TOL - 11th Apr, 2024
The golden rule of investment: Always "follow the money"
Because if you don't know who the sucker is, the sucker's probably you.
No matter the investment, whether it's a public stock, a private asset or a fund, investors should "follow the money" to ensure that management has their best interests at heart.
That's according to Roc Partners' Michael Lukin who, backed by nearly three decades of experience in investment markets, has learnt that alignment is everything. In fact, it is the biggest fundamental lesson he teaches to up-and-coming investors.
"Where's your money going? Is it allowing people to take money off the table and leave you stranded? Is it being used to help grow the business? Is the management team or founder aligned with you in terms of owning the same instrument that you own?" Lukin recommends investors ask themselves.
"If you don't know who's the sucker on the table, the sucker's probably you."
It's a lesson that has served Lukin and his team well. While Roc Partners has so far flown under the radar, it now manages $8 billion in investor capital. It offers private credit, private equity and real asset solutions to some of Australia's largest institutions and superannuation funds, as well as high-net-worth investors and family offices.
In this Views from the Top interview, Lukin breaks down some of the red tape surrounding private markets. He outlines why Australia is still playing catch-up compared to the rest of the globe when it comes to investments in unlisted assets, and names the sectors that he believes provide the best risk-adjusted returns in Australia.
He also discusses why investors may need to turn to private markets in their search for growth, and provides the best explanation for why private debt will remain on investors' radars in the coming years that I have heard in some time.
Plus, he outlines why investors need to be very wary of separating the wheat from the chaff when selecting private credit managers - that is, if the returns sound too good to be true, they probably are.
Note: This interview was recorded on Wednesday 20 March 2024.
Timecodes
- 0:00 - Intro
- 0:22 - Some background on Michael Lukin and Roc Partners
- 1:37 - Why financial advisers are allocating more to private markets
- 3:36 - The difference between private equity and private debt
- 4:50 - The sectors that Roc Partners invests in and why
- 6:35 - Why companies don't need public markets any more for capital
- 9:27 - Return expectations for private assets
- 10:46 - The next chapter of the private credit story in Australia
- 14:21 - M&A outlook for 2024 and beyond
- 15:32 - Michael's view from the top: "Always follow the money"
Specialist private markets investment manager
Achieving strong results in private markets takes deep experience, sector insights and strong relationships. But it’s our vision of what’s possible, our ability to solve complex challenges and our steadfast commitment to people and purpose that’s critical in unlocking the value in opportunities. Find out more about private equity, private credit and real assets at Roc Partners.
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Ally Selby is the deputy managing editor at Livewire Markets, joining the team at the end of 2020. She loves all things investing, financial literacy and content creation, having previously worked for the likes of Financial Standard, Pedestrian Group, Your Money, Sky Business and Sky News.
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Ally Selby is the deputy managing editor at Livewire Markets, joining the team at the end of 2020. She loves all things investing, financial literacy and content creation, having previously worked for the likes of Financial Standard, Pedestrian...
Expertise
Ally Selby is the deputy managing editor at Livewire Markets, joining the team at the end of 2020. She loves all things investing, financial literacy and content creation, having previously worked for the likes of Financial Standard, Pedestrian...
Expertise
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