- Within a global context, the quality of players in the Australian private equity market has been very high. Additionally, the average returns in the Australian market have been 2-4% higher than the average return achieved globally.
- Dispersion in performance among managers in private equity is considerably more than in public equities. In some cases, there is a 30-40% difference between the best and worst performing managers. However, there is a pattern with this performance. Pacific Equity Partners looks for companies with a history of adding value, where managers are accountable and where interference in the day-to-day operations is minimised.
- Investors should avoid businesses where external variables unduly affect profits - or businesses that are exposed to arbitrary regulation. Looking forward, the global investment environment is likely to remain challenging, given increased volatility, and investors should remain conscious of risk.
In this episode, Finding value in private equity, LGT Crestone’s Chief Investment Officer, Scott Haslem, interviews Tim Sims, Managing Director and founder of Pacific Equity Partners.
Tim explains how the industry has evolved since Pacific Equity Partners was founded, and provides his thoughts on the important factors to consider when assessing private equity opportunities. He also gives his view on valuations versus public equities and whether increased constraints within the superannuation industry are likely to impact private equity.