Mark Sherwood talks "Alternatives" with Ausbiz

Posted on
11th November 2021
By Shannon Turnbull

Mark Sherwood talks "Alternatives" with Ausbiz

Private investors more interested in alternatives (By Shannon Turnbull, 11th November 2021)

The fintech and agricultural sectors are hot right now, with farming aggregation strategies working for iPartners at this time. Mark says private investors are becoming more interested in alternatives as a way to diversify.

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We'll look at what investors are doing with their

money in this space.

Welcome back, Mark Sherwood From iPartners.

Mark, welcome.

Look, are alternatives,

I mean, really getting the same attention that

they were getting, as we were sort of

you know, at the height of the

pandemic, yields were extremely low.

Has anything sort of shifted in the landscape

over the past few months now that we've

got sort of central banks moving closer to lift off?


Nice to speak to you again.

An answer to that question, no.

There is a lot going on in the

alternatives sector, particularly in capital raisings

for some growing private businesses, some

that are requiring further debt capital, some that

are requiring further equity capital, really, depending on

their business and their business needs.

Our current activity is tending to be with

businesses that we have already supported through their

earlier stages of growth.

They're continuing to need further debt funding because

their business continues to grow fast and grow.

well, this has particularly been prevalent in

the fintech sector, but it has also been

occurring in other sectors as well, even

such as within the agricultural sector, where there's

been quite a lot of recent activity as well.

Can we go down that path?

AGTech is a really hot space at

the moment.

What kind of deals are you seeing at

the moment out there?

Yeah, in AG we've been very active.

We've been involved in some farming aggregation type

strategies, we're also currently raising further debt capital for

a business that provides lending in the cattle

and the livestock sector, which therefore supports

farmers as well.

The business that we're working with right now,

Ottley Capital has been one which have been,

we've been able to support from their commencement,

and they've been playing quite a pivotal role

in that livestock sector, providing efficient

capital for livestock agents that do the buying

and selling of the food that we eat.

So that has been quite

satisfying to support a growing private business and

of course, supporting that farming sector there as well.

So there's lots of demand coming from businesses

that are growing and are seeking capital.

What is demand like from investors?

I mean because, of course, the returns on

offer can often be, you know, really appealing.

Yeah, in terms of the alternative sector and

the demand for investors, we're definitely seeing private

investors becoming more sophisticated around their knowledge of

the range of alternative assets that

are becoming available and really looking at

alternatives as a way of adding diversification to

their investor portfolios.

We've been spending a lot of time trying

to help this process through education pieces

and presentations that assist those investors.

It's fair to say that the largest institutional

and global investors tend to already have much

higher weightings towards alternatives than what we have

traditionally seen from private investors.

Probably the best example of this could be

to look at the future fund, who openly

published their returns and make their asset

allocations public, and who will, of course, have

had very strong returns over the last 10

years, particularly their most recent update shows over

30% weighting towards alternatives and private equity combined.

And if you take that asset allocation analysis

one step further, property and infrastructure type assets

totaled around 14% in their portfolio, so that

is on top of that 30% weighting that

I just mentioned in alternatives and private equity.

So it really shows how the institutional world

has been taking very large weightings towards alternatives

for quite a long time, and this is

really starting to feed through to the private

investor as well.

Mark just humor me for a moment.

So we're seeing volatility in public market start

to pick up whether it's rates

world, FX or even equities now.

What does that mean for private markets?

Is it going to encourage people to go

in there and seek the safety?

Or do you start to see people get

a bit nervous about what's going on in the space?

Yes, David, I think it's fair to say

that private investors, have realised that just because

an investment exposure may be unlisted, as in

not listed on a stock exchange, it doesn't

necessarily mean it has to have a higher level of risk.

Private investors are very interested in seeing differentiated

opportunities that potentially add an exposure for them

that they don't currently have, and in

many cases, a slight liquidity premium might be

able to be negotiated into the return of

the asset, making the investment highly viable and

and the reward for the level of risk

being highly appropriate.

And that's the exact type of asset that

we seek.

So that is all coming across

to the private investor.

And I think that's why we're seeing the

consistency of interest in the sector.

Mark, thank you for the update.

We do appreciate it.

And we look forward to speaking again.

My pleasure.