Until now, access to exclusive institutional-grade private equity funds, run by the world’s leading asset managers, has typically been restricted to large institutions and the ultra-wealthy.
It is telling that many of the largest and most successful fund managers in the world do not have brands that are familiar to even the most active individual investors in Australia.
After many decades working in financial markets, Sam Phillips saw an opportunity to democratise access for Australian sophisticated investors seeking entry into this world. He felt diversified private equity investment opportunities with global top 20 fund managers who had sustained track records was an outstanding premise upon which to found his startup, Reach Alternative Investments.
“These opportunities had only been accessible to institutions prepared to meet a minimum investment requirement of $10-50 million, which is well out of reach of most individual investors. It’s all reflected in the name, ‘private equity’ private because it is a closed shop,” he said.
“Thanks to the combination of our relationships and the technology we have applied to this problem, we have been fortunate enough to secure access to these types of funds and connect them to the Australian sophisticated investor capital pool.”
Accessing better deals
Phillips, along with co-founder Hugh McCaffrey, launched Reach Alternative Investments last year with the aim of helping sophisticated investors and their advisers access these deals.
They can do so by aggregating the individual demand from its investors to meet the institutional entry threshold which brings the individual minimum investment down to as little as $75,000.
In addition Reach partnered with one of Australia’s leading private equity voices, the Australian Investment Council, to create an education hub to assist investors new to this space with resources to assist them to invest in this space effectively.
“Our concept is very new in Australia and we have been required to educate awareness of our proposition which in itself is a sign of how established the status of allowing only institutional access has been,” Phillips said.
“However, with a proven model that has achieved success overseas, we’ve had some very good buy-in. After 20 years abroad I had seen how private markets were being democratised elsewhere with technology.
“Here, the sector has remained very paper-based, we’re offering much needed onboarding and transaction efficiencies with our technology which is a major win, especially for advisers who simply do not have the time.”.
Phillips joined Antler last year as an early-stage VC incubator which enables and invests in exceptional people to build the defining companies of tomorrow, in a bid to help find a partner to bring his vision to fruition and provide a clear pathway to capital.
“Antler’s been terrific. I’ve been in the industry for a long time, when I came back to Australia I wanted to do things from scratch. Antler has been a great fit for us in that regard,” he said.
“I had the vision and the industry understanding but I didn’t have the operational or technical support to bring it all together. Thanks to Antler I’ve been able to partner with my co-founder and COO Hugh McCaffrey who has had extensive legal experience, over time we have achieved very solid traction and grown our offer, so it’s been fantastic.”
Since launch Reach has added considerable weight to its go-to-market executive as well as adding new names to its already highly experienced advisory board including Liquidnet’s Lee Porter, Guy Saxelby from Earlytrade, technologist David Jenkins and Antler’s Ant Millet.
Most recent hires include a Head of Technology, CMO & Director of Corporate Affairs, a specialist Private Equity Analyst as well as a Graphic Designer.
“We have grown our team and built a brand and culture that demonstrates our commitment to going about our business responsibly to achieve the confidence and credibility of a proudly conservative sector without sacrificing the vibrant drive and energy of a startup” Phillips said.
Looking forward, Phillips adds that Reach is “leading a timely change to the investor landscape” as the post-Covid economy awakens.
“With anticipated interest rate hikes and forecast stock market volatility we are seeing many investors looking to diversify away from listed markets. Institutional grade private equity funds are generally illiquid, often with a tenure of 3-10 years,” he said.
“We typically see that adding some illiquid private market investments into a portfolio may bring better diversity, some level of outperformance and also dampen volatility. It’s very good timing for us”
Phillips said that as the regulation of financial services continues to change, Reach sees itself as leading the charge to meet growing demand for private equity.
“We can apply a robust scalable model, secure technology and extensive experience and networks to narrow the gap between what the institutions have available to them and what sophisticated investors have had available. Perhaps, in time, our model has the potential to benefit retail investors as well” he said.
“This is the moment to get it right in Australia then look to other markets that are ripe, because every country has a potential market for this calibre of opportunity”
- Startup Daily is the official media partner of Antler in Australia