,280 --> 00:27:53,080
Speaker 2: again double the profits and continue that growth.

488
00:27:53,640 --> 00:27:56,120
Speaker 1: How much dry powder are you sitting on currently ready

489
00:27:56,160 --> 00:27:56,680
Speaker 1: to allocate?

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00:27:57,119 --> 00:28:01,920
Speaker 2: Yeah, so we've fully deployed our six private equity fund.

491
00:28:02,240 --> 00:28:04,879
Speaker 2: We're currently in the process of raising a three billion

492
00:28:04,960 --> 00:28:08,960
Speaker 2: dollar fund seven. That raise is going very well. It'll

493
00:28:08,960 --> 00:28:11,360
Speaker 2: be completed by the end of the year, and then

494
00:28:11,400 --> 00:28:15,000
Speaker 2: we will we spend although we already have one deal

495
00:28:15,040 --> 00:28:18,920
Speaker 2: that we've already done and warehoused to go into. There's

496
00:28:18,920 --> 00:28:22,159
Speaker 2: already deal in the fun we are deploying. We continue

497
00:28:22,200 --> 00:28:24,399
Speaker 2: to deploy. As I said, we end up doing you know,

498
00:28:24,440 --> 00:28:26,080
Speaker 2: two to three deals each year.

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00:28:26,400 --> 00:28:28,080
Speaker 1: If I bring you a deal of a business that

500
00:28:28,119 --> 00:28:31,040
Speaker 1: wants to sell, do I get a cut camp how

501
00:28:31,040 --> 00:28:31,720
Speaker 1: it works?

502
00:28:31,960 --> 00:28:32,680
Speaker 3: Absolutely?

503
00:28:33,119 --> 00:28:33,960
Speaker 1: I'm not buying it.

504
00:28:34,240 --> 00:28:39,040
Speaker 3: Yeah, we just have to discuss that's right.

505
00:28:39,680 --> 00:28:41,240
Speaker 1: Thank you so much. For coming. I'd love with the

506
00:28:41,280 --> 00:28:42,720
Speaker 1: chat to you as always wonderful.

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00:28:42,720 --> 00:28:43,440
Speaker 3: Thank you very much, Ma,