In an interview, David Jones F Fin, managing director of CHAMP Private Equity, talked about the company and the role of private equity (PE) in the global financial crisis (GFC). According to Jones, PE had a negligible role in the GFC. It was all about people mispricing risk. There were some PE players who did fall under the spell of cheap debt, but firms that had been around longer and had experienced a number of cycles saw through this boom. He said CHAMP (with its predecessor business) has the longest history of any PE group in Australia, operating for around 22 years now. The group raises capital largely from superannuation groups, pension funds, endowments and other institutions globally. He noted that they look for businesses that are undercapitalized and undermanaged from a board perspective. CHAMP opened up an office in Singapore about 18 months ago because they think there are real opportunities for Australian companies to grow into the Asian region.
profile story by MArIoN FAHrEr F Fin PHoToGrAPHy by AdAM HollinGWorTH Finsia Hedge funds and private equity (PE) firms needs. We have put capital into the business and have been widely criticised for exacerbating the have worked on developing the board and the global financial crisis (GFC), partly because of management team. the high levels of leverage often involved in their We see the finance industry as an important part deals. Is this criticism unwarranted? of the Australian economy, one in which most sectors are world class and where we believe that there will DJ pe had a negligible role in the GfC. it was all be continued opportunities for pe to participate. about people mispricing risk – the risk appetite was Prior to the Centric Wealth investment, our most ramped right up and the risk premia dropped right recent deal, in December 2008, we also bought a down. lenders, investors and many asset owners finance sector business called Alleasing, out of were not projecting appropriate scenarios for Allco, which provides office equipment and other asset pricing. specialised leasing for businesses. We see this as an There were some pe players who did fall under attractive niche business. As part of that investment, the spell of cheap debt, but firms that had been we brought three small acquisitions to the company, around longer and had experienced a number of to immediately boost its scale, and brought the cycles saw through this boom. from our perspective, principals of those groups onto the Alleasing board the boom went on for longer than we expected. to add depth. Now, in the recovery part of the cycle, pe can have a very positive role to play in providing necessary Finsia What are the key areas of strategic capital to smaller and medium-sized businesses that focus for CHAMP Private Equity and how is the might not otherwise obtain risk capital, particularly business structured? as investors and lenders focus on the ‘big end of DJ CHAMp (with its predecessor business) has the town’ in the flight to quality. This is exactly what PE longest history of any pe group in Australia, operating does and our recent acquisition of Centric Wealth for around 22 years now. it was founded by Bill ferris is a prime example. and Joe Skrzynski, who are both still active within the Finsia What were the key strategic objectives group and we have a relationship with Castle Harlan, underpinning your buyout of a 75% stake in a US-based mid-sized PE firm, of comparable size to us. This provides important opportunities for us to Centric Wealth in March this year? Is this likely work
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