The Exchanges

Q 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?

A I became increasingly curious about them, and I applied for a job at Westpac, 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 roll 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 a 150 years of history at that stage, and there had been some great leaders. The leader of Westpac at the time was a guy called David Morgan. They had survived that banking crisis in the early 19 nineties 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 five 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 because that was the peak of their power. We bought one of the asset managers off 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 Westpac in The world awash 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 …

AI assessment note: “I applied for a job at Westpac... The role I went into was called group controller”

Q What is it about having that breadth of products that makes it more valuable as investment strategies?

A 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 onerous 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.

AI assessment note: “puts us in a better position to make an informed investment decision”

Q How do you think about alpha generation or the opportunity to take advantage of an efficiency in the market?

A 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 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 …

AI assessment note: “Alpha is intrinsically linked to being that first call on the street and that origination capability.”

Q What was the thought process about going public?

A 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 tranche 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 COVID, 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 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 the 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 an ASX listed business. An independent board, independent chair, our risk committees, compliance committees, now answerable to independent board members as opposed to reporting through to executives in the business is .1. …

AI assessment note: “It was a perhaps dual factor. One is as a privately owned business attracting talent”

Q Why don't you take me back to your upbringing and the path that led you into this business?

A I was born in regional Australia in a little town called Lithgow, 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 truancy. 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 idyllic 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 hands. I thought a career in accounting and finance was a sure way to get a job straight at university. So I started off at KPMG and audit. I really enjoyed my time because it was like a big business school. I found that it helped ro…

AI assessment note: “I was born in regional Australia in a little town called Lithgow”

Q 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?

A After a period of extensive growth of the last three and a half years, in particular, since we became listed, that has been an increasingly 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.

AI assessment note: “We now operate with one distribution and marketing team right across the business.”

Q What's the unifying DNA of the investment strategies at Regal?

A 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 long short equity capability He has been running that strategy since. 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 t…

AI assessment note: “looking for an edge in what we're doing that often leads you to be a contrarian”

Q Once you have that call, what does the underwriting process look like?

A 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 clear eyed 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 wide-eyed 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 in the street. We say use a cricket analogy. You let that ball go through to the keeper or a …

AI assessment note: “We go through a four-step selection process. We start with the valuation of the company”

Q How did you think about finding the talent locally to exploit opportunities?

A Australia has developed an explosive financial services sector over the last 3040 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've 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 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 really enjoyed my time at some of the biggest companies in the U.S…

AI assessment note: “when that diaspora is returning... that's a great pool of talent to come back”

Q 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?

A 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 one-on-one, 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.

AI assessment note: “Being able to structure remuneration outcomes, being able to structure a collaborative environment”

Q What goals have you espoused for the business over the next several years?

A 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 a hundred billion dollars the next five years. It's a crude measure, but it's not necessarily the best measure to demonstrate the success or capability 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 five years time, you can set your clock by it and come back in five years time, you'll see us. A better measure is more nuanced 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 fifty billion dollars 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-led business and alternative focus, is we eat our own cooking. We don't want to be the leader of a hundred billion dollars of Low margin, underperforming fun. We want to be the leaders of a business that is genera…

AI assessment note: “Our success will be continuing to develop and acquire additional investment capability”

Q 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?

A 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 expense 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. Without 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 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 Regal has now, there are about 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 mar…

AI assessment note: “Australia is really well placed to be a beneficiary riding that wave of increased spending.”