Last night we held the first of our 2021 seminar series, in collaboration with Deloitte Private, and Pāua Wealth Management’s resident private equity (‘PE’) guru, Quentin Stewart.
The Q&A session provided attendees with an insider’s view on the opportunities and pitfalls in the PE space; Quentin shared the wisdom he’s gained over many years of assessing businesses and what to look for.
Quentin is a 25-year veteran of the financial markets. Following training as a chartered accountant with KPMG in London, Quentin worked at a global investment bank as part of a proprietary debt and equity structuring and trading team. In 2002, he was a founding member of a team that established what would become one of Europe’s largest private equity houses, Terra Firma Capital Partners UK Ltd. For 15 years, he led large-cap buyouts in a variety of industries and jurisdictions from Europe to the US and Australasia, ultimately with a focus on energy and commodities.
With a great deal of interest in alternative investments, questions from our audience were mainly around the role PE plays as part of a wider diversified portfolio and where to start. Some of the key points noted were:
- An allocation to PE should be considered as part of your overall strategic asset allocation, in the context of longer-term investment objectives, your investment beliefs, risk appetite and as part of a wider diversified portfolio.
- Your exposure within PE should also be diversified. This should extend beyond New Zealand, and across multiple sectors.
- A PE investment should be viewed and valued in the same way as an investment in public equity – with the difference coming from the illiquidity of private markets.
- It’s important to discuss potential PE opportunities with an investment professional you trust. Although deeply experienced in assessing PE opportunities, Quentin works with professional advisers to develop a strategic framework aligned to his investment beliefs and to ensure an appropriate level of due diligence is conducted on any potential investments.
- Investing into PE should ideally be done through a fund manager. They have the greatest access to new investment opportunities and also have the required scale and investment research to select opportunities most likely to succeed.
- The key to investing with the right PE fund manager is whether the manager has the skill and ability to replicate their returns over time and through changing markets. PE markets change rapidly and an investment idea that may have generated significant returns one year, may not work again in another.
It was great to see a number of new and familiar faces in attendance and being able to provide an informative discussion and a platform for attendees to ask questions. We are looking forward to seeing you all at our next event.