Q&A: Adamantem Capital's Anthony Kerwick & Rob Koczkar

Q: What gap did you see in the Australian private equity market that Adamantem could fill?

AK: We’re interested in helping management teams identify and fund the calculated risks that can grow their businesses. We think that’s what we do well, and it’s what we enjoy doing. There are so many Australian companies looking to grow, innovate and employ more people. We’re interested in a broad range of opportunities – from private companies looking for growth capital to subsidiaries of bigger conglomerates that might be starved of capital through to listed companies who might be looking for a supportive shareholder and capital partner. We’re motivated by the opportunity to work with other stakeholders to improve and grow local businesses.

RK: We continue to see a strong pipeline of opportunities in the mid-market space and, structurally, some of the established local players with larger funds are now targeting larger scale deals.

Q: Why do you think there is a misperception that you are raising an activist fund?

AK: I suspect this has come from our broader investment mandate as we’ll be looking beyond buyouts to potentially invest in listed companies. It depends on the circumstances, and each opportunity needs to be assessed on its merits, but we don’t feel like we necessarily always need 100% ownership to influence the trajectory of a company.

RK: I think that’s right, but a key difference between Adamantem and a typical “activist” fund is that we think the key to our success will be developing a deep understanding of the businesses we target and partnering with other stakeholders to create change. We expect to be engaged with board and management teams on company direction over the longer term. Unlike activists, we’re not trying to create a short-term uptick in stock price by bombarding people with an idea and expecting them to implement it. Our objective is to find situations where we can bring capital and perspectives to partner with management to improve long term performance. Our investment style is to remove tensions and conflicts, not create them.

Q: Private equity engagement with public companies in Australia has often involved boards trying to resist advances from buyout funds. To what extent do you think the way private equity works with public companies should be redefined?

RK: I think there’s a responsibility on us all to keep improving the industry and keep moving forward. The local private equity market is still young compared to the US and the UK and it’s comparatively underpenetrated. As an industry, we have an important contribution to make to the economy and need to think about how we ease the tensions between public and private markets.

Q: How significant is the private market opportunity in terms of supporting founders who need capital to support growth or buying out founders who want to retire?

AK: I think there is so much potential in this space. Australia and New Zealand are home to a host of successful, entrepreneurial local companies that are grappling with decisions around capital, scale, capability and succession. Partnering with those businesses and backing them to take calculated risks and change their trajectory is something we’re very excited about.

Q: How big a team – and what sort of skill sets – do you need to execute the strategy?

RK: We have a team of nine investment professionals working with us on a significant pipeline of opportunities and we’ll continue to scale that team towards the end of the year. Our team has diverse backgrounds spanning private equity, investment strategy, business strategy and operational management, public markets and professional services. We’re also fortunate to have the support of an advisory council with significant listed company and directorship experience.

Q: You are one of several new GPs in the market. What is behind this trend?

AK: As Rob mentioned earlier, I think the local market is still young compared to the US and the UK and so it’s inevitable that we’ll see generational change and structural change. Some notable firms are in the process of exiting the market here locally and others are experiencing transitions in their senior leadership ranks.

Q: What do you think are the biggest challenges facing new GPs in Australia?

RK: Ensuring alignment with investors and creating a sustainable investment model are the things that we have prioritized. In a global context, Australia remains a strong services-driven economy with relatively low political risk. So the pipeline of opportunities is there and the appetite from global investors is there. 

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• Topics
• Australasia
• GPs
• Buyout
• Australia
• Adamantem Capital
• New Zealand