May 11, 2023

Share Private equity firms are undergoing remarkable change as deal teams skew younger. The next crop of leaders are front-and-centre of negotiations. They worked at investments banks and now hold board seats at portfolio companies. They are even satirised through popular Instagram accounts like ‘Aussie Corporate’ and ‘Litquidity.’ Josie Gorter, an investment director at Potentia Capital, ran point on the firm’s acquisition of Nitro Software. Louie Douvis This influx of youth is in stark contrast to private equity of old, when weary Wall Streeters – often men – dominated boardrooms. As per Bryan Burrough and John Helyar’s famous tale Barbarians at the Gate, loading up target companies with debt was private equity’s modus operandi, before stripping them down ahead of an eventual sale. Today, private equity – sitting on billions-of-dollars in unused capital or dry powder – has branched out. Firms have funds dedicated to longer-term projects like infrastructure, while others eye specific sectors like consumer products or financial services. “It was a value investing game. Find the cheapest business on the ASX. All the value creation was in the entry. My observation now, it is growth oriented,” says Sam Franklin, a 34-year-old director with EQT Partners. Advertisement “If we are bringing something to our committee, where there is a reduction in headcount. Quite frankly, I do not think it is going to work in the Australian market.” “You are not just thinking transactionally. You are thinking like a future business owner.” — Dan Lahav, TPG Capital, principal Embracing tech It’s no surprise then that private equity is warming up to technology in a big way. Josie Gorter, an investment director at tech-focused investor Potentia Capital, is part of the deal team that acquired Nitro Software’s outstanding stock for about $455 million last month. To usher the transaction through, the 32-year-old Gorter was tasked with visiting Nitro’s sites in Ireland to smooth out the acquisition. She is also involved in another tech play for Potentia, its $1 billion-plus acquisition of payments company Tyro. Advertisement “We have shown a specialist tech firm can work in this market. We still get questions about it. Specialising in technology in itself in private equity in Australia is pretty special,” says Gorter, who sits on the board of other Potentia investments like mining software firm Micromine and superannuation services firm SuperChoice . Katie Woods, a managing director at Adamantem Capital, was involved in the firm’s investment in Servian, a data analytics company helping the big banks and Telstra utilise customer data. She is excited by the convergence of tech and private equity, and is particularly buoyed by the idea of setting up businesses for the future. “It is not every day you have the opportunity to sit in boardrooms and shape a strategic agenda,” Woods, 34, said. Cutting-edge developments have meant tech lies at the beating heart of all industries, and private equity’s next generation of leaders want to be at the forefront of this. Andrew Barber, a senior associate at Partners Group, says his firm empowered younger staffers to build client relationships at an early stage. Advertisement The 28-year-old believes this helped Partners identify “transformative” trends and enabled it to better compete in a saturated dealmaking environment. “As private equity becomes increasingly competitive, a focus on thematic trends is ever more important,” Barber says. The bank to the boardroom The road to private equity often starts in investment banking. Gorter worked at Citi, Barber was at Gresham Partners, while Franklin and Woods did stints at Macquarie Capital. Some, like TPG Capital principal Dan Lahav, built their careers abroad. Advertisement He joined the private equity shop in January 2020 after nearly four years with investment bank Allen & Company in New York, where he worked on deals like Snapchat’s initial public offering. Mr Lahav says those years in banking got him used to the rigours of dealmaking. Investment bankers move from one deal to the next at break-neck speed, which served him well when transitioning to private equity. Snapchat co-founders Bobby Murphy, left, and CEO Evan Spiegel ring the opening bell in New York Thursday, March 2, 2017. AP “Banking helped me synthesise information quickly, especially on the transactional side of things. Doing a lot of deals, that is how you get the best experience and learn the most,” he says. The main difference is how reactive banking can be compared to private equity. While banks are quick to jump on what clients want, Lahav says private equity execs need to think more like chief executives. “A lot of the table stakes are the same, but private equity is proactive. You are not just thinking transactionally. You are thinking like a future business owner,” Lahav says. Advertisement The gender gap The Australian Investment Council found women accounted for just 6 per cent of senior executives – partners and managing directors – in private equity in 2022, up from 2 per cent in 2019. In junior ranks, women represented 34 per cent last year, from 22 per cent in 2019, but private equity leaders admitted they could do more to broaden the pool from which they hire. “The facts would suggest we are improving in private equity, but there is still some way to go in the senior level,” Woods says. Gorter argues women add different perspectives, like during the execution of a deal and in the boardroom. “And I think that is becoming much more understood. It is nice to have others around you to have that kind of relationship with,” Gorter says. Advertisement As corporate Australia welcomes the next generation of leaders, the AFR Weekend got to know five of the country’s private equity stars under the age of 35. Katie Woods, managing director, Adamantem Capital Katie Woods, managing director, Adamantem Capital. Rhett Wyman Woods joined Adamantem in 2015 after roughly four years at Macquarie Capital. The University of Queensland graduate counts Adamantem managing director Rob Koczkar as a mentor. She highlighted her work on investments in Linen Services Australia and haircare company NAK Hair as the most memorable since joining Adamantem in 2015. She sits on the board of both these portfolio companies. Advertisement When she is not cobbling together deals, she is plugged into the University of Queensland Sydney Alumni Council. Woods is also learning French and listens to the Coffee Break French podcast to brush up her skills. She is also curious about the stories of company founders and is a regular listener of How I Built This. “It is part of the job I love the most. Getting to meet founders, hearing their stories and how they built it,” she says. Sam Franklin, director, EQT Partners Sam Franklin, director, EQT Partners. Louie Douvis