Brendan O’Connor – Alpha Opportunities in Australia at Regal Partners (EP.485)
Summary
Australia: The guest makes a multi-sentence case for Australia as a diversifying, AAA, rule-of-law market with unique sector composition and strong pension-driven capital formation.
Resources: He is bullish on resources given sticky inflation, reshoring, and geopolitics, highlighting Australia’s historic and ongoing leadership in mining and critical minerals.
Diversified Metals & Mining: Deep in-house technical expertise (mining engineers, geologists) supports equity, debt, and royalty origination across the mining value chain.
Water Rights: Australia’s cap-and-trade water system and shift to higher-value crops underpin attractive leasing yields and capital appreciation for water rights owners.
Agricultural Debt: Preference for structured lending to agriculture and infrastructure over crowded property debt, leveraging origination and sector know-how to drive risk-adjusted returns.
Small Mid Caps: The real growth in Australia is in SMID caps, with structural inefficiencies offering alpha opportunities versus ex-growth large caps.
Alternative Investments: Regal’s multistrategy platform (hedge funds, credit, royalties, real/natural assets, growth equity) aims for high-teen returns with disciplined risk management.
Market Context: AI-driven energy demand, geopolitical shifts, and inflation support the long-term case for natural resources and real assets exposure in Australia.
Transcript
Australia uniquely provides a very idiosyncratic return series that is diversifying to what you'd find elsewhere. If you have a look at the Australian marketplace, financials and materials, materials, think of resource companies represent about 55% of the market. That's very different to many other equity markets around the world. the nature of the Australian economy. We're probably the 15th largest economy in the world. We sit just below South Korea from an economy size. We've got half the population of South Korea as an example. So, a GDP per capita is double theirs. There's market structure that means that we're being able to generate alpha from a section of the market that an offshore investor perhaps just is less familiar with. Part of the answer to that is being able to explain some unique structural elements to the Australian market. Australia is an interesting miracle in this regard. Some of those micro and macroeconomic reforms that the government introduced in the late 1980s translated into the introduction of a superenuation guarantee levy in 1992. it first started where 3% of everyone's salary was put aside as pension savings. That rate is now 12% of everyone's salaries. There are three key things that have shaped the pension system in Australia. There is a multi-deade trend to internalize asset management capability rather than using third party providers. There's an acceleration of a pre-existing trend around passive and ETF fund investing. Obviously, that's been a good trade for them, but it misses out on some of the positive aspects of active management. It also means there's been a slower adoption to alternative investment strategies, which is really Regal's sweet spot. Regal's edge in providing investors not just in Australia but around the world access to the best of Australia's alternative investment strategies inherently or necessarily means that we need to be originating those opportunities. [music] I'm Ted Sides and this is Capital Allocators. My guest on today's show is Brendan O' Conor, the CEO of Regal Partners, a premier alternatives manager in Australia with 21 billion Aussie dollars of funds [music] under management across hedge funds, credit and royalties, real and natural assets, and growth equities. Brendan joined the firm in 2016 [music] and has helped lead its expansion from a billion Aussie dollar long short specialist to a publicly listed multistrategy alternatives firm today. Our conversation traces Regal's evolution from its origins as a founder-led hedge fund into an integrated multistrategy platform. We discuss the unique economic and structural dynamics of the Australian market and how Regal leverages its deep sector and crosset expertise to [music] hunt for alpha. We cover Regal's four-step investment analysis and risk process, [music] the integration of investment teams, and perspectives on the exciting future of Australian markets. [music] Before we get going, have you noticed that airline travel takes a lot longer these days? Security lines go on as far as the eye can see. [music] And that's even with pre-check clear or the pre-check clear combo, and flights seem to get delayed regularly for no apparent reason. Well, the next time you have even an inkling of a delay, and long before you have to board, deboard, [music] board again, and sit on the tarmac for an hour before you leave, might I suggest you fill that idle time with successive episodes of capital allocators? By the time your plane leaves, you'll [music] have gotten through at least two or three amazing episodes and probably made friends with your equally frustrated neighbor in the seat next to you, who may not have had the benefit of listening until you tell them to. [music] Make a new friend, productively pass the time, and find your way around the world smarter than you started. Thanks for spreading the word. [music] Please enjoy my conversation with Brendan O'Conor. >> [music] >> Brendan, thanks so much for doing this. >> Thanks very much, Ted. Great to be here. >> Why don't you take me back to your upbringing and the path that led you into this business? >> I was born in regional Australia in a little town called Lifco, the other side of the Blue Mountains, the youngest of seven children. Mom stayed home to raise the kids while dad went to work. Dad worked for a government agency that helped families and children that came from broken homes, domestic violence, sort of truency. We moved around New South Wales, a state in the east coast of Australia, and we ended up in Grafton. I spent my formative childhood up there, having an idealic childhood. We didn't have much money, but that didn't matter when you're riding around on your bike, exploring the quiet streets, exploring the local river, the local beaches. I had a lot of fun. By the time I turned 10, my elder siblings were going to university down in Sydney. We relocated down to Sydney, and we ended up in the western suburbs of Sydney at a place called Toon Gabby. That was a big culture shock, but it was there when I finished high school and worked part-time jobs through university. I started off at KPMG as my first job. I initially wanted to be an engineer when I was at school, but very much driven by a desire to get a job and get a pay packet in my hand. I thought a career in accounting and finance was a sure way to get a job straight out of university. So, I started up at KPMG in audit. I really enjoyed my time because it was like a big business school. I found that it helped round out a lot of the theoretical aspects you learn at university. As an auditor, you go into a range of different businesses. You ultimately get to learn how they work from oil and gas businesses to manufacturers to banks to asset managers. I got a deep understanding of how each business worked. I guess the other part of why I enjoyed my time there, I met my wife. We've now been married for 28 years and we have six children of our own. So, it was a very important phase in my life. So before we dive into that part of the career, I'd be remiss if I didn't ask you about growing up with seven kids in your family. >> It's one of those questions where you don't know what the alternative is, but you piece it together as you grow up. So I had five sisters and one brother. My brother is 8 years older than me, and I desperately wanted to have a closer relationship with my brother growing up. When someone's eight and then they're 16, that's a big age gap. I used to marvel at those families that would catch up with and they may have one child and they would always come around to our place to have a play in the backyard and they were just blown away by the size. It was seemed like every afternoon would catch up. It was like a party for them where it was just a regular day for me. [laughter] >> How about your father doing the work that he did? I found that in the country in particular, maybe it was my age, I didn't notice so much the social aspect of what was occurring. The older I got, and particularly as we moved to Sydney, Sydney being a big city with edgier situations, I could start to see it took a toll on some of the things that he was dealing with. That created a degree of stress, but he was pretty good at being able to switch that off and turn around and just be a loving father to the seven children, which is great. And what was it about growing up with seven kids that led you to want to have six? [laughter] >> I jokingly say that my wife and I are very compatible and slow learners. We weren't striving for a particular number. It just happened that way and you can't imagine life any differently. My eldest is 25, my youngest is 16. Four of them are in the workforce, one at university and one at school. Take me back through that work experience at KPMG and where that set you out from there. >> I loved KPMG but didn't have high conviction as to where I wanted to spend my time from career. I was just really interested in being in the city working with people of a similar age to myself. There's a big cohort of graduates that have came on through and it was a career path where I could go many different places. So I did my chartered accounting exam and spent my time learning about businesses and understanding the business world. I'd always been curious about businesses, how they operated and I'd had a admiration for entrepreneurs, people who have actually taken a risk and set up a business themselves as opposed to administering a business that someone had built many generations before. Perhaps that's the next thread as to where I ultimately moved them because the more I became interested in the world of business, the more I started to read more about capital markets and particularly capital flows. I looked at Australia and Australia had made some very significant micro and macroeconomic reforms through the 1980s that ultimately spurned a great evolution of the finance industry. In particular, through the '90s, the big four banks, it's a bit of an oligopoly, a little bit like the Canadian banking system, they dominated the marketplace. I became increasingly curious about banks and despite a very idiosyncratic event in the early 1990s where we had a bit of a banking crisis, they recovered from that quite well. And by the late '9s, 2000s, the big four banks were the dominant part of the Australian financial system. Interestingly, credit growth in Australia was growing at 10% peranom and hadn't been less than 10% for many many years. And so, you had this huge growth in leverage coming into the household sector and it drove the profits of the banks. >> Where did that take you in terms of the roles that you played as you got interested in what was happening in the banking system? >> I became increasingly curious about them and I applied for a job at Westpack, one of the big four banks, Australia's oldest bank. The role I went into was called group controller. It had the potential to be quite a dry role because its title ultimately meant that you were head of accounting policy, but it gave me great insights to the operations of one of Australia's largest companies. It had over 150 years of history at that stage and there had been some great leaders. The leader of Westpak at the time was a guy called David Morgan. They had survived that banking crisis in the early 1990s when there were hedge funds on the register came through and it was growing extremely well. I took that as a great learning experience. In a 5-year period, we sold a very profitable but low growth finance business called AGC to GE Capital. That was an interesting experience negotiating with a bunch of Americans cuz that was the peak of their power. We bought one of the asset managers of Bankers Trust. The old Bankers Trust investment bank had a large funds management business in Australia. And I finished my time there on the executive committee of the financial markets team of Westpak in 2006 with the world a wash with liquidity. I clearly had no idea as to what was about to happen and credit spreads at all-time lows. I was thinking that these asset managers I was curious about and I was approached to join a company called Challenger Limited which was a large life insurance selling annuities that had a funds management business as well. So I jumped at the chance to move out of the banking industry into a very fast growing asset management industry in Australia. my reference to little did I know what was about to happen because obviously the global financial crisis bit quite hard in Australia. That was a wild ride in the early days of Challenger. >> And what did you end up doing? >> I spent the bulk of my time there as CFO for the asset management business. So the asset management business covered a credentially regulated life insurance business. On one side, it had assets that it had invested in across real estate, equities, fixed income, infrastructure, private equity, and on the liability side were fixed rate, fixedterm annuities to Australian retirees. The simple business was that the better the return you could make on each of those assets given you had a fixed rate on the liability side, that was just profit coming to the shareholder, the investment committee process, the asset allocation. Then on the other side of the business was a traditional fiduciary funds management business but allowed portfolio managers to run their own investment strategy but backed by challenge limited. I cut my teeth from a asset management perspective through that time. >> Having seen that model so long ago and it's a model certainly in the US that's taken over some of the largest public asset managers. curious what you see as the strengths and weaknesses of the insurance company with fixed annuities managing assets. >> It's a oil and water culture in many respects. The life insurer is a ruthless IRRa investor. [laughter] It has a bias to its IR to cash paying on a regular basis because it's trying to match its cash flows as much as its assets and liabilities. But ultimately it is a investor and world only to itself. A asset management business is built on trust and you're acting in the client's best interest at all times. Your client in this regard being the investor in the fund is very different to the investment you might make if it's a loan to a corporate for example. The better analogy might be when I was at a bank all you cared about was getting your money back on that loan. Today it's about making sure the investor in that fund that may have provided that loan has the right experience. What I mean by that is in has an investment experience that is consistent with the offer document or the fundraising. It was very much a fiduciary experience is very different to the bank or life insurance balance sheet experience. >> How did you end up coming over to Regal? After 10 years at Challenger, I was looking for my next challenge, no pun intended, and I met Phil King. Phil is one of the founders of Regal Funds Management. He started the business in 2004 with his brother Andrew. Phil was always the chief investment officer. Andrew on back office and distribution. Andrew had retired from the business in early 16. Phil wasn't ready to hang up the boots and turn it into a family office. He wanted to build a business. He was looking for a leader to help him take the business through its next phase of growth. I immediately saw the potential in being able to harness what was an incredible track record of long short equity investing with a robust technology platform that they built. To be able to turn that into a diversified alternatives manager that offered a range of investment strategies. That was the potential and I jumped at that. >> The history is very heavily focused on the Australian market and would love to hear the basic case for why invest in Australia. >> Australia uniquely provides a very idiosyncratic return series that is diversifying to what you'd find elsewhere. If you have a look at the Australian marketplace, financials and materials, materials, think of resource companies, represent about 55% of the market. That's very different to many other equity markets around the world. The nature of the Australian economy, we're probably the 15th largest economy in the world. We sit just below South Korea from an economy size. We've got half the population of South Korea as an example. So a GDP per capita is double theirs just to sort of frame it as I said is dominated by some industries that are unique to Australia and the best example of that is resources. Resources today represents about 25% of the equity market. If you go back to the late60s and 70s resources as a percentage of the Australian market was as much as 65%. I think that is a sign of things to come because from a world perspective there are perhaps many parallels between the environment we're in today from a commodity and resource perspective as what occurred in the late '60s and '7s. We're in a world with high for longer sticky inflation. Certainly a breakdown of the free trade agreements that were happening so easily previously. There's a lot of reonshoring. Unfortunately, we've seen the best of the geopolitical environment from a security perspective. That all points to being a more inflationary, higher cost security environment, which is very bullish resources. I think you'll find that a offshore investor that doesn't have exposure to Australia can do so in a AAA rated country, democratic and one of rule of law. Very strong laws in respect of first registered mortgage protections for the lender, very low corruption. It's a safe environment for them to deploy capital that's giving them a return series. probably very diversifying to the return series they get in the US, Canada, Europe or elsewhere. Further, the big companies in Australia, the big four banks, Telstra, the big telecommunications company, exclude BHP and Rio, those big companies are X growth. They are growing very slowly with maybe 2 to 3% EPS growth over the years ahead. The real growth in the Australian marketplace comes from that small and midcap sector. There's market structure that means that we're being able to generate alpha from a section of the market that an offshore investor perhaps just is less familiar with. Part of the answer to that is being able to explain some unique structural elements to the Australian market. Australia is an interesting miracle in this regard. Some of those micro and macroeconomic reforms that the government introduced in the late 1980s translated into the introduction of a superenuation guarantee levy in 1992 it first started where 3% of everyone's salary was put aside as pension savings. That rate is now 12% of everyone's salaries. Within a 36-y year period, Australia has accumulated $4 trillion of superenuation savings, meaning it's the fourth largest pension system in the world. Yet, our population is something like the 50th largest in the world. That $4 trillion, if it was a country, it would be equivalent to something like Italy in terms of GDP. You look at that, you say, "What an enormous amount of savings for that population." But because it's its pension system roots, it doesn't have the same construct as let's say the asset management industry in the US or Europe. There are three key things that have shaped the pension system in Australia. There is a multi-deade trend to internalize asset management capability rather than using third party providers. There's an acceleration of a pre-existing trend around passive and ETF fund investing. Obviously, that's been a good trade for them, but it misses out on some of the positive aspects of active management. It also means there's been a slower adoption to alternative investment strategies, which is really regal sweet spot. Given the resource intensivity of the economy and sectors, how do you think about the importance of the asset base in driving investment returns over the next several years? Australia has been blessed with an abundance of resources and minerals, including critical minerals. The world needs energy more so today than any other time in its past. Energy is the critical input to the large AI thematic that is driving a huge amount of capital spenders across the world. Australia is really well placed to be a beneficiary riding that wave of increased spending. You've seen some of that in terms of some of the deals announced between Australia and the US in terms of getting access to rare critical minerals. With our resource capabilities, the technical capability between mining engineers, geologists, I'd say we would be the first call on the street as being the Australian experts to understand which companies are going to be the winners from a resource perspective. We have been very constructive on the resource sector for a long period of time now because the domestic investors have largely [clears throat] been passive and the resource sector takes some real technical expertise. We find it's a area that we can add value that others struggle to identify value in. And that has been a self-fulfilling prophecy because if you think about the 200 staff that Rehook has now thereabouts, half of those what I'd call portfolio managers and analysts, so front office people, we would have 25 of those dedicated to a resources strategy in some shape or form. Whether it be in debt markets, whether it be equities or royalties, we have a team of five mining engineers, five geologists, we have surveyors, we have staff that have worked at some of the largest mining companies in the world, and they're actually picking the stocks, making the investment decisions from a debt perspective, originating royalties, and that puts us in a great position as what I call the original equipment manufacturer, the OEM. M to originate those best opportunities across the capital structure. >> You mentioned that when you joined Regal primarily long short equity shop. What's happened since to where you are today? >> We had about a billion dollars Aussie in long short equity strategies back in late 2016 when I joined. We're now about 21 billion Aussie. We're diversified across long short equities, cred and royalties, real and natural assets including things like water, agriculture, carbon and growth equity. The fourth category which is we're the largest preIPO investor for companies in Australia. There's been a significant diversification of investment capability and products that we can take to market a little bit like a diversified equity portfolio that is inherently more valuable today than it was when I started as a monoline long short equity provider. What is it about having that breadth of products that makes it more valuable as investment strategies? The ability to be able to see pricing in public markets and in private markets. The ability to see pricing in debt markets relative to equity markets, in pricing of royalties puts us in a better position to make an informed investment decision for any given investment opportunity. There'll be opportunities where we say, "I'm not a buyer of the equity at that price, but hey, I could structure a royalty. It won't be dilutive to you and I won't put the same ownerous terms around it from a debt package perspective and provide that to them instead." That is increasingly a virtuous circle. The more businesses that we see, the more we can have informed conversations about whether we're a debt provider, equity provider, or royalty provider. And then that leads to better returns that makes us more relevant to companies. They come back and it's a virtuous circle from there. >> You mentioned getting there with a billion Aussie 20some today. How do you get from one to 20 in a period of time building out new products? >> One foot in front of the other. It's a [laughter] It certainly hasn't been a straight line. Our growth has been three limbs to it. strong net flows through a coordinated sales effort that has been helped by what has been great investment performance across a range of the strategies and so obviously that has helped take fun up further. The third aspect is a number of key acquisitions. We have acquired additional investment capability to help expand and develop that capability we have dating all the way back to your time at Westpak and those early acquisitions and then some of the things you've been involved with in Regal. What are the things that you found work and don't in acquiring an asset management team? >> Asset management businesses are inherently people businesses. That sounds simple and trit to say, but I found that the motivations of the key investment professionals in particular the founders of that business are the essence as to whether it's going to be a good acquisition or not. At its very simplest level, I seeking great investment either individuals, teams or businesses that have a proven edge in what they're doing. Then I look to explore as to whether the partnership between them and ourselves can be a 1 plus 1 equals 3 or five scenario. That means that they need to be up for the journey. They need to be moving from a founder mentality where they are answerable to themselves to hey I'm now an employee working as part of an ASX listed business with all the governance that goes with that. They need to be able to buy in to that common goal of regal partners overall as opposed just their own P&L. The single answer to your question is people, their motivations. Once you've been able to demonstrate that they truly do have a proven edge in what they're doing, they haven't just been lucky. >> Once you have them on the team and you have a series of different teams, how have you thought about bringing that together under one umbrella? After a period of extensive growth over the last three and a half years in particular since we became listed that has been an increasing focus as we bring what I'd call that common platform behind each of the investment capabilities. We now operate with one distribution and marketing team right across the business. Whether we have people selling hotels or royalties or debt strategies or equity strategies, they all operate under the one distribution team. That means we can be coordinated. We can communicate well. We can share information. We're not falling over each other walking into a client when the other person's just walking out of that client. Basic, but it's the element of doing those little things really well. We've also got the common technology and finance and risk and governance platform behind it all. We've got one compliance team, one risk team, one finance team, one technology team that supports the business and then that has been key to making sure that we're approaching opportunities but also risks with the same lens and therefore fixing things if they need to be fixed once as opposed to multiple times. You're trying to do that all at the same time as leaving the essence of what made the investment capability you're acquiring. You're leaving that intact and you're trying to put that on a pedestal to develop that to grow. >> How did you think about finding the talent locally to exploit opportunities? >> Australia has developed an explosive financial services sector over the last 30 to 40 years. Basically, the bulk of my career. You've probably seen a diaspora of Australians around the US, Europe, certainly in London going off in Hong Kong, Singapore, wanting to go and apply their trade and learn and hope to succeed at some of the world's largest financial institutions. One of the nice things about Australia is that it's a long way away from the rest of the world, which is a tyranny of distance at times, but it certainly means that people can return to Australia in a very safe environment, a long way away from some of the conflict that's existing elsewhere in the world. And frankly, it's just a beautiful place to live. We got lovely beaches, nice weather, good rule of law, etc. We often find that when that diaspora is returning because perhaps they're married, they want to start kids, their kids are at a age where they want to go to high school, university, whatever it may be, that's a great pool of talent to come back to Australia early in their career. While we are probably at risk of losing them because they want to travel and go overseas and compete with the biggest in the world, we've got a privileged position to being the first call on the street for talent when they're returning to Australia to say, "Hey, I enjoyed my time at some of the biggest companies in the US." That's similar to what you guys are doing back here. I'd like to do that here in Regal in Australia and develop my career. When it comes to that assessment of investment performance, what have you found works in the assessing teams? It's one of the benefits of the asset management industry. It's ruthless in its objectivity. It's hard to fudge whether you've performed or underperformed. The scoreboard doesn't lie. Performance is best viewed through a risk adjusted lens. And over the long term, I find that managing people's egos around their performance can be challenging, but making an objective call as to whether they have performed or not is one of the easier aspects of the role. Whether they acknowledge it or not, [laughter] I think it's pretty clear. >> And then once they're inside the tent, how do you try to help them improve performance? It touches upon two key roles as part of the leadership team that I have brought on board over the last three years have been really important to that point in particular. We need to be expert risk managers to do what we're doing. Not just because of the hedge funds and leverage strategies, but the origination of unique products and capabilities and protecting ourselves against the downside that can occur. making sure we're maximizing the investment returns coming out of those opportunities. Risk management needs to be a key capability for the business overall. 3 years ago, I hired our very first dedicated chief risk officer. They've been on board now. and they lead a team of five people across the business that are working not only with the portfolio managers to assess their risk, but their key objective is to improve risk adjusted returns. We didn't need someone to come in and say, "Hey, you're outside or near risk parameters." We needed someone to say, "How do we actually improve your risk adjusted returns?" In some instance, taking more risk for a given return serious, whatever it may be. The other key hire that I've made in the last three years which has been enormously powerful in generating that collaborative team achievement focus direction is a HR director having that constant and consistent message around communication values standards as to how we interact with our employees has been helpful to me and the business in advancing that culture. culture. >> When you bring in these different teams, how do you think about the cooperative nature of the synergies they can get compared to wanting to incent them for their own performance? There's no easy answer to that, particularly where it may have been acquired capability brought in place. We try and instill a culture where the individual wins where the team wins. And that's a great mantra to have as it relates to an individual conversation oneonone. It can sometimes break down because they're laser focused on their own performance. Being able to structure remuneration outcomes. Being able to structure a collaborative environment where staff within the bounds of protecting public private assets and information barriers between the two sides of business are encouraged to hand off opportunities. Hey, just had a look at this company. I'm going to pass from a equity perspective, but I'm happy to provide an introduction if they want to have a chat to the debt side, for example. When we can highlight those to staff through our regular town hall meetings, we're really holding those up. These are great examples of Regal's ability to harness the best of what we do across the range of the business for the benefit of our clients. >> What have you found is special about the investment teams at Regal? I've never worked in a place where there has been such energy and enthusiasm for the business to succeed. Everyone at Regal from investment perspective has a buzz, a drive around achieving. This goes back to the origins of the business, a founder business. That same DNA is its things achieved by hard work, resilience, laying awake at night, worrying about what could go wrong, getting up early, making sure that those little things that you're concerned about are done as opposed to measuring or rewarding effort. As a founder business, we concentrate and focus on rewarding achievement as opposed to the effort that can just go on in a large business. What's the unifying DNA of the investment strategies at Regal? >> I'd say looking for an edge in what we're doing that often leads you to be a contrarian. I'll give you a good example. Paul Moore who leads our global longshort equity capability he has been running that strategy since 1998 by having a well-defined investment process and a capability that lends you to look for opportunities that are off the beaten path. That's been the essence of whether it's been equities within debt. The debt's probably an easy one to explain. The Australian market has a voracious appetite for the providing of debt to property. Australians love property, the big property investors. When we're talking about deploying debt to a lending opportunity, we have no competitive advantage trying to compete against everyone else trying to provide debt to established properties. We're looking to provide debt to agricultural opportunities or to the development of infrastructure. those opportunities that have a unique and perhaps complicated edge to them that we can actually do good due diligence and good structuring to generate returns. And it goes back to that mantra of being that original equipment manufacturer. We're not simply intermediary for someone else's originated opportunity where we're clipping the ticket. We're going out finding those opportunities and backing ourselves with the conviction that if that opportunity wobbles and we need to stabilize it, we've got the investment capability to step into that situation, stabilize it, turn around, sell it. >> How about on the growth equity side? >> Growth equity side was that dominant position. We started that strategy in November 2016. We had always been a large provider of capital. that last institutional capital raise about 18 months to two years before a company IPOed. We decided to create a dedicated strategy around it. It's probably a strategy we've got about half a billion dollars in now as one of the largest and longest standing providers of capital to that part of the market in Australia. That company has seen some wonderful investments that have ultimately gone on to create big businesses in the states. You may be familiar with this buy now pay later thematic that developed and companies like Zip and Quad Pay. They were small technology financial institutions that sprung out of Australia and now very large businesses. It puts us at a ground floor advantage being able to be early investors in some of those great opportunities. I'd love to dive into a couple of the different types of strategies that you pursue and how you think about how they stand on themselves and how they benefit from having adjacent strategies under the umbrella. >> There are two ways to answer that. One is the four asset classes I talk about whether it be long short equities, cred and royalties, real and natural assets and growth equities. Just across that lens, you can talk about being able to make better investment decisions because by being a proficient equity investor and understanding the risks and rewards of being long or short a company through your fundamental analysis, you inevitably need to understand the position of the debt provider in that balance sheet and the relative returns they're earning visav your position as equity owner. by being able to say, "Okay, well, gee, I think the equity is undervalued and I might be attracted to buy that or I think the equity is overvalued, but have a look at the return that the debt provider is getting for the next 3 years. They've just locked in a 12% return for something that I'd be happy to own the equity of anyway. That relative risk returns it." The more interesting aspect though is ultimately on a sector analysis. When I sit back and think about the businesses, I think more about the coming together of the capabilities that we have, the ability to say I can provide for any resource company globally, a equity solution, a debt solution or a royalty solution because I've got the technical expertise to truly assess the mine risk, the nature of the resource they're mining, an informed view of what the future prospects for that particular commodity, might be a view as to the sovereign risk we might taking as to what country that mine is in. That is a unique expertise. We might be one of three companies globally from an asset management perspective that have the breadth of that capability. The other area which is uniquely Australia is I'd call natural assets in Australia. Natural assets in Australia encompass everything from not only the equities public and private in agricultural in Australia, the debt. We're one of the largest providers outside the big four banks of agricultural debt to the Australian agricultural market. One of the adjacencies to that is we're the largest owner of water rights outside the Commonwealth government in Australia. to explain water water rights is water in Australia as it relates to largecale farming operations operates under economic cap and trade system. You own a farm that farm historically may be soldier settler blocks given to soldiers returning from World War II and over the generations have done a bit of dairy farming things like that. I.e. Dairy prices are typically low profit margins and a soldier settler block is typically a subscale for what a modern farming enterprise would look like. We're finding that those farms are being transformed into larger farms and they're typically migrating from dairy farming to higher value use product table grapes, almonds, avocados. The importance of that from a water price perspective is those products that usage have higher profit margins and those therefore can sustain higher prices. As the owner of those water rights when we're leasing that water out to farmers, we're enjoying the higher lease return from being able to lease that water out to those farmers as well as the capital appreciation that sits behind a increasingly scarce asset in Australia. Australia is the driest continent on Earth and there's a lot less water compared to land. So water is a better way to pay the agricultural exposure. As you've developed this range of strategies and capabilities across alternative assets all focused in Australia, as an investor comes to you and they're interested in getting exposure to the benefits of the Australian economy, the wave of AI derivative, how do you advise them of where to plug in? The best of Regal can be accessed via our multistrategy solutions. We have been running a multistrategy capabilities in Regal since 2019. We listed a permanent capital vehicle on the ASX. Subsequent to that, we have launched strategies that provide access to get access to the best of our ingredients. Often represents the first foray for those offshore investors to get access to the best of Regal's alternative investment capability. It explicitly targets high teen returns with high singledigit volatility and in that way is a great entree for any investor to first get access to the best of regal and therefore the best of alternative investments in Australia. they can then broaden that relationship and we often find they'll subsequently dive into some of the individual strategies whether they be hedge funds, credit, royalties or growth equity. So, it's a great first start for any offshore investor. >> How do you think about alpha generation or the opportunity to take advantage of an efficiency in the market? >> Really important. I use that term, the original equipment manufacturer. Regal's edge in providing investors not just in Australia but around the world access to the best of Australia's alternative investment strategies inherently or necessarily means that we need to be originating those opportunities. If I think about the equities perspective, that means we're the first call on the street to opportunities to be able to deploy capital to new events. IPOs, ECM activity, whatever it may be. That first call on the street means that we're in a position to typically influence the pricing around where some of those transactions get done. That puts us in an important position at alpha. As a large provider of debt capital to the agricultural sector, to increasingly corporates in Australia, it puts us in a better position to command pricing. We're simply not a syndicate of a large debt package that let's say the private equity firms have put together here in Australia. We're originating those opportunities ourselves. Finally, you think about from an agricultural perspective and water. We are the dominant provider of that owner of those water rights. If someone wanted to set up a farm in Australia of scale, they're not thinking so much as their first question about where they set that farm up so much as how do I access and secure my water? That means a conversation with Regal as to how do I secure those water rights? Alpha is intrinsically linked to being that first call on the street and that origination capability. Once you have that call, what does the underwriting process look like? >> As a equity investor, we're a fundamental stock picker bottom up. There's not a company certainly domestically and increasingly from a global perspective that we don't have a view on. We go through a four-step selection process. We start with the valuation of the company and the valuation is the cornerstone of our investment papers that we write up. The second one is to understand the macro environment in which that company sits in. what are the macro headwinds or tailwinds that might be unique to that company and the sector they operate within. Thirdly, we look to say well what is the catalyst? And by forcing ourselves to identify a catalyst, it forces us to be cleareyed as to when to time the investment for entry, but also to exit potentially if that catalyst has come and gone and your thesis hasn't played out. The fourth step is the edge and that is to say if the market's typically efficient, what is the market missing? What insights do we believe that we have that the market is missing? And by forcing our team to actually address that, it makes us better investors to be wideeyed as to what the opportunity but also what the risks are. When we're talking about that first call on the street, it's wrapped within that fundamental stock picking capability. There are first calls on the street, we say, use a cricket analogy. you let that ball go through to the keeper or a baseball analogy, you might not swing at that one, but it allows you to have high conviction and lean into those opportunities where the planets align and you've got a strong fundamental position as well as being the first call on street. >> What does that look like outside of equities and credit royalties, real assets, growth equity? >> There it's a less homogeneous asset class, more heterogeneous opportunities in there. Then it becomes more around relationships. What type of borrowers you happy to deal with? What type of counterparties are you happy to deal with? Have you had a good relationship with in the past? What type of sector may they be in? What commodity might be there? If you're talking about beef, for example, can be highly cyclical, might stay away at this time of the cycle, come back later on. And that fundamental expertise in whatever you're doing, whether it be from equity or debt or royalty perspective, is the cornerstone of making that informed decision. As you've grown the firm thus far, why have you selected the particular strategies you did to implement on that opportunity in Australia? >> It goes back to that mantra around the right to play. What right do we have? In the same way that I enforce a discipline from a merger and acquisition or inorganic growth discipline, demonstrate your edge in what you're doing. It's the same for Regal overall. We need to be able to hold ourselves accountable to have a true edge in what we're doing and that is built around generating great investment returns for our clients. Now the domestic market which we sit in Australia and so we'll start there is very dominated by a lot of older companies built in another era that provide exposure to long only equities or long only public fixed income. We don't believe we've got a particular edge there. I don't believe that that's the future for investors looking to achieve growth in their portfolio given that backdrop of higher for longer inflation, sticky inflation, breakdown of some of the free trade agreements that were happening and lowering cost before geopolitical risk and a higher cost of security including defense. That all speaks to a more diversified portfolio of alternative investment strategies. That's the tailwind that Regal has playing into. That's the capability that we're building. Regal is seeking to be that collection of best-in-class investment strategies that offer alternatives or different investment strategies that can provide growth no matter what the backdrop to the market. >> What was the thought process about going public? >> It was a perhaps dual factor. One is as a privately owned business attracting talent. Phil King and I put in place a long-term incentive plan that gave employees equity in the business that vested over a period of years. The bulk of that equity was coming in its first tranch to vest. And we say, well, as much as people should take a long-term approach and appreciate the dividends coming through, we thought that they probably want to invent where they could liquidate some of that as well. That just happened to coincide with a period of time where our business had recovered well from co had probably record performance and at the same time there was a ASX listed hedge fund that had fallen on harder times and was looking for a bit of help to just take it forward. So we engineered a reverse acquisition of that business which basically meant a backdoor listing of Regal Partners onto ASX. That's some of behind the scenes color as to where we are. So this is June 2022. We ended up as a ASX listed business. The transformational piece that has come from is really three key things. One is a step change in the governance that wraps its arms around the business as a ASX listed business. an independent board, independent chair. Our risk committees, compliance committee is now answerable to independent board members as opposed to reporting through to executives in the business is point one. Point two is that translates into far easier door opening opportunities particularly from an offshore perspective when we're talking about marketing in Asia, the US or the Middle East around demonstrating, hey, here's Regal Partners. You can independently look on the ASX website. These are our filings. This is who we are. There's a step change in profile that helps marketing. The third thing surprised me. The third thing was actually the additional spring in the step that happened from a staff perspective by saying, "Hey, I work for that business and I can see whether the share price is up or down." There is a engagement that comes from being part of a growing listed business. That's been a real thrill. >> What do you see some of the drawbacks? The governance of a independent board brings with it by definition a new set of stakeholders that like any team need to be brought along the journey, buy into the strategy, be comfortable with both the risks and also the opportunities ultimately the strategy of how we take that forward. There's been far more of my time spent working with the board taking them and helping them understand a strategy there proddding and testing the strategy and ultimately agreeing what the strategy is and taking that forward. That's a whole another aspect of it. There is the reverberations I'll call it from being a public company in respect of news flow by being a large asset management business in Australia. We'd always had a profile. But that profile, particularly through the press, seems to have amplified. Now that we're also a public company, there are good aspects to that. There are bad aspects to that. You need a steady hand and approach to be able to navigate your way through that and not get unduly distracted on the positives or the negatives. Either way, the benefits being listed ultimately outweigh the negatives. The other benefit I'd say is that it's given us a currency, i.e. the share price that we can use to help acquire investment capability and that has been powerful in helping us grow. >> What goals have you espoused for the business over the next several years? >> That's a challenging one in some respects because I find that a common failure in markets at least asset management markets here domestically is for people to fall into the trap of saying flag on the hill we're going to be hundred billion the next 5 years. It's a crude measure, but it's not necessarily the best measure to demonstrate the success or capability the investment business you're building. So, as much as people want you to throw out there, here's a number. We're going to be x billion in 5 years time, you can set your clock by and come back in 5 years time, you'll see us. A better measure is more nuance than that. Our success will be continuing to develop and acquire additional investment capability where we are generating great investment returns for our clients. If we can do that within our existing product sets in the additional investment capabilities we think naturally sit as part of our platform, I've got no doubt that we'll be over $50 billion over the years ahead. But it's important that I word it around investment returns as opposed to simply asset gathering because the thing that makes us unique given that founder business and alternative focus is we eat our own cooking. We don't want to be the leader of a hundred billion of low margin underperforming fund. We want to be the leaders of a business that is generating great returns for our clients and therefore ourselves and be proud of that. Whether that's $20 billion or $50 billion or hundred billion dollars. That's the second derivative. >> Well, Brenon, I want to make sure I get a chance to ask you a couple of fun closing questions. What is your favorite hobby or activity outside of work and family? >> That's an easy one. Surfing. Our whole family surfs. I picked up surfing probably in the last 15 years. I didn't grow up surfing. I'm particularly proud of the fact that I learned to surf later in life. If I could surf every morning before work, I would. I try and get out surfing as often as I can. It's that great hallmark of a hobby where not only is it incredibly distracting cuz it's hard to think of anything else when you're popping up on that wave, but it's also got a nice fitness element to it. Less time in the gym, more time surfing is my heaven. >> What was your first paid job and what did you learn from it? >> My first regular paid job was paper delivery. This is the local newspaper. The papers were delivered on a Tuesday evening. On a Wednesday morning, I had to go out and start delivering them. I was 13 years old. I had my basket at the front of my bike going around the suburbs doing it. What I learned from it was people were happy to pay me to do things if I could be consistently reliable and be honest in what I'm doing. Cuz I found that they said, "Oh, Brendan, thank you for doing that." And we found other workers sort of do it for a few months and they stop it or they dump the papers into the creek and things like that. Call me naive. That truly surprised me. Hard work I learned was a pathway to earning money. I needed money. I wanted money. So it was self-fulfilling. What was the best advice you've ever received? >> I've received a lot of advice over the years. The two pieces that come back to my mother and father. My mom had a great expression, Brendan, if a job's worth doing, it's worth doing really well. I hear myself saying that to my kids a lot. And dad, particularly from a construction perspective, was always Brendan, measure twice, cut once. They're two little truisms that I take with me that can be broadly applied to many aspects of life. >> What life lessons have you learned that you wish you knew a lot earlier in life? There are no shortcuts at the end of the day to build anything truly successful focused on that achievement as opposed to just the effort around it. There are no shortcuts. Building things properly in a sustainable way is the only sustainable way to build a great business. >> Brandon, last one. If the next 5 years are a chapter in your life, what's that chapter about? >> It's a continued evolution of Regal Partners. It will become a far more highly recognized brand of best-in-class active management capability located in Australia with a much larger nonAustralian client base than it does today. Oh, >> great. Brennan, thanks so much for sharing this very regal story. >> Thank you very much, Sid. I really enjoyed it. Thanks [music] for listening to this sponsored insight. Sponsored episodes are paid opportunities for another 12 to 18 managers a year to appear on the podcast. If you're interested in telling your story in front of the largest audience of investors in the industry, [music] please email us at team@capitalallocators.com to apply [music] for one of the slots. >> All opinions expressed by TED and podcast guests are solely their own opinions and do not reflect the opinion of capital allocators or their firms. This podcast is forformational purposes only and should not be relied upon as a basis for investment decisions. Clients of Capital Allocators or podcast guests may maintain positions in securities discussed on this podcast.
Brendan O’Connor – Alpha Opportunities in Australia at Regal Partners (EP.485)
Summary
Transcript
Australia uniquely provides a very idiosyncratic return series that is diversifying to what you'd find elsewhere. If you have a look at the Australian marketplace, financials and materials, materials, think of resource companies represent about 55% of the market. That's very different to many other equity markets around the world. the nature of the Australian economy. We're probably the 15th largest economy in the world. We sit just below South Korea from an economy size. We've got half the population of South Korea as an example. So, a GDP per capita is double theirs. There's market structure that means that we're being able to generate alpha from a section of the market that an offshore investor perhaps just is less familiar with. Part of the answer to that is being able to explain some unique structural elements to the Australian market. Australia is an interesting miracle in this regard. Some of those micro and macroeconomic reforms that the government introduced in the late 1980s translated into the introduction of a superenuation guarantee levy in 1992. it first started where 3% of everyone's salary was put aside as pension savings. That rate is now 12% of everyone's salaries. There are three key things that have shaped the pension system in Australia. There is a multi-deade trend to internalize asset management capability rather than using third party providers. There's an acceleration of a pre-existing trend around passive and ETF fund investing. Obviously, that's been a good trade for them, but it misses out on some of the positive aspects of active management. It also means there's been a slower adoption to alternative investment strategies, which is really Regal's sweet spot. Regal's edge in providing investors not just in Australia but around the world access to the best of Australia's alternative investment strategies inherently or necessarily means that we need to be originating those opportunities. [music] I'm Ted Sides and this is Capital Allocators. My guest on today's show is Brendan O' Conor, the CEO of Regal Partners, a premier alternatives manager in Australia with 21 billion Aussie dollars of funds [music] under management across hedge funds, credit and royalties, real and natural assets, and growth equities. Brendan joined the firm in 2016 [music] and has helped lead its expansion from a billion Aussie dollar long short specialist to a publicly listed multistrategy alternatives firm today. Our conversation traces Regal's evolution from its origins as a founder-led hedge fund into an integrated multistrategy platform. We discuss the unique economic and structural dynamics of the Australian market and how Regal leverages its deep sector and crosset expertise to [music] hunt for alpha. We cover Regal's four-step investment analysis and risk process, [music] the integration of investment teams, and perspectives on the exciting future of Australian markets. [music] Before we get going, have you noticed that airline travel takes a lot longer these days? Security lines go on as far as the eye can see. [music] And that's even with pre-check clear or the pre-check clear combo, and flights seem to get delayed regularly for no apparent reason. Well, the next time you have even an inkling of a delay, and long before you have to board, deboard, [music] board again, and sit on the tarmac for an hour before you leave, might I suggest you fill that idle time with successive episodes of capital allocators? By the time your plane leaves, you'll [music] have gotten through at least two or three amazing episodes and probably made friends with your equally frustrated neighbor in the seat next to you, who may not have had the benefit of listening until you tell them to. [music] Make a new friend, productively pass the time, and find your way around the world smarter than you started. Thanks for spreading the word. [music] Please enjoy my conversation with Brendan O'Conor. >> [music] >> Brendan, thanks so much for doing this. >> Thanks very much, Ted. Great to be here. >> Why don't you take me back to your upbringing and the path that led you into this business? >> I was born in regional Australia in a little town called Lifco, the other side of the Blue Mountains, the youngest of seven children. Mom stayed home to raise the kids while dad went to work. Dad worked for a government agency that helped families and children that came from broken homes, domestic violence, sort of truency. We moved around New South Wales, a state in the east coast of Australia, and we ended up in Grafton. I spent my formative childhood up there, having an idealic childhood. We didn't have much money, but that didn't matter when you're riding around on your bike, exploring the quiet streets, exploring the local river, the local beaches. I had a lot of fun. By the time I turned 10, my elder siblings were going to university down in Sydney. We relocated down to Sydney, and we ended up in the western suburbs of Sydney at a place called Toon Gabby. That was a big culture shock, but it was there when I finished high school and worked part-time jobs through university. I started off at KPMG as my first job. I initially wanted to be an engineer when I was at school, but very much driven by a desire to get a job and get a pay packet in my hand. I thought a career in accounting and finance was a sure way to get a job straight out of university. So, I started up at KPMG in audit. I really enjoyed my time because it was like a big business school. I found that it helped round out a lot of the theoretical aspects you learn at university. As an auditor, you go into a range of different businesses. You ultimately get to learn how they work from oil and gas businesses to manufacturers to banks to asset managers. I got a deep understanding of how each business worked. I guess the other part of why I enjoyed my time there, I met my wife. We've now been married for 28 years and we have six children of our own. So, it was a very important phase in my life. So before we dive into that part of the career, I'd be remiss if I didn't ask you about growing up with seven kids in your family. >> It's one of those questions where you don't know what the alternative is, but you piece it together as you grow up. So I had five sisters and one brother. My brother is 8 years older than me, and I desperately wanted to have a closer relationship with my brother growing up. When someone's eight and then they're 16, that's a big age gap. I used to marvel at those families that would catch up with and they may have one child and they would always come around to our place to have a play in the backyard and they were just blown away by the size. It was seemed like every afternoon would catch up. It was like a party for them where it was just a regular day for me. [laughter] >> How about your father doing the work that he did? I found that in the country in particular, maybe it was my age, I didn't notice so much the social aspect of what was occurring. The older I got, and particularly as we moved to Sydney, Sydney being a big city with edgier situations, I could start to see it took a toll on some of the things that he was dealing with. That created a degree of stress, but he was pretty good at being able to switch that off and turn around and just be a loving father to the seven children, which is great. And what was it about growing up with seven kids that led you to want to have six? [laughter] >> I jokingly say that my wife and I are very compatible and slow learners. We weren't striving for a particular number. It just happened that way and you can't imagine life any differently. My eldest is 25, my youngest is 16. Four of them are in the workforce, one at university and one at school. Take me back through that work experience at KPMG and where that set you out from there. >> I loved KPMG but didn't have high conviction as to where I wanted to spend my time from career. I was just really interested in being in the city working with people of a similar age to myself. There's a big cohort of graduates that have came on through and it was a career path where I could go many different places. So I did my chartered accounting exam and spent my time learning about businesses and understanding the business world. I'd always been curious about businesses, how they operated and I'd had a admiration for entrepreneurs, people who have actually taken a risk and set up a business themselves as opposed to administering a business that someone had built many generations before. Perhaps that's the next thread as to where I ultimately moved them because the more I became interested in the world of business, the more I started to read more about capital markets and particularly capital flows. I looked at Australia and Australia had made some very significant micro and macroeconomic reforms through the 1980s that ultimately spurned a great evolution of the finance industry. In particular, through the '90s, the big four banks, it's a bit of an oligopoly, a little bit like the Canadian banking system, they dominated the marketplace. I became increasingly curious about banks and despite a very idiosyncratic event in the early 1990s where we had a bit of a banking crisis, they recovered from that quite well. And by the late '9s, 2000s, the big four banks were the dominant part of the Australian financial system. Interestingly, credit growth in Australia was growing at 10% peranom and hadn't been less than 10% for many many years. And so, you had this huge growth in leverage coming into the household sector and it drove the profits of the banks. >> Where did that take you in terms of the roles that you played as you got interested in what was happening in the banking system? >> I became increasingly curious about them and I applied for a job at Westpack, one of the big four banks, Australia's oldest bank. The role I went into was called group controller. It had the potential to be quite a dry role because its title ultimately meant that you were head of accounting policy, but it gave me great insights to the operations of one of Australia's largest companies. It had over 150 years of history at that stage and there had been some great leaders. The leader of Westpak at the time was a guy called David Morgan. They had survived that banking crisis in the early 1990s when there were hedge funds on the register came through and it was growing extremely well. I took that as a great learning experience. In a 5-year period, we sold a very profitable but low growth finance business called AGC to GE Capital. That was an interesting experience negotiating with a bunch of Americans cuz that was the peak of their power. We bought one of the asset managers of Bankers Trust. The old Bankers Trust investment bank had a large funds management business in Australia. And I finished my time there on the executive committee of the financial markets team of Westpak in 2006 with the world a wash with liquidity. I clearly had no idea as to what was about to happen and credit spreads at all-time lows. I was thinking that these asset managers I was curious about and I was approached to join a company called Challenger Limited which was a large life insurance selling annuities that had a funds management business as well. So I jumped at the chance to move out of the banking industry into a very fast growing asset management industry in Australia. my reference to little did I know what was about to happen because obviously the global financial crisis bit quite hard in Australia. That was a wild ride in the early days of Challenger. >> And what did you end up doing? >> I spent the bulk of my time there as CFO for the asset management business. So the asset management business covered a credentially regulated life insurance business. On one side, it had assets that it had invested in across real estate, equities, fixed income, infrastructure, private equity, and on the liability side were fixed rate, fixedterm annuities to Australian retirees. The simple business was that the better the return you could make on each of those assets given you had a fixed rate on the liability side, that was just profit coming to the shareholder, the investment committee process, the asset allocation. Then on the other side of the business was a traditional fiduciary funds management business but allowed portfolio managers to run their own investment strategy but backed by challenge limited. I cut my teeth from a asset management perspective through that time. >> Having seen that model so long ago and it's a model certainly in the US that's taken over some of the largest public asset managers. curious what you see as the strengths and weaknesses of the insurance company with fixed annuities managing assets. >> It's a oil and water culture in many respects. The life insurer is a ruthless IRRa investor. [laughter] It has a bias to its IR to cash paying on a regular basis because it's trying to match its cash flows as much as its assets and liabilities. But ultimately it is a investor and world only to itself. A asset management business is built on trust and you're acting in the client's best interest at all times. Your client in this regard being the investor in the fund is very different to the investment you might make if it's a loan to a corporate for example. The better analogy might be when I was at a bank all you cared about was getting your money back on that loan. Today it's about making sure the investor in that fund that may have provided that loan has the right experience. What I mean by that is in has an investment experience that is consistent with the offer document or the fundraising. It was very much a fiduciary experience is very different to the bank or life insurance balance sheet experience. >> How did you end up coming over to Regal? After 10 years at Challenger, I was looking for my next challenge, no pun intended, and I met Phil King. Phil is one of the founders of Regal Funds Management. He started the business in 2004 with his brother Andrew. Phil was always the chief investment officer. Andrew on back office and distribution. Andrew had retired from the business in early 16. Phil wasn't ready to hang up the boots and turn it into a family office. He wanted to build a business. He was looking for a leader to help him take the business through its next phase of growth. I immediately saw the potential in being able to harness what was an incredible track record of long short equity investing with a robust technology platform that they built. To be able to turn that into a diversified alternatives manager that offered a range of investment strategies. That was the potential and I jumped at that. >> The history is very heavily focused on the Australian market and would love to hear the basic case for why invest in Australia. >> Australia uniquely provides a very idiosyncratic return series that is diversifying to what you'd find elsewhere. If you have a look at the Australian marketplace, financials and materials, materials, think of resource companies, represent about 55% of the market. That's very different to many other equity markets around the world. The nature of the Australian economy, we're probably the 15th largest economy in the world. We sit just below South Korea from an economy size. We've got half the population of South Korea as an example. So a GDP per capita is double theirs just to sort of frame it as I said is dominated by some industries that are unique to Australia and the best example of that is resources. Resources today represents about 25% of the equity market. If you go back to the late60s and 70s resources as a percentage of the Australian market was as much as 65%. I think that is a sign of things to come because from a world perspective there are perhaps many parallels between the environment we're in today from a commodity and resource perspective as what occurred in the late '60s and '7s. We're in a world with high for longer sticky inflation. Certainly a breakdown of the free trade agreements that were happening so easily previously. There's a lot of reonshoring. Unfortunately, we've seen the best of the geopolitical environment from a security perspective. That all points to being a more inflationary, higher cost security environment, which is very bullish resources. I think you'll find that a offshore investor that doesn't have exposure to Australia can do so in a AAA rated country, democratic and one of rule of law. Very strong laws in respect of first registered mortgage protections for the lender, very low corruption. It's a safe environment for them to deploy capital that's giving them a return series. probably very diversifying to the return series they get in the US, Canada, Europe or elsewhere. Further, the big companies in Australia, the big four banks, Telstra, the big telecommunications company, exclude BHP and Rio, those big companies are X growth. They are growing very slowly with maybe 2 to 3% EPS growth over the years ahead. The real growth in the Australian marketplace comes from that small and midcap sector. There's market structure that means that we're being able to generate alpha from a section of the market that an offshore investor perhaps just is less familiar with. Part of the answer to that is being able to explain some unique structural elements to the Australian market. Australia is an interesting miracle in this regard. Some of those micro and macroeconomic reforms that the government introduced in the late 1980s translated into the introduction of a superenuation guarantee levy in 1992 it first started where 3% of everyone's salary was put aside as pension savings. That rate is now 12% of everyone's salaries. Within a 36-y year period, Australia has accumulated $4 trillion of superenuation savings, meaning it's the fourth largest pension system in the world. Yet, our population is something like the 50th largest in the world. That $4 trillion, if it was a country, it would be equivalent to something like Italy in terms of GDP. You look at that, you say, "What an enormous amount of savings for that population." But because it's its pension system roots, it doesn't have the same construct as let's say the asset management industry in the US or Europe. There are three key things that have shaped the pension system in Australia. There is a multi-deade trend to internalize asset management capability rather than using third party providers. There's an acceleration of a pre-existing trend around passive and ETF fund investing. Obviously, that's been a good trade for them, but it misses out on some of the positive aspects of active management. It also means there's been a slower adoption to alternative investment strategies, which is really regal sweet spot. Given the resource intensivity of the economy and sectors, how do you think about the importance of the asset base in driving investment returns over the next several years? Australia has been blessed with an abundance of resources and minerals, including critical minerals. The world needs energy more so today than any other time in its past. Energy is the critical input to the large AI thematic that is driving a huge amount of capital spenders across the world. Australia is really well placed to be a beneficiary riding that wave of increased spending. You've seen some of that in terms of some of the deals announced between Australia and the US in terms of getting access to rare critical minerals. With our resource capabilities, the technical capability between mining engineers, geologists, I'd say we would be the first call on the street as being the Australian experts to understand which companies are going to be the winners from a resource perspective. We have been very constructive on the resource sector for a long period of time now because the domestic investors have largely [clears throat] been passive and the resource sector takes some real technical expertise. We find it's a area that we can add value that others struggle to identify value in. And that has been a self-fulfilling prophecy because if you think about the 200 staff that Rehook has now thereabouts, half of those what I'd call portfolio managers and analysts, so front office people, we would have 25 of those dedicated to a resources strategy in some shape or form. Whether it be in debt markets, whether it be equities or royalties, we have a team of five mining engineers, five geologists, we have surveyors, we have staff that have worked at some of the largest mining companies in the world, and they're actually picking the stocks, making the investment decisions from a debt perspective, originating royalties, and that puts us in a great position as what I call the original equipment manufacturer, the OEM. M to originate those best opportunities across the capital structure. >> You mentioned that when you joined Regal primarily long short equity shop. What's happened since to where you are today? >> We had about a billion dollars Aussie in long short equity strategies back in late 2016 when I joined. We're now about 21 billion Aussie. We're diversified across long short equities, cred and royalties, real and natural assets including things like water, agriculture, carbon and growth equity. The fourth category which is we're the largest preIPO investor for companies in Australia. There's been a significant diversification of investment capability and products that we can take to market a little bit like a diversified equity portfolio that is inherently more valuable today than it was when I started as a monoline long short equity provider. What is it about having that breadth of products that makes it more valuable as investment strategies? The ability to be able to see pricing in public markets and in private markets. The ability to see pricing in debt markets relative to equity markets, in pricing of royalties puts us in a better position to make an informed investment decision for any given investment opportunity. There'll be opportunities where we say, "I'm not a buyer of the equity at that price, but hey, I could structure a royalty. It won't be dilutive to you and I won't put the same ownerous terms around it from a debt package perspective and provide that to them instead." That is increasingly a virtuous circle. The more businesses that we see, the more we can have informed conversations about whether we're a debt provider, equity provider, or royalty provider. And then that leads to better returns that makes us more relevant to companies. They come back and it's a virtuous circle from there. >> You mentioned getting there with a billion Aussie 20some today. How do you get from one to 20 in a period of time building out new products? >> One foot in front of the other. It's a [laughter] It certainly hasn't been a straight line. Our growth has been three limbs to it. strong net flows through a coordinated sales effort that has been helped by what has been great investment performance across a range of the strategies and so obviously that has helped take fun up further. The third aspect is a number of key acquisitions. We have acquired additional investment capability to help expand and develop that capability we have dating all the way back to your time at Westpak and those early acquisitions and then some of the things you've been involved with in Regal. What are the things that you found work and don't in acquiring an asset management team? >> Asset management businesses are inherently people businesses. That sounds simple and trit to say, but I found that the motivations of the key investment professionals in particular the founders of that business are the essence as to whether it's going to be a good acquisition or not. At its very simplest level, I seeking great investment either individuals, teams or businesses that have a proven edge in what they're doing. Then I look to explore as to whether the partnership between them and ourselves can be a 1 plus 1 equals 3 or five scenario. That means that they need to be up for the journey. They need to be moving from a founder mentality where they are answerable to themselves to hey I'm now an employee working as part of an ASX listed business with all the governance that goes with that. They need to be able to buy in to that common goal of regal partners overall as opposed just their own P&L. The single answer to your question is people, their motivations. Once you've been able to demonstrate that they truly do have a proven edge in what they're doing, they haven't just been lucky. >> Once you have them on the team and you have a series of different teams, how have you thought about bringing that together under one umbrella? After a period of extensive growth over the last three and a half years in particular since we became listed that has been an increasing focus as we bring what I'd call that common platform behind each of the investment capabilities. We now operate with one distribution and marketing team right across the business. Whether we have people selling hotels or royalties or debt strategies or equity strategies, they all operate under the one distribution team. That means we can be coordinated. We can communicate well. We can share information. We're not falling over each other walking into a client when the other person's just walking out of that client. Basic, but it's the element of doing those little things really well. We've also got the common technology and finance and risk and governance platform behind it all. We've got one compliance team, one risk team, one finance team, one technology team that supports the business and then that has been key to making sure that we're approaching opportunities but also risks with the same lens and therefore fixing things if they need to be fixed once as opposed to multiple times. You're trying to do that all at the same time as leaving the essence of what made the investment capability you're acquiring. You're leaving that intact and you're trying to put that on a pedestal to develop that to grow. >> How did you think about finding the talent locally to exploit opportunities? >> Australia has developed an explosive financial services sector over the last 30 to 40 years. Basically, the bulk of my career. You've probably seen a diaspora of Australians around the US, Europe, certainly in London going off in Hong Kong, Singapore, wanting to go and apply their trade and learn and hope to succeed at some of the world's largest financial institutions. One of the nice things about Australia is that it's a long way away from the rest of the world, which is a tyranny of distance at times, but it certainly means that people can return to Australia in a very safe environment, a long way away from some of the conflict that's existing elsewhere in the world. And frankly, it's just a beautiful place to live. We got lovely beaches, nice weather, good rule of law, etc. We often find that when that diaspora is returning because perhaps they're married, they want to start kids, their kids are at a age where they want to go to high school, university, whatever it may be, that's a great pool of talent to come back to Australia early in their career. While we are probably at risk of losing them because they want to travel and go overseas and compete with the biggest in the world, we've got a privileged position to being the first call on the street for talent when they're returning to Australia to say, "Hey, I enjoyed my time at some of the biggest companies in the US." That's similar to what you guys are doing back here. I'd like to do that here in Regal in Australia and develop my career. When it comes to that assessment of investment performance, what have you found works in the assessing teams? It's one of the benefits of the asset management industry. It's ruthless in its objectivity. It's hard to fudge whether you've performed or underperformed. The scoreboard doesn't lie. Performance is best viewed through a risk adjusted lens. And over the long term, I find that managing people's egos around their performance can be challenging, but making an objective call as to whether they have performed or not is one of the easier aspects of the role. Whether they acknowledge it or not, [laughter] I think it's pretty clear. >> And then once they're inside the tent, how do you try to help them improve performance? It touches upon two key roles as part of the leadership team that I have brought on board over the last three years have been really important to that point in particular. We need to be expert risk managers to do what we're doing. Not just because of the hedge funds and leverage strategies, but the origination of unique products and capabilities and protecting ourselves against the downside that can occur. making sure we're maximizing the investment returns coming out of those opportunities. Risk management needs to be a key capability for the business overall. 3 years ago, I hired our very first dedicated chief risk officer. They've been on board now. and they lead a team of five people across the business that are working not only with the portfolio managers to assess their risk, but their key objective is to improve risk adjusted returns. We didn't need someone to come in and say, "Hey, you're outside or near risk parameters." We needed someone to say, "How do we actually improve your risk adjusted returns?" In some instance, taking more risk for a given return serious, whatever it may be. The other key hire that I've made in the last three years which has been enormously powerful in generating that collaborative team achievement focus direction is a HR director having that constant and consistent message around communication values standards as to how we interact with our employees has been helpful to me and the business in advancing that culture. culture. >> When you bring in these different teams, how do you think about the cooperative nature of the synergies they can get compared to wanting to incent them for their own performance? There's no easy answer to that, particularly where it may have been acquired capability brought in place. We try and instill a culture where the individual wins where the team wins. And that's a great mantra to have as it relates to an individual conversation oneonone. It can sometimes break down because they're laser focused on their own performance. Being able to structure remuneration outcomes. Being able to structure a collaborative environment where staff within the bounds of protecting public private assets and information barriers between the two sides of business are encouraged to hand off opportunities. Hey, just had a look at this company. I'm going to pass from a equity perspective, but I'm happy to provide an introduction if they want to have a chat to the debt side, for example. When we can highlight those to staff through our regular town hall meetings, we're really holding those up. These are great examples of Regal's ability to harness the best of what we do across the range of the business for the benefit of our clients. >> What have you found is special about the investment teams at Regal? I've never worked in a place where there has been such energy and enthusiasm for the business to succeed. Everyone at Regal from investment perspective has a buzz, a drive around achieving. This goes back to the origins of the business, a founder business. That same DNA is its things achieved by hard work, resilience, laying awake at night, worrying about what could go wrong, getting up early, making sure that those little things that you're concerned about are done as opposed to measuring or rewarding effort. As a founder business, we concentrate and focus on rewarding achievement as opposed to the effort that can just go on in a large business. What's the unifying DNA of the investment strategies at Regal? >> I'd say looking for an edge in what we're doing that often leads you to be a contrarian. I'll give you a good example. Paul Moore who leads our global longshort equity capability he has been running that strategy since 1998 by having a well-defined investment process and a capability that lends you to look for opportunities that are off the beaten path. That's been the essence of whether it's been equities within debt. The debt's probably an easy one to explain. The Australian market has a voracious appetite for the providing of debt to property. Australians love property, the big property investors. When we're talking about deploying debt to a lending opportunity, we have no competitive advantage trying to compete against everyone else trying to provide debt to established properties. We're looking to provide debt to agricultural opportunities or to the development of infrastructure. those opportunities that have a unique and perhaps complicated edge to them that we can actually do good due diligence and good structuring to generate returns. And it goes back to that mantra of being that original equipment manufacturer. We're not simply intermediary for someone else's originated opportunity where we're clipping the ticket. We're going out finding those opportunities and backing ourselves with the conviction that if that opportunity wobbles and we need to stabilize it, we've got the investment capability to step into that situation, stabilize it, turn around, sell it. >> How about on the growth equity side? >> Growth equity side was that dominant position. We started that strategy in November 2016. We had always been a large provider of capital. that last institutional capital raise about 18 months to two years before a company IPOed. We decided to create a dedicated strategy around it. It's probably a strategy we've got about half a billion dollars in now as one of the largest and longest standing providers of capital to that part of the market in Australia. That company has seen some wonderful investments that have ultimately gone on to create big businesses in the states. You may be familiar with this buy now pay later thematic that developed and companies like Zip and Quad Pay. They were small technology financial institutions that sprung out of Australia and now very large businesses. It puts us at a ground floor advantage being able to be early investors in some of those great opportunities. I'd love to dive into a couple of the different types of strategies that you pursue and how you think about how they stand on themselves and how they benefit from having adjacent strategies under the umbrella. >> There are two ways to answer that. One is the four asset classes I talk about whether it be long short equities, cred and royalties, real and natural assets and growth equities. Just across that lens, you can talk about being able to make better investment decisions because by being a proficient equity investor and understanding the risks and rewards of being long or short a company through your fundamental analysis, you inevitably need to understand the position of the debt provider in that balance sheet and the relative returns they're earning visav your position as equity owner. by being able to say, "Okay, well, gee, I think the equity is undervalued and I might be attracted to buy that or I think the equity is overvalued, but have a look at the return that the debt provider is getting for the next 3 years. They've just locked in a 12% return for something that I'd be happy to own the equity of anyway. That relative risk returns it." The more interesting aspect though is ultimately on a sector analysis. When I sit back and think about the businesses, I think more about the coming together of the capabilities that we have, the ability to say I can provide for any resource company globally, a equity solution, a debt solution or a royalty solution because I've got the technical expertise to truly assess the mine risk, the nature of the resource they're mining, an informed view of what the future prospects for that particular commodity, might be a view as to the sovereign risk we might taking as to what country that mine is in. That is a unique expertise. We might be one of three companies globally from an asset management perspective that have the breadth of that capability. The other area which is uniquely Australia is I'd call natural assets in Australia. Natural assets in Australia encompass everything from not only the equities public and private in agricultural in Australia, the debt. We're one of the largest providers outside the big four banks of agricultural debt to the Australian agricultural market. One of the adjacencies to that is we're the largest owner of water rights outside the Commonwealth government in Australia. to explain water water rights is water in Australia as it relates to largecale farming operations operates under economic cap and trade system. You own a farm that farm historically may be soldier settler blocks given to soldiers returning from World War II and over the generations have done a bit of dairy farming things like that. I.e. Dairy prices are typically low profit margins and a soldier settler block is typically a subscale for what a modern farming enterprise would look like. We're finding that those farms are being transformed into larger farms and they're typically migrating from dairy farming to higher value use product table grapes, almonds, avocados. The importance of that from a water price perspective is those products that usage have higher profit margins and those therefore can sustain higher prices. As the owner of those water rights when we're leasing that water out to farmers, we're enjoying the higher lease return from being able to lease that water out to those farmers as well as the capital appreciation that sits behind a increasingly scarce asset in Australia. Australia is the driest continent on Earth and there's a lot less water compared to land. So water is a better way to pay the agricultural exposure. As you've developed this range of strategies and capabilities across alternative assets all focused in Australia, as an investor comes to you and they're interested in getting exposure to the benefits of the Australian economy, the wave of AI derivative, how do you advise them of where to plug in? The best of Regal can be accessed via our multistrategy solutions. We have been running a multistrategy capabilities in Regal since 2019. We listed a permanent capital vehicle on the ASX. Subsequent to that, we have launched strategies that provide access to get access to the best of our ingredients. Often represents the first foray for those offshore investors to get access to the best of Regal's alternative investment capability. It explicitly targets high teen returns with high singledigit volatility and in that way is a great entree for any investor to first get access to the best of regal and therefore the best of alternative investments in Australia. they can then broaden that relationship and we often find they'll subsequently dive into some of the individual strategies whether they be hedge funds, credit, royalties or growth equity. So, it's a great first start for any offshore investor. >> How do you think about alpha generation or the opportunity to take advantage of an efficiency in the market? >> Really important. I use that term, the original equipment manufacturer. Regal's edge in providing investors not just in Australia but around the world access to the best of Australia's alternative investment strategies inherently or necessarily means that we need to be originating those opportunities. If I think about the equities perspective, that means we're the first call on the street to opportunities to be able to deploy capital to new events. IPOs, ECM activity, whatever it may be. That first call on the street means that we're in a position to typically influence the pricing around where some of those transactions get done. That puts us in an important position at alpha. As a large provider of debt capital to the agricultural sector, to increasingly corporates in Australia, it puts us in a better position to command pricing. We're simply not a syndicate of a large debt package that let's say the private equity firms have put together here in Australia. We're originating those opportunities ourselves. Finally, you think about from an agricultural perspective and water. We are the dominant provider of that owner of those water rights. If someone wanted to set up a farm in Australia of scale, they're not thinking so much as their first question about where they set that farm up so much as how do I access and secure my water? That means a conversation with Regal as to how do I secure those water rights? Alpha is intrinsically linked to being that first call on the street and that origination capability. Once you have that call, what does the underwriting process look like? >> As a equity investor, we're a fundamental stock picker bottom up. There's not a company certainly domestically and increasingly from a global perspective that we don't have a view on. We go through a four-step selection process. We start with the valuation of the company and the valuation is the cornerstone of our investment papers that we write up. The second one is to understand the macro environment in which that company sits in. what are the macro headwinds or tailwinds that might be unique to that company and the sector they operate within. Thirdly, we look to say well what is the catalyst? And by forcing ourselves to identify a catalyst, it forces us to be cleareyed as to when to time the investment for entry, but also to exit potentially if that catalyst has come and gone and your thesis hasn't played out. The fourth step is the edge and that is to say if the market's typically efficient, what is the market missing? What insights do we believe that we have that the market is missing? And by forcing our team to actually address that, it makes us better investors to be wideeyed as to what the opportunity but also what the risks are. When we're talking about that first call on the street, it's wrapped within that fundamental stock picking capability. There are first calls on the street, we say, use a cricket analogy. you let that ball go through to the keeper or a baseball analogy, you might not swing at that one, but it allows you to have high conviction and lean into those opportunities where the planets align and you've got a strong fundamental position as well as being the first call on street. >> What does that look like outside of equities and credit royalties, real assets, growth equity? >> There it's a less homogeneous asset class, more heterogeneous opportunities in there. Then it becomes more around relationships. What type of borrowers you happy to deal with? What type of counterparties are you happy to deal with? Have you had a good relationship with in the past? What type of sector may they be in? What commodity might be there? If you're talking about beef, for example, can be highly cyclical, might stay away at this time of the cycle, come back later on. And that fundamental expertise in whatever you're doing, whether it be from equity or debt or royalty perspective, is the cornerstone of making that informed decision. As you've grown the firm thus far, why have you selected the particular strategies you did to implement on that opportunity in Australia? >> It goes back to that mantra around the right to play. What right do we have? In the same way that I enforce a discipline from a merger and acquisition or inorganic growth discipline, demonstrate your edge in what you're doing. It's the same for Regal overall. We need to be able to hold ourselves accountable to have a true edge in what we're doing and that is built around generating great investment returns for our clients. Now the domestic market which we sit in Australia and so we'll start there is very dominated by a lot of older companies built in another era that provide exposure to long only equities or long only public fixed income. We don't believe we've got a particular edge there. I don't believe that that's the future for investors looking to achieve growth in their portfolio given that backdrop of higher for longer inflation, sticky inflation, breakdown of some of the free trade agreements that were happening and lowering cost before geopolitical risk and a higher cost of security including defense. That all speaks to a more diversified portfolio of alternative investment strategies. That's the tailwind that Regal has playing into. That's the capability that we're building. Regal is seeking to be that collection of best-in-class investment strategies that offer alternatives or different investment strategies that can provide growth no matter what the backdrop to the market. >> What was the thought process about going public? >> It was a perhaps dual factor. One is as a privately owned business attracting talent. Phil King and I put in place a long-term incentive plan that gave employees equity in the business that vested over a period of years. The bulk of that equity was coming in its first tranch to vest. And we say, well, as much as people should take a long-term approach and appreciate the dividends coming through, we thought that they probably want to invent where they could liquidate some of that as well. That just happened to coincide with a period of time where our business had recovered well from co had probably record performance and at the same time there was a ASX listed hedge fund that had fallen on harder times and was looking for a bit of help to just take it forward. So we engineered a reverse acquisition of that business which basically meant a backdoor listing of Regal Partners onto ASX. That's some of behind the scenes color as to where we are. So this is June 2022. We ended up as a ASX listed business. The transformational piece that has come from is really three key things. One is a step change in the governance that wraps its arms around the business as a ASX listed business. an independent board, independent chair. Our risk committees, compliance committee is now answerable to independent board members as opposed to reporting through to executives in the business is point one. Point two is that translates into far easier door opening opportunities particularly from an offshore perspective when we're talking about marketing in Asia, the US or the Middle East around demonstrating, hey, here's Regal Partners. You can independently look on the ASX website. These are our filings. This is who we are. There's a step change in profile that helps marketing. The third thing surprised me. The third thing was actually the additional spring in the step that happened from a staff perspective by saying, "Hey, I work for that business and I can see whether the share price is up or down." There is a engagement that comes from being part of a growing listed business. That's been a real thrill. >> What do you see some of the drawbacks? The governance of a independent board brings with it by definition a new set of stakeholders that like any team need to be brought along the journey, buy into the strategy, be comfortable with both the risks and also the opportunities ultimately the strategy of how we take that forward. There's been far more of my time spent working with the board taking them and helping them understand a strategy there proddding and testing the strategy and ultimately agreeing what the strategy is and taking that forward. That's a whole another aspect of it. There is the reverberations I'll call it from being a public company in respect of news flow by being a large asset management business in Australia. We'd always had a profile. But that profile, particularly through the press, seems to have amplified. Now that we're also a public company, there are good aspects to that. There are bad aspects to that. You need a steady hand and approach to be able to navigate your way through that and not get unduly distracted on the positives or the negatives. Either way, the benefits being listed ultimately outweigh the negatives. The other benefit I'd say is that it's given us a currency, i.e. the share price that we can use to help acquire investment capability and that has been powerful in helping us grow. >> What goals have you espoused for the business over the next several years? >> That's a challenging one in some respects because I find that a common failure in markets at least asset management markets here domestically is for people to fall into the trap of saying flag on the hill we're going to be hundred billion the next 5 years. It's a crude measure, but it's not necessarily the best measure to demonstrate the success or capability the investment business you're building. So, as much as people want you to throw out there, here's a number. We're going to be x billion in 5 years time, you can set your clock by and come back in 5 years time, you'll see us. A better measure is more nuance than that. Our success will be continuing to develop and acquire additional investment capability where we are generating great investment returns for our clients. If we can do that within our existing product sets in the additional investment capabilities we think naturally sit as part of our platform, I've got no doubt that we'll be over $50 billion over the years ahead. But it's important that I word it around investment returns as opposed to simply asset gathering because the thing that makes us unique given that founder business and alternative focus is we eat our own cooking. We don't want to be the leader of a hundred billion of low margin underperforming fund. We want to be the leaders of a business that is generating great returns for our clients and therefore ourselves and be proud of that. Whether that's $20 billion or $50 billion or hundred billion dollars. That's the second derivative. >> Well, Brenon, I want to make sure I get a chance to ask you a couple of fun closing questions. What is your favorite hobby or activity outside of work and family? >> That's an easy one. Surfing. Our whole family surfs. I picked up surfing probably in the last 15 years. I didn't grow up surfing. I'm particularly proud of the fact that I learned to surf later in life. If I could surf every morning before work, I would. I try and get out surfing as often as I can. It's that great hallmark of a hobby where not only is it incredibly distracting cuz it's hard to think of anything else when you're popping up on that wave, but it's also got a nice fitness element to it. Less time in the gym, more time surfing is my heaven. >> What was your first paid job and what did you learn from it? >> My first regular paid job was paper delivery. This is the local newspaper. The papers were delivered on a Tuesday evening. On a Wednesday morning, I had to go out and start delivering them. I was 13 years old. I had my basket at the front of my bike going around the suburbs doing it. What I learned from it was people were happy to pay me to do things if I could be consistently reliable and be honest in what I'm doing. Cuz I found that they said, "Oh, Brendan, thank you for doing that." And we found other workers sort of do it for a few months and they stop it or they dump the papers into the creek and things like that. Call me naive. That truly surprised me. Hard work I learned was a pathway to earning money. I needed money. I wanted money. So it was self-fulfilling. What was the best advice you've ever received? >> I've received a lot of advice over the years. The two pieces that come back to my mother and father. My mom had a great expression, Brendan, if a job's worth doing, it's worth doing really well. I hear myself saying that to my kids a lot. And dad, particularly from a construction perspective, was always Brendan, measure twice, cut once. They're two little truisms that I take with me that can be broadly applied to many aspects of life. >> What life lessons have you learned that you wish you knew a lot earlier in life? There are no shortcuts at the end of the day to build anything truly successful focused on that achievement as opposed to just the effort around it. There are no shortcuts. Building things properly in a sustainable way is the only sustainable way to build a great business. >> Brandon, last one. If the next 5 years are a chapter in your life, what's that chapter about? >> It's a continued evolution of Regal Partners. It will become a far more highly recognized brand of best-in-class active management capability located in Australia with a much larger nonAustralian client base than it does today. Oh, >> great. Brennan, thanks so much for sharing this very regal story. >> Thank you very much, Sid. I really enjoyed it. Thanks [music] for listening to this sponsored insight. Sponsored episodes are paid opportunities for another 12 to 18 managers a year to appear on the podcast. If you're interested in telling your story in front of the largest audience of investors in the industry, [music] please email us at team@capitalallocators.com to apply [music] for one of the slots. >> All opinions expressed by TED and podcast guests are solely their own opinions and do not reflect the opinion of capital allocators or their firms. This podcast is forformational purposes only and should not be relied upon as a basis for investment decisions. 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