Australia's Glow hits first close on debut PE fund
Australian private equity firm Glow Capital Partners has reached a first close of AUD 55m (USD 37m) on its debut fund. The target is AUD 300m.
The commitments came entirely from domestic high net worth individuals, all of them personal contacts of the team.
Glow was set up in 2021 by Justin Ryan, formerly a managing partner at Quadrant Private Equity, and Kate Morris, founder of e-commerce platform Adore Beauty. Quadrant acquired Adore in 2019; the company completed a domestic IPO in 2020.
The firm initially focused on tech-enabled consumerism, including e-commerce platforms and marketplaces, digitally-enabled consumer brands, and technology-enabled business products and services. The current mandate is described more broadly as consumer and industrial brands and businesses.
Glow has yet to make an investment, citing high valuations and market uncertainty. The idea is to use the fund’s initial capital to study the field and be in a position to make an acquisition when the cycle turns.
“The way forward is to generate a pipeline, find good investments to present to potential [institutional] fund investors, and use that as a way of getting to know them and getting their confidence,” Ryan said, adding there would be a strong focus on co-investment offers.
“That’s what anyone has to do in a market like this. They can’t just come out and get immediate support. They have to prove themselves up, and that’s what we’re determined to do.”
Glow has been in the market since November 2021, claiming differentiation in diversity. There are plans for the team to be 50% women, which is expected to translate into differentiated and proprietary deal flow.
The targeted AUD 300m corpus would include up to AUD 150m for co-investment and make seven to 10 investments across Australia and New Zealand. Target companies will be profitable with enterprise values in a range of AUD 30m to AUD 120m.
Valuations have been the main sticking point to date. Ryan noted last year that many Australian tech companies were experiencing low growth rates yet continuing to inappropriately base their valuations on multiples of revenue.
“We’ve looked at hundreds of businesses so far, and there’s probably only two or three that we think are satisfactory. In this environment, you just need to remain very disciplined and focused and hold your nerve,” he added.
“We’re coming into a very good period for investing. There will be great vintage years, and what we don’t have is the baggage of legacy investments. We have time on our side. If we need to take a little longer, we will. We’re a first-time fund anyway, so we want to get it right.”
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