Private equity returns to basics

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      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
				
DOCUMENT INFO
Description: 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.
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