WEBVTT

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Welcome back to The Rate of Change with York

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Wealth Management. As advisors to some of the

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wealthiest families in the country, The Rate

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of Change is a podcast designed to help you in

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the pursuit of building long -term wealth through

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the insights of some of the brightest minds in

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asset management. I'm your host, Murdoch Gaddy,

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and in today's broadcast, we're joined by Johan

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Kenny, Investment Director at All Cap Securities.

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Johan's background spans capital markets, structured

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credit, and private equity, having held senior

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roles at ANZ ING Fitch Ratings. Equifax and Arowana.

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But what struck me most in this conversation

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is just how risk averse and methodical he is.

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This is shaped in part by his early career navigating

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capital markets during, wait for it, the Sri

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Lankan Civil War. In this episode, Johan breaks

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down the macro environment for construction in

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Australia, highlighting the... between the private

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sector development and government -funded infrastructure

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projects, particularly in the area of essential

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services in water projects, which is tied to

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long -term public service delivery. In saying

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that, in today's... We're doing something a little

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bit different. Most listeners have heard a lot

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of our guests have been managed funds, which

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is an interesting structure to work with. But

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today we're looking at a means of working with

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companies via a special purpose vehicle or an

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SPV. This conversation really does cover a lot

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from deal structure and risk management to how

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Orcap thinks about governance. cash flow, timing,

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and really thinking about when investors get

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involved, as the expression goes, you never sell

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a good business, you retain it. But when investors

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are involved, you really need to create pathways

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to help those investors off ramps to exit out

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to get some capital back. As always, this Rockcast

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is made for entertainment purposes only. I encourage

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you to listen to the disclaimer at the end of

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this Rockcast and keep your feedback coming.

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You can reach me at mgatty at ywm .com .au. So

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if you found this conversation interesting, you

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want to learn more, or if there's any other guests

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that we've had on, you want to work out, you

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know, how's this. fit with your portfolio, how

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much to allocate, then please reach out to me

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directly and we can work with you in ensuring

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the assets in your portfolio are right for you.

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So with that being said, I hope you enjoyed this

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conversation as much as I did. So sit back, relax

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and enjoy. Johan Kenny, welcome to The Rate of

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Change with York Wealth Management. Great to

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be here, Murdoch. Great to have you here, Johan.

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Why don't we begin things like we always do and

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can you please tell everyone a little bit about

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yourself? So who's Johan and how are you going

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to finance? Yeah, sure. So I guess I started

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like... all financial professionals in a different

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career. So my career began at Imperial College

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London, where I earned an honours degree in mechanical

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engineering. I specialised in nuclear reactor

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technology, specifically nuclear reactor cooling

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systems. That academic foundation really instilled

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in me a deep appreciation for systems thinking,

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you know, modelling failure modes, designing

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layered redundancies and quantifying sort of

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tail risk. And these principles continue to guide

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sort of how I approach financial structuring

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and credit today. My professional career then

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started at State Engineering Corporation in Sri

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Lanka, where I designed stabilization platforms

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for four guns on fast attack naval vessels. And

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this was during Sri Lanka's civil war. This work

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in control systems executing in high volatile

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environments sharpened my focus on reliability

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engineering and real time risk mitigation. Again,

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skills that translated naturally into finance.

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I then entered the financial sector via the investment

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bank. It was an IMF on lending institution, a

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development bank in Sri Lanka called DFCC, where

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I helped develop corporate bond trading models

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to bring liquidity into Sri Lanka's underdeveloped

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debt capital markets. That work seeded my lifelong

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interest in market structure, price discovery,

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and potentially piqued my interest in investor

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psychology. After earning my master's in banking

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at UNSW, I joined Russell Investments and then

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moved to ANZ Insto, where I originally instructed

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financing for institutional real estate. Then

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moved to ING Investment Management, where I developed

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sort of relative value tools based on implied

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default probabilities derived from CDS pricing,

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you know, help guide sort of security selection,

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trading strategy and global credit mandates.

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And then I sort of moved to the dark side. I

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joined Fitch Ratings, where I covered sectors

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from property and transport to packaging and

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logistics, and later became chief ratings analyst

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at Equifax, where I led a team of circa 20 people

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and launched Equifax's first public rating, which

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is kind of like the equivalent to the point -in

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-time ratings that the big four rating agencies,

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the big three rating agencies provide. And then

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I developed sort of their mid -market. risk index

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as well for you know to track construction risk.

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I also built machine learning based credit models

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for a New Zealand bank specializing in lending

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to the dairy sector. I drew on my sector expertise

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from sort of raiding Fonterra, the world's largest

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dairy exporter to inform the models and the treatment

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of risk particularly my understanding of the

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volatility structures of sort of farm gate milk

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price. And then I sort of moved to Arowana, Arowana

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International, where I specialized in special

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seats credit. I raised debt capital for distressed

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businesses, led operational turnarounds, executed

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sort of exits from VA, voluntary administration.

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And I applied machine learning there to optimize

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liquidity and overheads in the firms under administration.

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So that really sort of helped manage and triage

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cash flows for businesses that were sort of.

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in crisis um let's still unpack there let's still

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unpack there where do we start but i think um

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i want to ask you about did you say you started

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your essentially your career and knowledge bank

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as an engineer in essentially the nuclear program

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right and arms program during the sri lankan

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civil war did i hear that correctly No, I think

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there's a juxtaposition of two concepts there.

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But so I studied nuclear reactor technology at

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uni and there it was basically about cooling

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systems. So we studied things like, you know,

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disasters like Three Mile Island, Chernobyl and

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effectively, you know, how systems, cooling systems

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fail. and how to mitigate that risk and also

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how to build systems robustly so that we avoid

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the tail risk associated with the critical failures

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that lead to critical failures. In Sri Lanka,

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Sri Lanka went through a couple of decades worth

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of civil war. And there, when I went back to

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Sri Lanka, I was working for a company called,

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well, it's a government. body called the State

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Engineering Corporation, which is the civil arm

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of their military engineering at the time. And

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there they were developing, they were modifying

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vessels from all over the world, you know, to

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cope with the behavior of the suicide bombers.

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um in the north of the country so uh they you

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know they required for example things like israeli

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doras which are fast attack vessels uh and they

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retrofitted them with um you know chinese engines

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um unfortunately what happened was there was

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a mismatch in the power and the the the steering

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capability of the vessel um and so the gunners

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weren't able to properly target um you know these

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um these these attacking vessels. So what they

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basically had to do was to build stabilization

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platforms that allowed them to, so again, feedback

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control systems, which is what I had effectively

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trained on for cooling systems, but they're still

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feedback control systems. So yeah, we built gyro

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-based stabilization platforms for the four gunners

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in those vessels. That was my first project as

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a trainee engineer. Yeah, right. Those gyro systems

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are phenomenal when you're running a boat, you

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want to go deep sea fishing, but the applications

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for, you know, war and protecting your country,

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right? You know, that's quite fascinating. But

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look, I've said it once, I've said it a thousand

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times. The reason why I like asking that question,

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like, you know, who are you? Where did you come

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from? You know, where are you going through?

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Like, as you mentioned today, right? Your job

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is essentially to have a project and mitigate

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against the risk, right? But, you know, but you

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as a human being. you know where you've come

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from as a what's the expression um good times

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create weak men weak men create hard times hard

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times you know create good men there's something

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like that that always gets discussed and i just

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find it very interesting that your background's

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essentially you know nuclear problem solving

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you know risk mitigation and but you essentially

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cut your teeth in a very very difficult circumstance

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do you think that's really shaped How you think

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about looking at problem solving and assets and

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entering into, I don't know, any project? Has

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that really shaped how you think and behave and

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make decisions? Yeah, I think there were two

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fundamental, I guess, components to my thought

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process and the blueprint of the way I think

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that we're influenced both by the circumstances.

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as well as my training. So that's systems oriented,

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remembering, you know, just understanding that

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everything's connected and optimization really

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is a multifaceted. you know, problem of solving,

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you know, a sequence of partial derivatives,

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right? So that's rather than sort of linear thinking

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and isolating and trying to understand, well,

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if I just change this variable, how's that going

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to happen in isolation? So not really appreciating

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not just the correlation risk, but how correlation

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itself changes and the structure of correlation

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changes as risk changes, as the system changes.

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So that's the first thing. But the second thing

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is always to keep the users well -being in mind

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as the first priority. And whether that's a business,

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trying to keep a business afloat, an insolvency,

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a business in insolvency, going through that

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sort of process and trying to manage cash flows

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where you're trying to optimize your overheads

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or making sure that a business is able to repay

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its debt on time in full or an instrument is

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able to deliver its returns. Again, those are

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the two main sort of takeaways, I think. yeah

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and then when you're looking at you know problems

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you probably since you know you said you studied

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all the nuclear reactor disasters right and i

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find that quite interesting uh for two two folds

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you know why did it happen it could have been

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prevented you're talking about systems and then

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secondly um when you're talking about infrastructure

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projects you know when was the iphone invented

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you know i mean like technology is moving so

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quickly right so how do you ensure that these

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mega structures that are built using, you know,

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tech that's out of, I don't know, some movie

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from the 1990s, right? You know, with these big

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right red buttons and everything, you know, that

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actually work today. So like, you know, take

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Fukushima, right? Please tell me for the love

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of God that you would not have stuck the generators

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on the basement floor when essentially they're

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prone to earthquakes and tsunamis and the thing

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gets flooded and all of a sudden the sumps don't

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work, right? Yeah, listen, it's easy to identify

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this stuff in retrospect, but remember that they

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had a seawall that prevented or protected that

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reactor from tsunamis up to, I think it was about

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10 meters, and the tsunami that actually hit

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was 15 meters, right? So, you know, you could...

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equally blame the height of the wall as being

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the main thing. But a natural place for generators

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is lower because you don't want them higher because

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if you put them on a structure, there's more

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vibration from earthquakes. So it's easy to,

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you know, it was an earthquake first and then

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the tsunami, right? So it could have been the

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earthquake that destroyed generators if they

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were in an elevated position and cracked the

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structures that they were on. it's easy to point

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a finger and isolate but always important to

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think about these things in a connected way so

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with ai now i think we're discussing it you know

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just before we jumped on um how fascinating that

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is and god you have to love chat gpt but you

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can use ai now to essentially um you know help

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in that problem solving process so you know Is

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that something that you quite enjoy doing as

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well? Has that shaped how you think and problem

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solve these things? Yeah, so absolutely. So I

00:13:47.860 --> 00:13:51.039
am a little bit of a technocrat. So after I sort

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of finished my master's in banking, I jumped

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in the investment bank. So I invested in management

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at ING and there I started the CFA and finished

00:13:59.399 --> 00:14:02.639
the CFA at ING. But I was still not satisfied.

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Once I worked at a rating agency and I understood,

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again, going back to this sort of, human psychology

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and the way people anchor and make decisions

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and how fixed and narrow the sort of parts the

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solution parts are and the inadequacy of the

00:14:20.179 --> 00:14:24.120
exploration of solution space i jumped into um

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you know this this concept of of big data um

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this was sort of uh you know in 2014 2015 long

00:14:32.120 --> 00:14:37.120
before it was called you know ai right um And

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at that time, I started sort of exploring and

00:14:40.559 --> 00:14:43.320
it was just it's a statistical application. So

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I was applying sort of these statistical approaches

00:14:46.000 --> 00:14:49.860
to credit risk. And that's when I sort of did

00:14:49.860 --> 00:14:53.179
that project for the New Zealand Bank to effectively

00:14:53.179 --> 00:15:01.059
automate their risk assessment process. But the

00:15:01.059 --> 00:15:05.679
applications of machine learning really. I guess,

00:15:05.820 --> 00:15:13.580
demonstrate and I think lay bare how limited

00:15:13.580 --> 00:15:17.659
we are as a species in terms of exploring a solution

00:15:17.659 --> 00:15:22.559
space. And so I, you know, jumped on the bandwagon

00:15:22.559 --> 00:15:25.940
of a PhD now and I'm doing a PhD in applied statistics,

00:15:26.299 --> 00:15:28.519
specializing in machine learning applications

00:15:28.519 --> 00:15:34.519
in finance and published a paper already. publishing

00:15:34.519 --> 00:15:37.320
my second paper now, but I'm focusing on Bayesian

00:15:37.320 --> 00:15:40.519
statistics, which are sort of a space where,

00:15:40.539 --> 00:15:43.080
you know, you're effectively learning the structure

00:15:43.080 --> 00:15:45.559
of uncertainty and then making projections about

00:15:45.559 --> 00:15:50.019
that, but in real time. So absolutely, you know,

00:15:50.019 --> 00:15:53.399
agree with you that things are moving super fast,

00:15:53.460 --> 00:15:55.720
but as a species, I don't think we're designed

00:15:55.720 --> 00:15:59.830
to cope with that really well. It's fascinating

00:15:59.830 --> 00:16:02.190
how it all works. And then, well, that takes

00:16:02.190 --> 00:16:04.590
us into where you are today. So all caps securities.

00:16:04.730 --> 00:16:08.250
I should say, I've said a couple of times that

00:16:08.250 --> 00:16:11.570
we love it when people recommend the guests to

00:16:11.570 --> 00:16:13.850
come on and great strategies that we haven't

00:16:13.850 --> 00:16:16.649
discussed. I want to crack into how you're doing

00:16:16.649 --> 00:16:18.129
things in the strategy, but I just want to give

00:16:18.129 --> 00:16:21.830
a thank you to Josh Manning. Manning Asset Management

00:16:21.830 --> 00:16:24.529
for introducing All Cap Securities a couple of

00:16:24.529 --> 00:16:26.110
years ago. So I've been following some of the

00:16:26.110 --> 00:16:28.690
projects you've been doing. But for people not

00:16:28.690 --> 00:16:33.230
familiar with All Cap Securities, you know, who's

00:16:33.230 --> 00:16:36.049
All Cap Securities? You know, what's the origin?

00:16:36.210 --> 00:16:38.269
What's the philosophy? And, you know, what are

00:16:38.269 --> 00:16:42.070
you trying to achieve? So All Cap, I think, was

00:16:42.070 --> 00:16:48.330
born out of... The idea of acquiring this particular

00:16:48.330 --> 00:16:50.870
transaction I'm working on, it was born out of

00:16:50.870 --> 00:16:54.190
the idea of acquiring rather than brokering the

00:16:54.190 --> 00:17:00.509
capital sourcing for this transaction. But I

00:17:00.509 --> 00:17:04.170
think what Orcap really represents is a collection

00:17:04.170 --> 00:17:10.150
of like -minded experts working collectively

00:17:10.150 --> 00:17:14.079
in... you know, that systematic integrated way

00:17:14.079 --> 00:17:17.599
to deliver really outstanding solutions for investors.

00:17:17.880 --> 00:17:20.880
Now, I know that that sounds quite sort of like

00:17:20.880 --> 00:17:24.579
a Macca's tagline, but I think it's difficult

00:17:24.579 --> 00:17:31.640
to appreciate how important integration and connectedness

00:17:31.640 --> 00:17:34.700
is to execution. I mean, you can think of it

00:17:34.700 --> 00:17:37.869
as, you know, two sides of a chessboard start

00:17:37.869 --> 00:17:40.730
with the same number of pieces and the person

00:17:40.730 --> 00:17:43.710
that or the side that usually wins is the one

00:17:43.710 --> 00:17:47.650
that can better integrate and coordinate um that

00:17:47.650 --> 00:17:49.630
execution piece and if you think in terms of

00:17:49.630 --> 00:17:55.410
well um success is you know really deep analysis

00:17:55.410 --> 00:17:59.950
making sure that you've structured things um

00:17:59.950 --> 00:18:03.049
in a way that protects in an ex -ante sort of

00:18:03.049 --> 00:18:06.240
way And then from a next post sort of thing,

00:18:06.299 --> 00:18:08.460
it then becomes sort of executing the financing

00:18:08.460 --> 00:18:11.380
and making sure that your execution, the operating

00:18:11.380 --> 00:18:14.140
piece is done. What Orcap has done is it has

00:18:14.140 --> 00:18:20.339
hired a bunch of experts at each phase with 20

00:18:20.339 --> 00:18:24.059
plus years experience each. So hundreds of years

00:18:24.059 --> 00:18:27.220
collectively in each of these diverse areas,

00:18:27.259 --> 00:18:30.779
all talking to each other in a very sort of,

00:18:30.779 --> 00:18:35.230
through sort of. a quarterback for each of these

00:18:35.230 --> 00:18:38.549
transactions. And so we're able to really deliver

00:18:38.549 --> 00:18:42.930
outsize transactions in terms of scale compared

00:18:42.930 --> 00:18:46.509
to the size of team that we have purely because

00:18:46.509 --> 00:18:49.430
of the accumulated experience and expertise we

00:18:49.430 --> 00:18:53.190
have in that. I believe that's the real differentiator

00:18:53.190 --> 00:18:57.109
for Wacom. I'm just going to say, what does that

00:18:57.109 --> 00:18:59.109
mean, like, in simple terms? Like, as an example,

00:18:59.190 --> 00:19:00.890
right? So the majority of our guests that we've

00:19:00.890 --> 00:19:02.829
had on have essentially been, you know, managed

00:19:02.829 --> 00:19:05.170
funds, which a lot of investors completely understand.

00:19:05.430 --> 00:19:07.910
You know, managed funds, looking at an asset

00:19:07.910 --> 00:19:09.609
class, we're trying to get exposure. We're essentially,

00:19:09.710 --> 00:19:11.930
you know, playing fantasy Premier League with

00:19:11.930 --> 00:19:13.190
fund managers. You know, we're looking for a

00:19:13.190 --> 00:19:14.970
striker. We're looking for a defender. You know,

00:19:15.009 --> 00:19:16.109
what are we doing? Looking for someone in the

00:19:16.109 --> 00:19:18.289
middle just to tick along all the time. And they

00:19:18.289 --> 00:19:20.269
understand that, you know, managed fund, you

00:19:20.269 --> 00:19:23.059
can pick them up via platform, go direct. And

00:19:23.059 --> 00:19:26.099
then essentially we're hiring some of the brightest

00:19:26.099 --> 00:19:27.980
minds to essentially achieve a particular asset

00:19:27.980 --> 00:19:31.160
class. So the other reason why I'm getting Orcap

00:19:31.160 --> 00:19:33.960
and yourself on is you do things a bit differently

00:19:33.960 --> 00:19:37.160
about how you structure it. So what I'm trying

00:19:37.160 --> 00:19:39.380
to understand is how is the structure different

00:19:39.380 --> 00:19:43.579
to a managed fund? And what is the asset class?

00:19:43.700 --> 00:19:45.819
What's the underlying investment that you're

00:19:45.819 --> 00:19:49.140
targeting for these businesses? Sure. So I guess

00:19:49.140 --> 00:19:53.579
what we're trying to do right now is to explore

00:19:53.579 --> 00:19:58.799
that opportunity of leverage buyouts for sort

00:19:58.799 --> 00:20:05.099
of Gen Xers and baby boomers, you know, that

00:20:05.099 --> 00:20:06.920
are effectively trying to exit their business,

00:20:07.140 --> 00:20:11.579
but don't really have a willing sort of family

00:20:11.579 --> 00:20:14.779
member or members that want to continue to grow

00:20:14.779 --> 00:20:19.599
that business. you know or end um it could be

00:20:19.599 --> 00:20:23.339
a scenario where they um they believe that listen

00:20:23.339 --> 00:20:26.140
um you know they just don't have the remit to

00:20:26.140 --> 00:20:30.099
to to effectively take that business to the next

00:20:30.099 --> 00:20:32.259
level and they want a professional manager so

00:20:32.259 --> 00:20:38.299
you could think of this as a potential pe style

00:20:38.299 --> 00:20:42.839
sort of you know You could play where you sort

00:20:42.839 --> 00:20:49.220
of generate a fund style investment. But what

00:20:49.220 --> 00:20:52.079
we've effectively done is we've gone ahead and

00:20:52.079 --> 00:20:53.920
for this particular transaction, this first one

00:20:53.920 --> 00:20:56.160
that we're working on, we've effectively gone

00:20:56.160 --> 00:20:58.740
ahead and raised debt from NAB. So we've structured

00:20:58.740 --> 00:21:02.299
that, raised bank debt at two times, very conservative.

00:21:03.759 --> 00:21:05.500
And now we're saying, listen, we're going to

00:21:05.500 --> 00:21:09.880
invest directly in the equity. You can come in

00:21:09.880 --> 00:21:11.920
as a co -investor. So you're not investing in

00:21:11.920 --> 00:21:13.319
our fund. You're not paying us any management

00:21:13.319 --> 00:21:15.640
fees. We're providing the professional management

00:21:15.640 --> 00:21:18.660
to run this business. You're coming in as a co

00:21:18.660 --> 00:21:21.859
-investor to invest in this. What we're going

00:21:21.859 --> 00:21:23.859
to do though, so this investment effectively

00:21:23.859 --> 00:21:27.779
involves two payments. There's a 70 % upfront

00:21:27.779 --> 00:21:31.099
to the vendor and then there's 30 % out later.

00:21:31.380 --> 00:21:34.099
We're holding... the equity capital for that

00:21:34.099 --> 00:21:38.900
30%. And it's alignment because we have to then

00:21:38.900 --> 00:21:42.839
ensure that we deliver on those forward EBITDA

00:21:42.839 --> 00:21:46.180
estimates and crystallize those. That's the execution

00:21:46.180 --> 00:21:48.900
piece. And that's why I completely believe in

00:21:48.900 --> 00:21:51.660
my team, in our team at Orcap to be able to deliver

00:21:51.660 --> 00:21:55.619
those. We've got some brilliant, you know, guys

00:21:55.619 --> 00:22:00.940
out of Grocon, you know, 20. 25 plus years in

00:22:00.940 --> 00:22:04.859
terms of experience managing engineering services.

00:22:05.299 --> 00:22:08.180
We've got guys, you know, from professional services,

00:22:08.400 --> 00:22:12.819
you know, that have done FP &A for, you know,

00:22:12.819 --> 00:22:15.640
top Australian businesses. And with that kind

00:22:15.640 --> 00:22:18.839
of professional expertise, I believe we have

00:22:18.839 --> 00:22:20.799
very strong chance of delivering those forward

00:22:20.799 --> 00:22:23.819
estimates. If we do that, when we get back into

00:22:23.819 --> 00:22:27.779
secondaries to raise the remaining equity, we'll

00:22:27.779 --> 00:22:30.579
dilute less than, than if we go out at the current

00:22:30.579 --> 00:22:33.619
price. So we're offering - So this isn't, but

00:22:33.619 --> 00:22:37.079
just for - It's a co -investment. It's an SPV.

00:22:37.119 --> 00:22:40.700
So it's a special purpose vehicle. Yes. Right?

00:22:41.779 --> 00:22:45.119
That is on a case -by -case basis. So it's not

00:22:45.119 --> 00:22:48.480
in a fund. So you have, as you mentioned before,

00:22:48.539 --> 00:22:50.200
so I'm just trying to understand it at the same

00:22:50.200 --> 00:22:52.559
time, you know, as explain it. Look, if I can

00:22:52.559 --> 00:22:54.279
explain it, everyone can understand it, right?

00:22:55.660 --> 00:22:59.420
So the SPV, so you find essentially a business,

00:22:59.539 --> 00:23:01.660
a legacy business, you know, where someone's

00:23:01.660 --> 00:23:04.799
built a fantastic business in your particular

00:23:04.799 --> 00:23:07.799
asset class. What's the asset class? So this

00:23:07.799 --> 00:23:12.740
is a corporate that operates in engineering services,

00:23:12.859 --> 00:23:15.839
delivery of infrastructure for government clients.

00:23:16.660 --> 00:23:20.099
Okay, right. So that's a very big moat to get

00:23:20.099 --> 00:23:23.309
into, hard to get into, you know. very difficult

00:23:23.309 --> 00:23:26.029
to remove right so okay and it's been around

00:23:26.029 --> 00:23:29.309
for a long time was it yeah 20 30 years 30 year

00:23:29.309 --> 00:23:31.269
old business yeah so very high entry barriers

00:23:31.269 --> 00:23:37.640
as you said um right okay so um spv You're having

00:23:37.640 --> 00:23:40.460
a conversation with this particular family. It's

00:23:40.460 --> 00:23:42.240
almost like the same conversation we have in

00:23:42.240 --> 00:23:45.000
clients which work with these types of businesses

00:23:45.000 --> 00:23:47.740
where it's an intergenerational wealth problem.

00:23:47.960 --> 00:23:50.339
You have children. There might be eight kids.

00:23:50.400 --> 00:23:52.819
There might be two or one that may or may not

00:23:52.819 --> 00:23:53.980
want to stay in the business. They may want to

00:23:53.980 --> 00:23:55.680
stay in a board capacity. They physically might

00:23:55.680 --> 00:23:59.339
not do the work. Is that the scenario here or

00:23:59.339 --> 00:24:01.460
is the scenario they're looking to grow and scale

00:24:01.460 --> 00:24:03.700
and they just don't know how? I'm just trying

00:24:03.700 --> 00:24:07.009
to understand. You know, how is, what is this

00:24:07.009 --> 00:24:11.390
deal? Yeah, sure. So just a point of clarification

00:24:11.390 --> 00:24:15.029
though. So you're right about the SPV, but what

00:24:15.029 --> 00:24:17.230
we're planning on doing is it's transaction by

00:24:17.230 --> 00:24:19.509
transaction SPV. This goes back to my risk management,

00:24:19.589 --> 00:24:24.029
right? So we're not co -mingling sort of additional

00:24:24.029 --> 00:24:29.990
businesses into this single SPV. It's not sort

00:24:29.990 --> 00:24:34.450
of our base case, right? What that means is that

00:24:34.450 --> 00:24:38.609
it does give us the flexibility to potentially

00:24:38.609 --> 00:24:43.450
roll up, scale up as part, but we're effectively

00:24:43.450 --> 00:24:46.089
not targeting that sort of, we're targeting sort

00:24:46.089 --> 00:24:48.869
of initially organic growth and all the returns

00:24:48.869 --> 00:24:51.009
and everything that we've sort of calculated

00:24:51.009 --> 00:24:55.930
and I guess we're putting out to market are based

00:24:55.930 --> 00:25:01.079
on that. linear growth, not geometric growth,

00:25:01.200 --> 00:25:03.539
not exponential, you know, just sort of that

00:25:03.539 --> 00:25:07.759
additive growth, which is effectively geometrically

00:25:07.759 --> 00:25:10.099
reducing technically because as the business

00:25:10.099 --> 00:25:14.559
grows. So that SPV will only contain that single

00:25:14.559 --> 00:25:17.039
business at this particular point in time. That's

00:25:17.039 --> 00:25:18.779
not to say that we haven't got the flexibility

00:25:18.779 --> 00:25:21.119
to add additional businesses, but they will obviously

00:25:21.119 --> 00:25:24.000
be complementary, adjacent, potentially, you

00:25:24.000 --> 00:25:26.779
know, new exploring markets that aren't competing

00:25:26.779 --> 00:25:30.500
directly with this one. To your second point,

00:25:32.839 --> 00:25:36.640
yes, you're 100 % right. So where the vendors

00:25:36.640 --> 00:25:41.240
effectively find themselves at a bit of a juncture,

00:25:41.339 --> 00:25:46.160
they see sort of competitors have potentially

00:25:46.160 --> 00:25:50.319
grown through, it could be through mergers, it

00:25:50.319 --> 00:25:54.180
could be through a PE effectively taking them.

00:25:54.569 --> 00:25:57.069
um you know public or you know going through

00:25:57.069 --> 00:25:59.849
the private to public sort of path or it could

00:25:59.849 --> 00:26:02.190
be acquisitive growth um and then they've sort

00:26:02.190 --> 00:26:03.789
of gone listen we just don't have the skill set

00:26:03.789 --> 00:26:05.910
you know like the guys here are the principles

00:26:05.910 --> 00:26:08.910
of this business um the vendors beg your pardon

00:26:08.910 --> 00:26:11.289
are you know that they're engineers right so

00:26:11.289 --> 00:26:14.190
so they're predominantly civil engineers um you

00:26:14.190 --> 00:26:18.539
know and they've got teams of engineers that

00:26:18.539 --> 00:26:20.700
have come up from cadet level all the way up

00:26:20.700 --> 00:26:24.000
to the senior echelon so their mindset is really

00:26:24.000 --> 00:26:26.380
sort of like mine it's very risk management focus

00:26:26.380 --> 00:26:29.599
so that doesn't really lend itself to you know

00:26:29.599 --> 00:26:32.000
how do you grow this business right so we've

00:26:32.000 --> 00:26:35.470
got a team at all cap that really knows how to

00:26:35.470 --> 00:26:41.390
do that. I see my role more as the goalie, just

00:26:41.390 --> 00:26:44.490
making sure that things don't let anything through.

00:26:44.710 --> 00:26:46.890
And then we've got the forwards that are effectively

00:26:46.890 --> 00:26:49.930
doing all the, I guess, the planning and the

00:26:49.930 --> 00:26:53.630
strategic elements. And I'm just making sure

00:26:53.630 --> 00:26:56.269
that none of that then feeds back through to

00:26:56.269 --> 00:26:59.789
structural change in the risk profile. Rule number

00:26:59.789 --> 00:27:01.710
one, make money. Rule number two, don't lose

00:27:01.710 --> 00:27:03.869
money. Sorry. I think it's the other way around.

00:27:03.890 --> 00:27:07.230
Rule number one, don't lose money. Rule number

00:27:07.230 --> 00:27:09.029
one, don't lose money. Rule number two, don't

00:27:09.029 --> 00:27:12.410
lose money. Well, why don't we cover the big

00:27:12.410 --> 00:27:15.390
picture macro? Because look, for myself, I understand

00:27:15.390 --> 00:27:17.750
essentially how the market is, but for people

00:27:17.750 --> 00:27:20.490
that have never heard about this particular space,

00:27:20.930 --> 00:27:25.410
what is the big picture on this? Why does this

00:27:25.410 --> 00:27:29.230
particular opportunity exist? So maybe just cover

00:27:29.230 --> 00:27:31.670
what is the asset class? Where are you targeting?

00:27:32.009 --> 00:27:36.470
What is this on a big picture perspective? Sure.

00:27:36.569 --> 00:27:40.490
Okay. So in terms of an orientation, I think

00:27:40.490 --> 00:27:43.369
the simple thing is maybe I'll just talk a little

00:27:43.369 --> 00:27:47.700
bit about what industry the business is in. what

00:27:47.700 --> 00:27:51.400
it does functionally, and then potentially describe

00:27:51.400 --> 00:27:54.519
sort of the macro thematic that it sort of fits

00:27:54.519 --> 00:27:57.720
into and why this makes sense at this particular

00:27:57.720 --> 00:28:03.079
point in time, right? So what it does, so it's

00:28:03.079 --> 00:28:08.519
$160 to $170 million sort of revenue -based engineering

00:28:08.519 --> 00:28:11.180
services firm. Their clients are predominantly

00:28:11.180 --> 00:28:17.920
councils, of which... I think in a previous conversation

00:28:17.920 --> 00:28:20.519
you and I were having, I think we identified

00:28:20.519 --> 00:28:23.140
that there were over 100 of these, maybe over

00:28:23.140 --> 00:28:25.880
150 of them. It's a very fragmented customer

00:28:25.880 --> 00:28:31.579
base. And so it's a fragmented customer base.

00:28:31.880 --> 00:28:35.059
It's a customer base that's very keen not to

00:28:35.059 --> 00:28:37.420
be in the news for the wrong reasons. So they're

00:28:37.420 --> 00:28:41.769
very keen to ensure that... you know, businesses

00:28:41.769 --> 00:28:44.609
that they've hired to deliver infrastructure

00:28:44.609 --> 00:28:47.730
don't fail, that their supply chains don't fail.

00:28:48.470 --> 00:28:51.190
So, you know, they're keen to sort of ensure

00:28:51.190 --> 00:28:53.589
the liquidity and the solvency of these businesses.

00:28:53.910 --> 00:28:56.609
So the entry barrier there is, you know, they've

00:28:56.609 --> 00:28:58.390
got to have the balance sheet, right? So there's

00:28:58.390 --> 00:29:00.190
these New South Wales, and this is in a former

00:29:00.190 --> 00:29:02.329
life when I was at Equifax, this was what that

00:29:02.329 --> 00:29:04.450
construction index and that risk index that we

00:29:04.450 --> 00:29:06.210
put together was all about, was just sort of

00:29:06.210 --> 00:29:10.319
tracking. how businesses that we rated at a particular

00:29:10.319 --> 00:29:13.859
point in time, how they fared on an ongoing basis.

00:29:14.019 --> 00:29:18.559
So it was really about making sure that the government,

00:29:18.680 --> 00:29:22.319
when they used their metrics, were using metrics

00:29:22.319 --> 00:29:26.599
that supported that prospective rating migration

00:29:26.599 --> 00:29:29.619
thesis. And so the government effectively applies

00:29:29.619 --> 00:29:32.740
these metrics to ensure that businesses that...

00:29:32.990 --> 00:29:34.470
you know, get into these contracts and bid on

00:29:34.470 --> 00:29:36.869
these contracts don't fail. So you can't, you

00:29:36.869 --> 00:29:38.890
know, you can't bid on multi -billion dollar

00:29:38.890 --> 00:29:40.890
contracts unless you've got the right size. So

00:29:40.890 --> 00:29:43.190
these businesses can't, like if you're 160, 170

00:29:43.190 --> 00:29:45.069
million dollar business, you've got a certain

00:29:45.069 --> 00:29:47.089
balance sheet, you can't bid on billion dollar

00:29:47.089 --> 00:29:49.609
contracts. So these guys only bid on like, you

00:29:49.609 --> 00:29:52.109
know, 20 to maybe 100 million dollar contracts.

00:29:52.390 --> 00:29:55.369
That space isn't really attractive for the larger

00:29:55.369 --> 00:29:57.940
players, the billion dollar. market cap players

00:29:57.940 --> 00:29:59.960
right so the other the multi -million dollar

00:29:59.960 --> 00:30:02.460
market capital it doesn't really sort of you

00:30:02.460 --> 00:30:03.980
know it doesn't subscribe to their cost base

00:30:03.980 --> 00:30:06.740
it doesn't meet their return hurdles and the

00:30:06.740 --> 00:30:08.539
smaller players can't effectively participate

00:30:08.539 --> 00:30:10.140
in that space because they just don't have the

00:30:10.140 --> 00:30:11.579
balance sheet they don't meet those requirements

00:30:11.579 --> 00:30:14.259
so there's this nice little sort of corridor

00:30:14.259 --> 00:30:17.299
sweet spot so to speak uh for these businesses

00:30:17.299 --> 00:30:19.720
about who are your main competitors who are the

00:30:19.720 --> 00:30:21.960
main competitors you've got the deck mills, the

00:30:21.960 --> 00:30:25.059
Abigail D's. Sometimes you see like a, like a

00:30:25.059 --> 00:30:27.400
downer coming in for particular contracts, but,

00:30:27.460 --> 00:30:32.059
but it's really sort of those 200, sorry, 350

00:30:32.059 --> 00:30:36.019
to sort of like 500 revenue based businesses.

00:30:36.180 --> 00:30:39.019
It's usually. Besides this particular company,

00:30:39.039 --> 00:30:41.140
are there any other, you know, family orientated

00:30:41.140 --> 00:30:46.099
competitors out there? So not directly, not ones

00:30:46.099 --> 00:30:50.859
that participate in this niche of. water infrastructure

00:30:50.859 --> 00:30:55.680
that they specialize in. So this is water infrastructure

00:30:55.680 --> 00:30:58.700
for local councils. And look, we're talking about

00:30:58.700 --> 00:31:00.960
Chach EPT. Always check your facts, right? Joe

00:31:00.960 --> 00:31:04.640
Rogan style. So I just thank you, Chach EPT.

00:31:04.799 --> 00:31:07.099
So in New South Wales, local council authorities

00:31:07.099 --> 00:31:13.240
say there is in total 137 councils. So general

00:31:13.240 --> 00:31:17.119
purpose councils, 128 county councils and nine.

00:31:17.279 --> 00:31:20.869
So essentially those are the clients. Yeah, I

00:31:20.869 --> 00:31:25.250
think it's probably slightly less because I think

00:31:25.250 --> 00:31:27.410
you're thinking about sort of like local government

00:31:27.410 --> 00:31:30.690
areas that have the budgets for these larger

00:31:30.690 --> 00:31:32.829
pieces of infrastructure. But I think you're

00:31:32.829 --> 00:31:39.829
in the right scale. Yeah, like right order of

00:31:39.829 --> 00:31:43.170
magnitude there in terms of the hundreds. But

00:31:43.170 --> 00:31:45.549
even if you think about it as in terms of hundreds

00:31:45.549 --> 00:31:51.150
of councils. Again, we talked about sort of entry

00:31:51.150 --> 00:31:54.849
barriers and balance sheet size. So even if you

00:31:54.849 --> 00:31:57.069
talk about lots of other family businesses, sure

00:31:57.069 --> 00:31:58.910
there are family businesses, lots of engineering

00:31:58.910 --> 00:32:00.890
businesses out there, but, you know, there'll

00:32:00.890 --> 00:32:02.609
be ones that specialize in road infrastructure.

00:32:02.869 --> 00:32:06.130
There'll be ones that specialize in, you know,

00:32:06.130 --> 00:32:10.769
I don't know, potentially rail. So why doesn't,

00:32:10.890 --> 00:32:12.809
so one question is the back of my head is like

00:32:12.809 --> 00:32:15.309
Sydney Water, right? So, you know, I've discussed

00:32:15.309 --> 00:32:18.619
it before, my sister. He's the head of remuneration

00:32:18.619 --> 00:32:20.380
at Sydney Water. So, you know, always, you know,

00:32:20.420 --> 00:32:21.859
when you catch up at the barbecue, you kind of

00:32:21.859 --> 00:32:23.200
hear they're doing this, they're doing that.

00:32:23.279 --> 00:32:25.420
You know, if we're talking about water -based

00:32:25.420 --> 00:32:29.619
building infrastructure that, you know, you need

00:32:29.619 --> 00:32:32.660
to essentially live as a human being and our

00:32:32.660 --> 00:32:35.700
population is expanding, right? Doesn't this

00:32:35.700 --> 00:32:37.980
fall underneath, you know, essentially the Sydney

00:32:37.980 --> 00:32:40.220
Water remit? Like, why wouldn't they pick up

00:32:40.220 --> 00:32:43.200
the contract? Why essentially? you know, are

00:32:43.200 --> 00:32:45.160
these the other competitors getting the contract?

00:32:45.240 --> 00:32:46.900
Doesn't it fall underneath like a Sydney Water

00:32:46.900 --> 00:32:49.500
scenario? Yeah, sure. No, that's a great question.

00:32:49.579 --> 00:32:52.880
So Sydney Water works on sort of state -based

00:32:52.880 --> 00:32:55.859
infrastructure. The infrastructure we're talking

00:32:55.859 --> 00:32:59.339
about now is really sort of, I guess, infrastructure

00:32:59.339 --> 00:33:01.380
for local government councils and need to be

00:33:01.380 --> 00:33:04.000
funded by the councils. And then, you know, the

00:33:04.000 --> 00:33:06.480
state government sometimes tips some money in,

00:33:06.559 --> 00:33:09.299
federal government tips some money in, depending

00:33:09.299 --> 00:33:11.779
on how big the piece of infrastructure is. The

00:33:11.779 --> 00:33:15.119
bottom line is the clients are local governments.

00:33:15.160 --> 00:33:18.339
It's not state -based infrastructure. So, you

00:33:18.339 --> 00:33:22.599
know, to the best of my understanding, like subbing

00:33:22.599 --> 00:33:25.299
or doing work for Sydney Water, purely because

00:33:25.299 --> 00:33:27.319
Sydney, you know, the scale of those projects.

00:33:29.500 --> 00:33:33.119
They bring a lot of risk because there's, you

00:33:33.119 --> 00:33:36.119
know, there's pricing risk because there's a

00:33:36.119 --> 00:33:39.000
lot of competition from the tier ones with big

00:33:39.000 --> 00:33:41.559
balance sheets and, you know, lots of overheads

00:33:41.559 --> 00:33:44.180
that they need to feed and cover. And so they're

00:33:44.180 --> 00:33:46.119
happy to accept lower margins for longer term

00:33:46.119 --> 00:33:48.819
projects because they're sort of handholding

00:33:48.819 --> 00:33:51.160
these local governments. They get into these

00:33:51.160 --> 00:33:54.089
early contracting involvement. They have these

00:33:54.089 --> 00:33:55.809
early contracting involvement sort of mandates

00:33:55.809 --> 00:33:58.109
where they work with council to actually shape

00:33:58.109 --> 00:34:01.910
the blueprint of these projects before they actually

00:34:01.910 --> 00:34:08.989
go out to tender. Right. Okay. So theoretically,

00:34:10.090 --> 00:34:14.110
so Sydney Water is state level. And essentially

00:34:14.110 --> 00:34:20.320
these contracts are on a local council. the council

00:34:20.320 --> 00:34:22.320
the council at the end of the day is your client

00:34:22.320 --> 00:34:24.619
right so look i live in lane cove you know used

00:34:24.619 --> 00:34:26.300
to work a lot out of north sydney used to live

00:34:26.300 --> 00:34:28.500
in the area and if everyone remembers anyone

00:34:28.500 --> 00:34:30.599
lives in the on the north side you know there

00:34:30.599 --> 00:34:33.000
was a particular council member or you know the

00:34:33.000 --> 00:34:36.659
head of the uh the north sydney council and she

00:34:36.659 --> 00:34:39.659
was just anti -development like she just refused

00:34:39.659 --> 00:34:43.000
to do anything and the skyline say the same and

00:34:43.000 --> 00:34:45.179
but then all of a sudden that's changed within

00:34:45.179 --> 00:34:47.980
the past decade and now it's just boom boom boom

00:34:48.440 --> 00:34:52.260
So, if I'm understanding you correctly, if a

00:34:52.260 --> 00:34:55.079
council changed into a, right, more people coming

00:34:55.079 --> 00:34:59.119
in, we need more infrastructure to help support

00:34:59.119 --> 00:35:02.860
the growing population there or update or improve,

00:35:03.380 --> 00:35:07.619
theoretically, the council would engage a firm

00:35:07.619 --> 00:35:12.420
like the one you're acquiring to build those

00:35:12.420 --> 00:35:15.389
water -based services. Is that correct? Is that

00:35:15.389 --> 00:35:18.010
how that works? Yeah, it is. But I think, you

00:35:18.010 --> 00:35:19.730
know, you talked about the skyline, you talked

00:35:19.730 --> 00:35:22.670
about development, right? So there is, I guess,

00:35:22.809 --> 00:35:27.530
essential infrastructure. And then I guess there's

00:35:27.530 --> 00:35:30.769
infrastructure for, you know, I wouldn't say

00:35:30.769 --> 00:35:33.949
it's optional, but it's less critical, right?

00:35:34.150 --> 00:35:36.670
So let's say, for example, you know, you've got

00:35:36.670 --> 00:35:39.789
an aging sewage treatment plant that's effectively

00:35:39.789 --> 00:35:44.079
beginning to leach. undesirable chemicals into

00:35:44.079 --> 00:35:47.840
a creek or into local water environments or potentially

00:35:47.840 --> 00:35:52.019
into the ocean. Left neglected, that's going

00:35:52.019 --> 00:35:55.820
to create a crisis on, you know, material proportions.

00:35:56.320 --> 00:35:59.039
It's going to be very adverse for the community

00:35:59.039 --> 00:36:01.539
there. Health, you know, you've got people's

00:36:01.539 --> 00:36:04.480
lives at risk, you know, potentially industries

00:36:04.480 --> 00:36:09.269
losing revenue, lawsuits galore. Very different

00:36:09.269 --> 00:36:12.349
to sort of that optional infrastructure. Yeah,

00:36:12.429 --> 00:36:14.429
should we have an extra community center here

00:36:14.429 --> 00:36:17.469
or not? So delineate this a little bit from that

00:36:17.469 --> 00:36:20.610
infrastructure piece, right? You're getting adjacent.

00:36:21.190 --> 00:36:24.050
You're benefiting from the tailwinds of infrastructure

00:36:24.050 --> 00:36:26.750
because with population growth, you need to build

00:36:26.750 --> 00:36:30.190
capacity. So these sewage treatment plants, for

00:36:30.190 --> 00:36:32.230
example, need to be upgraded. The technology

00:36:32.230 --> 00:36:34.250
is constantly evolving. The infrastructure around

00:36:34.250 --> 00:36:36.090
them and the infrastructure that connects to

00:36:36.090 --> 00:36:39.010
them is changing. So their specs need to change.

00:36:39.690 --> 00:36:42.849
The space that they occupy could potentially

00:36:42.849 --> 00:36:45.429
be utilized for other things. And so they're

00:36:45.429 --> 00:36:48.250
rejigged and a new blueprint is put in place.

00:36:48.969 --> 00:36:51.269
So they're constantly evolving. But also you

00:36:51.269 --> 00:36:53.389
have to build capacity. So there are sort of,

00:36:53.389 --> 00:36:56.349
you know, as migration brings new... a population

00:36:56.349 --> 00:36:58.570
increase, the capacity of these things need to

00:36:58.570 --> 00:37:02.750
change as well. So that essential water infrastructure

00:37:02.750 --> 00:37:06.050
is the focus of this business. That's what they've

00:37:06.050 --> 00:37:09.469
been doing for 30 years. That's what they sort

00:37:09.469 --> 00:37:14.639
of... have material relationships in terms of

00:37:14.639 --> 00:37:17.099
their supply chain, in terms of their cost estimates,

00:37:17.340 --> 00:37:19.440
in terms of their expertise, the expertise and

00:37:19.440 --> 00:37:21.159
the blueprint that they've built from within

00:37:21.159 --> 00:37:23.360
the business, the schemas that they have built

00:37:23.360 --> 00:37:25.599
in terms of risk mitigation and their process

00:37:25.599 --> 00:37:27.800
in terms of bidding and contract management.

00:37:29.380 --> 00:37:32.719
Right. Just leaving the business alone for a

00:37:32.719 --> 00:37:36.900
second. Sure. Where I'm trying to understand

00:37:36.900 --> 00:37:39.980
is the risk, right? You have conversations. I

00:37:39.980 --> 00:37:42.500
also partnered with a family office that specializes

00:37:42.500 --> 00:37:44.139
in property development, right? And we have a

00:37:44.139 --> 00:37:45.619
lot of clients and fund managers or whatever

00:37:45.619 --> 00:37:48.920
that specialize in numerous different things

00:37:48.920 --> 00:37:52.860
from CBD to industrialized complexes. But I keep

00:37:52.860 --> 00:37:56.010
hearing that if you get the price... wrong or

00:37:56.010 --> 00:37:58.570
the contract wrong or essentially something wrong

00:37:58.570 --> 00:38:00.849
in the cycle you know that systemic risk can

00:38:00.849 --> 00:38:03.090
happen and something that becomes a three -year

00:38:03.090 --> 00:38:04.929
play and then you get locked down like covid

00:38:04.929 --> 00:38:08.050
right and then you read the newspaper and builders

00:38:08.050 --> 00:38:10.590
are going bankrupt all the time you know and

00:38:10.590 --> 00:38:12.510
then essentially there's a knock -on effect and

00:38:12.510 --> 00:38:14.489
it just kind of you know knocks down the line

00:38:14.489 --> 00:38:16.170
and then people kind of get hurt that are doing

00:38:16.170 --> 00:38:18.530
the trades and everything right so what i'm not

00:38:18.530 --> 00:38:21.550
maybe i'm just not uh comprehending it or maybe

00:38:21.550 --> 00:38:26.789
i am but it sounds like these government contracts

00:38:26.789 --> 00:38:30.389
aren't impacted by, is that what you're getting

00:38:30.389 --> 00:38:32.710
at? They're not essentially impacted by what

00:38:32.710 --> 00:38:34.989
happens in the private market. Like, I'm just

00:38:34.989 --> 00:38:36.309
trying to understand the risks here. Like if

00:38:36.309 --> 00:38:38.409
we just did a government contract, right. And

00:38:38.409 --> 00:38:41.110
a COVID lockdown happens, right. Does this project

00:38:41.110 --> 00:38:43.969
continue or is it just, you know, they put a

00:38:43.969 --> 00:38:45.829
pause on it and it bleeds out. I'm just trying

00:38:45.829 --> 00:38:49.449
to understand. Yeah. Yeah. How does this space

00:38:49.449 --> 00:38:51.670
work compared private compared to, you know,

00:38:51.710 --> 00:38:55.019
local government? Sure. So. Let's explore the

00:38:55.019 --> 00:38:57.099
risk universe and the components there, right?

00:38:57.139 --> 00:39:00.219
So there's execution risk, right? So let's say

00:39:00.219 --> 00:39:03.000
you take a COVID scenario. You can't get labor

00:39:03.000 --> 00:39:05.159
into that particular space. Who bears that risk?

00:39:06.019 --> 00:39:09.260
You get liquidity risk. You know, your counterparty

00:39:09.260 --> 00:39:13.219
goes broke because of adjacent issues because

00:39:13.219 --> 00:39:15.139
of COVID. Their supply chain gets locked up.

00:39:15.260 --> 00:39:18.000
Their payment cycles get locked up. They don't

00:39:18.000 --> 00:39:20.719
receive their working capital. They don't have

00:39:20.719 --> 00:39:23.440
sufficient working capital to pay you. So counterparty

00:39:23.440 --> 00:39:29.219
risk. you get the risk associated with the forward

00:39:29.219 --> 00:39:32.239
order book. Okay. So, you know, the industry

00:39:32.239 --> 00:39:35.500
sort of falls and, you know, like the construction

00:39:35.500 --> 00:39:37.340
sector, you know, you look at that crane index.

00:39:38.059 --> 00:39:40.300
I live in the Shire as well. I live in Sutherland.

00:39:41.000 --> 00:39:43.059
So I live in Sylvania, which is close to Sutherland,

00:39:43.099 --> 00:39:44.460
and we're constantly going to Granada Beach.

00:39:44.559 --> 00:39:47.550
So as I walk along. uh corolla beach or green

00:39:47.550 --> 00:39:49.349
hills beach i'm constantly counting the number

00:39:49.349 --> 00:39:51.389
of cranes because for me that's a it's a really

00:39:51.389 --> 00:39:54.130
strong measure of the activity um you know and

00:39:54.130 --> 00:39:56.650
i also look at sort of um you know how busy are

00:39:56.650 --> 00:39:58.429
the coffee shops around there and you know how

00:39:58.429 --> 00:40:02.269
many um uh youths are parked in the area so it

00:40:02.269 --> 00:40:04.550
gives me a you know a sense of well how much

00:40:04.550 --> 00:40:06.329
work is is going on here because that's really

00:40:06.329 --> 00:40:09.269
important for the health of the community right

00:40:09.269 --> 00:40:14.909
that there's there's activity um and with Government,

00:40:14.909 --> 00:40:17.929
though, the thing is, it's counter cyclical in

00:40:17.929 --> 00:40:20.349
the sense that through COVID, for example, the

00:40:20.349 --> 00:40:22.110
government was trying to stimulate the local

00:40:22.110 --> 00:40:24.230
economies by providing these additional projects.

00:40:24.829 --> 00:40:28.469
So it was sort of indirect fiscal support. The

00:40:28.469 --> 00:40:31.289
other thing is that government, as I said to

00:40:31.289 --> 00:40:34.309
local councils, right, and local council members

00:40:34.309 --> 00:40:37.730
don't want the adverse publicity of having a

00:40:37.730 --> 00:40:40.610
build or supply of services to a particular.

00:40:41.449 --> 00:40:44.030
piece of work that they've sanctioned um you

00:40:44.030 --> 00:40:46.090
know go belly up it's it's not great news it's

00:40:46.090 --> 00:40:48.369
not great for their their re -election so so

00:40:48.369 --> 00:40:52.650
they've put in place this um sort of a very um

00:40:52.650 --> 00:40:57.869
contractor friendly um contract form which allows

00:40:57.869 --> 00:41:01.869
the suppliers of these services to effectively

00:41:01.869 --> 00:41:06.409
get you know up to 10 to 15 to maybe even 20

00:41:06.409 --> 00:41:10.590
% of liquidity up front in terms of these mobilization

00:41:10.590 --> 00:41:14.130
payments that allows these businesses to then

00:41:14.130 --> 00:41:16.110
push that liquidity down through their supply

00:41:16.110 --> 00:41:22.559
chain and not cause disruption to their sub -E's

00:41:22.559 --> 00:41:26.619
through something like a COVID. I think that

00:41:26.619 --> 00:41:31.280
is a counter -cyclical element that is really

00:41:31.280 --> 00:41:37.059
sort of understated in the commercial construction

00:41:37.059 --> 00:41:40.059
space. I wish that happened in private markets.

00:41:40.239 --> 00:41:44.119
That's for sure. When I was at Strong Partners,

00:41:44.320 --> 00:41:48.260
I was back in you know, the time when Julia Gillard

00:41:48.260 --> 00:41:49.639
was, you know, running things. Do you remember

00:41:49.639 --> 00:41:52.940
the super tax that came through? That super tax?

00:41:53.539 --> 00:41:55.840
The super mining tax? It's like, everyone made

00:41:55.840 --> 00:41:57.480
so much money, so we're going to work on a super

00:41:57.480 --> 00:42:00.239
mining tax. And it essentially just killed everything.

00:42:00.539 --> 00:42:01.840
So that was my first - Stuffed the mining contractors

00:42:01.840 --> 00:42:05.179
up, yeah. That was my first lesson on essentially

00:42:05.179 --> 00:42:08.199
when an industry is running hot, people do dumb

00:42:08.199 --> 00:42:10.460
contracts. And what I mean by dumb contracts,

00:42:10.639 --> 00:42:13.820
do you remember the mining services -based contracts?

00:42:14.039 --> 00:42:16.820
And all the good contracts were essentially not

00:42:16.820 --> 00:42:20.280
fixed costs. But then as things became more competitive

00:42:20.280 --> 00:42:22.599
and you're bidding for these things, the profit

00:42:22.599 --> 00:42:25.400
margins tightened up and it became fixed costs.

00:42:25.760 --> 00:42:29.619
The same argument may apply during COVID times

00:42:29.619 --> 00:42:33.610
when building materials started to – timber doubled

00:42:33.610 --> 00:42:36.070
you know things just you know people were essentially

00:42:36.070 --> 00:42:38.650
pricing fixed costs to win a project and then

00:42:38.650 --> 00:42:41.530
essentially burning their bum on you know the

00:42:41.530 --> 00:42:43.710
mismanagement of all these costs and blowouts

00:42:43.710 --> 00:42:46.590
right and it just destroyed companies you see

00:42:46.590 --> 00:42:48.250
and that's why they call mining you know boom

00:42:48.250 --> 00:42:51.829
bust property boom bust right yeah but but what

00:42:51.829 --> 00:42:54.429
i'm just trying to you know understand is what

00:42:54.429 --> 00:42:56.889
you're saying is in the government workspace

00:42:56.889 --> 00:43:00.650
somehow they've actually tried to do it in reverse

00:43:01.369 --> 00:43:05.809
to essentially protect the bottom end which actually

00:43:05.809 --> 00:43:09.829
stabilizes the space. Is that what you're saying?

00:43:10.010 --> 00:43:12.809
You got it in one, Murdoch. That's a beautiful

00:43:12.809 --> 00:43:16.969
way to crystallize the idea. So I think, you

00:43:16.969 --> 00:43:20.659
know, again, as soon as you talk about... Mining

00:43:20.659 --> 00:43:23.519
services, my brain goes to the risk universe

00:43:23.519 --> 00:43:25.619
and I think of all the random variants affecting

00:43:25.619 --> 00:43:27.699
this. You've got commodity cycles, you've got

00:43:27.699 --> 00:43:30.219
market risk, you've got counterparty risk. And

00:43:30.219 --> 00:43:33.480
all these things are effectively, they're a multivariate

00:43:33.480 --> 00:43:35.500
distribution, right? A distribution of lots of

00:43:35.500 --> 00:43:38.380
random variables all working together. To try

00:43:38.380 --> 00:43:41.559
and plug in fixed price contracts, long duration

00:43:41.559 --> 00:43:45.960
with fixed margins, like good luck. That is playing

00:43:45.960 --> 00:43:48.769
Russian roulette with a fully loaded gun. right

00:43:48.769 --> 00:43:51.710
it is ridiculously you know and uh when i was

00:43:51.710 --> 00:43:55.329
at fitch um reading you know contractors the

00:43:55.329 --> 00:43:58.650
size of downer um i i saw exactly this and i

00:43:58.650 --> 00:44:01.050
saw them rushing to the gates trying to divest

00:44:01.050 --> 00:44:03.849
these you know good bank bad bank sort of you

00:44:03.849 --> 00:44:06.909
know uh trying to divest these divisions um that

00:44:06.909 --> 00:44:12.739
were incredibly uh um you know cash, you know,

00:44:12.739 --> 00:44:15.179
there were cash black holes sucking up the liquidity

00:44:15.179 --> 00:44:17.380
of all the other businesses and effectively affecting

00:44:17.380 --> 00:44:20.460
the delivery and execution of the other parts

00:44:20.460 --> 00:44:22.460
of the business, which were then leading to LDAs,

00:44:22.460 --> 00:44:25.280
you know, liquidated damages. And then it created

00:44:25.280 --> 00:44:27.400
this vicious cycle as opposed to a virtuous cycle.

00:44:27.539 --> 00:44:30.260
So, but, you know, we've got lots of different

00:44:30.260 --> 00:44:32.139
contract forms. You've got cost plus, you've

00:44:32.139 --> 00:44:36.010
got profit sharing. Very difficult to do projects

00:44:36.010 --> 00:44:39.269
for government that are not sort of lump sum,

00:44:39.369 --> 00:44:41.690
but they have this new contract form called the

00:44:41.690 --> 00:44:45.250
GC21, which allows for all the risk shifting

00:44:45.250 --> 00:44:48.449
to happen to sort of, you know, the appropriate

00:44:48.449 --> 00:44:50.769
party, including government. So let's say, for

00:44:50.769 --> 00:44:54.250
example. you have a schedule of rates and something

00:44:54.250 --> 00:44:59.030
moves. I think we talked before about your mate

00:44:59.030 --> 00:45:01.949
who builds toilets, right? And makes too much

00:45:01.949 --> 00:45:05.670
money, you were saying. You talk about, let's

00:45:05.670 --> 00:45:14.820
say, for example, the... the fittings becoming

00:45:14.820 --> 00:45:17.039
too expensive. Well, okay, so the fittings are

00:45:17.039 --> 00:45:19.099
too expensive now. What does that basically do

00:45:19.099 --> 00:45:20.980
to my overall profit margin? Okay, so it's kind

00:45:20.980 --> 00:45:23.420
of isolated. But if the plumbing becomes more

00:45:23.420 --> 00:45:26.579
expensive, now that means that, okay, so now

00:45:26.579 --> 00:45:28.360
I have to maybe buy different fittings. So then

00:45:28.360 --> 00:45:30.820
that flows into a different cost line. Okay,

00:45:30.880 --> 00:45:33.699
so what the GC21 contract allows these guys to

00:45:33.699 --> 00:45:40.030
do is to isolate or sort of is to identify. the

00:45:40.030 --> 00:45:42.389
implications across all the different cost lines

00:45:42.389 --> 00:45:44.789
for a change in one of these different things.

00:45:44.869 --> 00:45:47.989
So that all that risk then gets properly appropriated

00:45:47.989 --> 00:45:50.030
as opposed to the contractor then bearing that

00:45:50.030 --> 00:45:52.510
risk. So it's another way that these risks are

00:45:52.510 --> 00:45:54.789
mitigated in terms of these complex deliveries.

00:45:56.250 --> 00:45:58.670
Well, what's the expression? Show me how someone's

00:45:58.670 --> 00:46:00.150
remunerated and I'll show you how you behave.

00:46:00.710 --> 00:46:03.269
Alignment, yeah. Yeah, predominantly. And what

00:46:03.269 --> 00:46:05.570
I don't understand, and look, we've discussed

00:46:05.570 --> 00:46:08.440
this before, right? is what i don't understand

00:46:08.440 --> 00:46:10.619
about australia is on that statement is essentially

00:46:10.619 --> 00:46:12.840
how money's raised like let's let's talk about

00:46:12.840 --> 00:46:14.380
this for a second right because what we're discussing

00:46:14.380 --> 00:46:18.380
here is raising money to create a project right

00:46:18.380 --> 00:46:21.320
but ensuring that that project actually gets

00:46:21.320 --> 00:46:24.539
settled upon so everyone along that chain from

00:46:24.539 --> 00:46:26.300
the people doing the work to essentially the

00:46:26.300 --> 00:46:28.780
people that are going to benefit from that particular

00:46:28.780 --> 00:46:30.880
you know project will actually get what they're

00:46:30.880 --> 00:46:34.019
paying for over that long process right exactly

00:46:34.019 --> 00:46:37.559
but what blows my mind in australia is like we

00:46:37.559 --> 00:46:39.960
tried to bring in um corporate bonds um especially

00:46:39.960 --> 00:46:41.960
to the mining services space and the best way

00:46:41.960 --> 00:46:43.659
to think it is how europe's looking these days

00:46:43.659 --> 00:46:46.000
is they look at in reverse so you take a mine

00:46:46.000 --> 00:46:48.699
life that's 30 years right that will calculate

00:46:48.699 --> 00:46:51.099
or a project to build that's 30 years like you

00:46:51.099 --> 00:46:53.559
know a water plant they will try to calculate

00:46:53.559 --> 00:46:56.719
you know looking backwards exactly how much money

00:46:56.719 --> 00:46:59.900
that's actually going to cost and then build

00:46:59.900 --> 00:47:02.599
a facility like a corporate bond you know call

00:47:02.599 --> 00:47:04.800
it what it is 500 million usd or whatever is

00:47:04.800 --> 00:47:07.480
required and then you yes you pay a fee up front

00:47:07.480 --> 00:47:09.559
for the establishment of the facility but then

00:47:09.559 --> 00:47:12.820
you can draw down on that facility whenever you

00:47:12.820 --> 00:47:15.159
require it based on the stages and only pay the

00:47:15.159 --> 00:47:18.360
interest from when that on the money which you

00:47:18.360 --> 00:47:21.599
draw down which means a stability and money available

00:47:21.599 --> 00:47:24.460
throughout the entire process and you don't have

00:47:24.460 --> 00:47:26.400
the capacity to blow it up. But you take a step

00:47:26.400 --> 00:47:28.119
back, you know, the comment I was making before,

00:47:28.260 --> 00:47:29.719
you know, show me someone's remunerator, show

00:47:29.719 --> 00:47:32.059
them how you behave. Unfortunately, I think good

00:47:32.059 --> 00:47:33.760
old Australians, half of these people are my

00:47:33.760 --> 00:47:36.780
mates, that, you know, we've created a scenario

00:47:36.780 --> 00:47:40.639
where, you know, you're looking at exits with

00:47:40.639 --> 00:47:43.340
the business, you know, you got Angel, you know.

00:47:43.599 --> 00:47:46.199
pre -IPO, IPO, and then when it's listed, you

00:47:46.199 --> 00:47:50.360
got placement A, B, C, D, E, F, G. And the issue

00:47:50.360 --> 00:47:52.920
there is the person that gets in first, there's

00:47:52.920 --> 00:47:55.139
actually really no benefit to getting first unless

00:47:55.139 --> 00:47:57.780
the price goes up like 2000 % because you're

00:47:57.780 --> 00:48:01.809
just getting continuously diluted. yes throughout

00:48:01.809 --> 00:48:04.909
all these processes and getting hit hit hit and

00:48:04.909 --> 00:48:06.909
it's all fine when the market's going up but

00:48:06.909 --> 00:48:09.050
if you get a scenario which happens unfortunately

00:48:09.050 --> 00:48:11.110
quite often you know we got scenarios happening

00:48:11.110 --> 00:48:12.909
right now playing out you know iran and israel

00:48:12.909 --> 00:48:15.190
all these moving parts in the world if you have

00:48:15.190 --> 00:48:18.130
a scenario where all of a sudden um you know

00:48:18.130 --> 00:48:20.190
there's a risk off scenario and people don't

00:48:20.190 --> 00:48:22.550
feel rich or people got burnt really badly because

00:48:22.550 --> 00:48:25.070
there's a crypto winter then what happens they're

00:48:25.070 --> 00:48:27.690
not going to allocate that capital to stage three

00:48:27.690 --> 00:48:29.429
or stage four of that project. And something

00:48:29.429 --> 00:48:31.250
that's been building for a long time, it just

00:48:31.250 --> 00:48:33.809
essentially ceases to exist or blows up. And

00:48:33.809 --> 00:48:37.110
this entire chain of people in the private sector

00:48:37.110 --> 00:48:40.869
just gets wiped out and destroyed, right? So

00:48:40.869 --> 00:48:43.530
I suppose when people are discussing risk in

00:48:43.530 --> 00:48:46.570
these large development projects, I would actually

00:48:46.570 --> 00:48:49.130
argue that this is what they mean because they've

00:48:49.130 --> 00:48:52.269
seen it before. Right. A hundred percent. And

00:48:52.269 --> 00:48:56.489
I think you've touched on a very rich set of

00:48:56.489 --> 00:49:00.110
subtopics then. By the way, the war is now just

00:49:00.110 --> 00:49:03.269
not between Israel and Iran. It's between Qatar

00:49:03.269 --> 00:49:06.750
has been bombed as well now. So, you know, and

00:49:06.750 --> 00:49:09.429
then obviously the U .S. is involved. Then you've

00:49:09.429 --> 00:49:11.710
got another battlefront across the Ukrainian

00:49:11.710 --> 00:49:16.719
-Russian. geography as well. So there are multiple

00:49:16.719 --> 00:49:19.659
theaters, you know, if China effectively uses

00:49:19.659 --> 00:49:22.360
this as an opportune time now to split that into

00:49:22.360 --> 00:49:24.780
three theaters, you'll have war on three fronts,

00:49:24.980 --> 00:49:27.159
you know, across the East China Sea in Taiwan.

00:49:27.300 --> 00:49:29.760
These are things that I sit in, you know, how

00:49:29.760 --> 00:49:32.159
can I structure something that protects investors?

00:49:33.179 --> 00:49:35.739
When, you know, you don't have enough imagination

00:49:35.739 --> 00:49:38.480
to think about how much shit's going to hit the

00:49:38.480 --> 00:49:40.639
fan. That's where people, counterfactual thinkers

00:49:40.639 --> 00:49:43.280
like myself, effectively, we apply our imagination,

00:49:43.559 --> 00:49:46.579
right? Going back to your point about, you know,

00:49:46.579 --> 00:49:49.420
being rewarded for the risk you take. And I love

00:49:49.420 --> 00:49:51.840
the idea of that sort of right to left, you know,

00:49:51.840 --> 00:49:54.340
setting up a redraw or revolver that basically

00:49:54.340 --> 00:49:56.500
provides you with that liquidity and certainty

00:49:56.500 --> 00:49:59.630
through the development. Absolutely brilliant

00:49:59.630 --> 00:50:02.409
idea. And I think that's something that you should

00:50:02.409 --> 00:50:04.650
certainly think about, you know, developing further.

00:50:04.869 --> 00:50:08.449
But one of the things, it's bizarre that the

00:50:08.449 --> 00:50:11.150
banks don't effectively, you know, aside from

00:50:11.150 --> 00:50:14.429
really top gear contractors are willing to effectively

00:50:14.429 --> 00:50:18.769
provide those facilities. I think the concept

00:50:18.769 --> 00:50:21.070
that you brought through as well in terms of,

00:50:21.090 --> 00:50:25.590
you know, are investors appropriately rewarded?

00:50:26.380 --> 00:50:30.280
for the risks that they're taking. We think in

00:50:30.280 --> 00:50:33.739
terms of, are you rewarded in terms of capital

00:50:33.739 --> 00:50:36.900
structure and position and subordination? But

00:50:36.900 --> 00:50:39.480
what you've just pointed out is the capital structure

00:50:39.480 --> 00:50:42.739
shift temporally effectively changes that return

00:50:42.739 --> 00:50:45.440
profile as well. So you've got to keep in mind,

00:50:45.460 --> 00:50:48.400
well, am I being paid? the appropriate amount

00:50:48.400 --> 00:50:50.900
of my risk -adjusted returns are, when I'm factoring

00:50:50.900 --> 00:50:54.579
and identifying that risk, is it temporally adjusted

00:50:54.579 --> 00:50:57.639
as well? Because, you know, at what stage is

00:50:57.639 --> 00:51:01.679
this business, right? At what point of this lifecycle

00:51:01.679 --> 00:51:04.760
is it or this project? And I think that's an

00:51:04.760 --> 00:51:08.519
absolutely incredibly important point. Yeah,

00:51:08.539 --> 00:51:13.940
but, okay. No, but I keep thinking the stability

00:51:13.940 --> 00:51:19.570
of these councils, It sounds like the stability

00:51:19.570 --> 00:51:21.590
of the council contracts is the capacity to deliver.

00:51:21.670 --> 00:51:24.070
If the capacity to deliver there means essentially

00:51:24.070 --> 00:51:27.409
all the way down the chain delivers, right? So

00:51:27.409 --> 00:51:29.389
that means essentially the tradie putting in

00:51:29.389 --> 00:51:32.590
that bathroom, right, has less risk of that job

00:51:32.590 --> 00:51:34.429
falling over. Is that what I'm hearing? Because

00:51:34.429 --> 00:51:37.329
if that's true, and it's happened to a lot of

00:51:37.329 --> 00:51:39.849
friends of mine, right? I think one of my mates,

00:51:39.989 --> 00:51:43.429
one of my clients actually puts in... you know,

00:51:43.449 --> 00:51:46.250
fittings. I won't say how much he's owed. Let's

00:51:46.250 --> 00:51:48.849
just say it's in the millions, right? But what

00:51:48.849 --> 00:51:50.710
he hates the most, and a mate of mine told this

00:51:50.710 --> 00:51:52.750
about a decade ago. I looked it up. It's true.

00:51:52.809 --> 00:51:55.869
It's ridiculous. It's actually legislated that

00:51:55.869 --> 00:51:59.150
you cannot pay a tradie more than 10%, right,

00:51:59.269 --> 00:52:02.969
of what a job is worth, right? It's wild, which

00:52:02.969 --> 00:52:04.769
means that every single time they go to Bunnings

00:52:04.769 --> 00:52:07.150
or Reem or whomever they're using to purchase

00:52:07.150 --> 00:52:10.309
the timber, they were literally using their own

00:52:10.309 --> 00:52:14.039
credit. to essentially build out a property development

00:52:14.039 --> 00:52:18.119
or an infrastructure project or a warehouse for

00:52:18.119 --> 00:52:22.340
Amazon to go in. The developers are literally

00:52:22.340 --> 00:52:25.760
utilizing the credit of the small business owner

00:52:25.760 --> 00:52:29.440
to build their project. And that's all fine when

00:52:29.440 --> 00:52:31.599
everything's going well. But what happens when

00:52:31.599 --> 00:52:35.079
the project's completed? Something happens from

00:52:35.079 --> 00:52:37.239
mismanagement because a person's not like yourself,

00:52:37.300 --> 00:52:40.769
Jan. They've miscalculated the numbers, the feasibility

00:52:40.769 --> 00:52:42.590
of Lofty, and they blow this thing out of the

00:52:42.590 --> 00:52:45.929
water. The domino impact of getting these people

00:52:45.929 --> 00:52:48.329
that physically did the work just get destroyed

00:52:48.329 --> 00:52:49.789
because the only way they're going to get their

00:52:49.789 --> 00:52:54.250
money back is essentially an exit with a sale

00:52:54.250 --> 00:52:57.469
or pre -sales or essentially becoming refinanced.

00:52:57.869 --> 00:53:01.269
And then they just get screwed. Absolutely, Murdoch.

00:53:01.329 --> 00:53:03.849
And I think there in having worked in a couple

00:53:03.849 --> 00:53:06.170
of these voluntary administrations and getting

00:53:06.170 --> 00:53:09.039
businesses out, you know the amount of value

00:53:09.039 --> 00:53:12.019
destruction as the business approaches that point

00:53:12.019 --> 00:53:15.920
um you know it's um it is amazing and and um

00:53:15.920 --> 00:53:21.079
i think that broader thought thought process

00:53:21.079 --> 00:53:23.179
and systems thinking where you're sort of going

00:53:23.179 --> 00:53:25.340
well okay if we collectively support the supply

00:53:25.340 --> 00:53:27.500
chain well we're going to deliver greater value

00:53:27.500 --> 00:53:30.179
for all the stakeholders not just you know we're

00:53:30.179 --> 00:53:32.039
not going to keep all that money and i think

00:53:32.039 --> 00:53:34.320
it's really about how risk is allocated through

00:53:34.320 --> 00:53:38.590
these projects um and Also where points of leverage

00:53:38.590 --> 00:53:41.329
are and your point about, you know, supply chains

00:53:41.329 --> 00:53:45.530
being used as ATMs, 100 % valid. It is probably

00:53:45.530 --> 00:53:51.190
not something that occurs, you know, much outside

00:53:51.190 --> 00:53:54.710
Australia because in developed markets like in

00:53:54.710 --> 00:53:57.070
the US where you have, you know, very liquid

00:53:57.070 --> 00:54:00.170
capital markets, both public and private, they're

00:54:00.170 --> 00:54:02.369
able to tap that liquidity. But here, as you

00:54:02.369 --> 00:54:05.869
said, you know, using sort of... small trading

00:54:05.869 --> 00:54:10.030
balance sheets as sources of liquidity and that's

00:54:10.030 --> 00:54:13.050
not priced in right like so you know that and

00:54:13.050 --> 00:54:15.889
effectively what happens is they'll just throw

00:54:15.889 --> 00:54:17.730
a dart and say oh here's a lump sum price and

00:54:17.730 --> 00:54:20.190
we think all of that's going to be absorbed my

00:54:20.190 --> 00:54:22.349
cost of funding goes up you know have a GFC style

00:54:22.349 --> 00:54:24.030
sort of thing and my cost of funding is insane

00:54:24.030 --> 00:54:26.250
now I can't get a working capital facility how

00:54:26.250 --> 00:54:27.750
do I fund it well I'll just wind the business

00:54:27.750 --> 00:54:30.309
up right one happens and then this is exactly

00:54:30.309 --> 00:54:34.409
your uh you know your your your fukushima scenario

00:54:34.409 --> 00:54:38.369
right so so you know you you you have the earthquake

00:54:38.369 --> 00:54:40.909
you have the tsunami like you know everything

00:54:40.909 --> 00:54:42.909
and and and then you have this critical failure

00:54:42.909 --> 00:54:45.409
right so you have enough of the subbies failing

00:54:45.409 --> 00:54:48.690
through the supply chain or you have a a suite

00:54:48.690 --> 00:54:50.989
of supplies with the suppliers of particular

00:54:50.989 --> 00:54:53.510
service shot creators or whatever it is within

00:54:53.510 --> 00:54:56.210
that particular thing suffering from some systemic

00:54:56.210 --> 00:55:01.630
issue and and the entire development target It's

00:55:01.630 --> 00:55:05.250
just fascinating they can't fix it. Okay, so

00:55:05.250 --> 00:55:07.469
that's that space. But with the government contracts,

00:55:07.610 --> 00:55:09.769
just trying to get my head around it, what I'm

00:55:09.769 --> 00:55:12.409
understanding just on simple terms here is that

00:55:12.409 --> 00:55:15.130
theoretically the main difference between essentially

00:55:15.130 --> 00:55:17.949
the private market and the council market is

00:55:17.949 --> 00:55:22.849
the projects are designed very well in the beginning

00:55:22.849 --> 00:55:28.900
and then they're supported financially. in case

00:55:28.900 --> 00:55:31.139
a black swan event or something happens so they

00:55:31.139 --> 00:55:35.019
continue but more importantly the subbies physically

00:55:35.019 --> 00:55:38.039
doing the work are actually remunerated accordingly

00:55:38.039 --> 00:55:42.619
so they don't blow up and then the project can

00:55:42.619 --> 00:55:45.539
actually be finalized and come through through

00:55:45.539 --> 00:55:48.260
full circle is that what you're saying so essentially

00:55:48.260 --> 00:55:52.829
with government contracts Well, what I'm hearing

00:55:52.829 --> 00:55:54.929
is there's technically less risk in the government

00:55:54.929 --> 00:55:57.489
contracts based on how that process there is

00:55:57.489 --> 00:55:59.230
on the private side. Am I missing something?

00:55:59.550 --> 00:56:03.510
I wouldn't categorize it that way, Murdoch, because

00:56:03.510 --> 00:56:06.070
there are government contracts of different scale.

00:56:06.550 --> 00:56:10.610
And I think it's Murphy's Law, right? I mean,

00:56:10.630 --> 00:56:13.989
if there's one thing that I would stick to is

00:56:13.989 --> 00:56:16.630
to assume that everything that can go wrong will

00:56:16.630 --> 00:56:19.960
go wrong. And it's only our failure of imagination

00:56:19.960 --> 00:56:25.840
as to what can go wrong that lets us down. They

00:56:25.840 --> 00:56:28.639
know exactly what they're doing. They get involved

00:56:28.639 --> 00:56:31.559
in the early contractor blueprints. So they've

00:56:31.559 --> 00:56:33.159
kind of designed it and they've influenced the

00:56:33.159 --> 00:56:36.579
entire design. They've already worked out and

00:56:36.579 --> 00:56:39.420
locked in their margin, right? Because they've

00:56:39.420 --> 00:56:43.219
already locked in their supply chain for that

00:56:43.219 --> 00:56:47.360
particular contract. They have a bunch of, you

00:56:47.360 --> 00:56:49.920
know, secondary and tertiary redundancies in

00:56:49.920 --> 00:56:55.199
terms of subbies or partners that can effectively

00:56:55.199 --> 00:56:58.579
complete sections that they don't have the competency

00:56:58.579 --> 00:57:03.019
for. So all of that happens ex -ante, but it's

00:57:03.019 --> 00:57:05.099
the simplicity and the short duration of these

00:57:05.099 --> 00:57:08.800
contracts that effectively really, I think, reduces

00:57:08.800 --> 00:57:13.559
that risk. It would be incorrect of me to say,

00:57:13.659 --> 00:57:16.980
you know, I can predict risk any better than

00:57:16.980 --> 00:57:20.800
someone else in terms of extreme events, right?

00:57:21.639 --> 00:57:24.039
The whole concept of Johari's windows where you

00:57:24.039 --> 00:57:26.739
have these sort of unknown unknowns, there's

00:57:26.739 --> 00:57:28.579
risks that you can price for, there's risks that

00:57:28.579 --> 00:57:31.719
you need to ensure. It's recognizing what you

00:57:31.719 --> 00:57:34.280
don't know and you haven't priced for that really

00:57:34.280 --> 00:57:36.739
helps you decide, do I want to undertake this

00:57:36.739 --> 00:57:39.119
contract or not? And that's all, you know, that's

00:57:39.119 --> 00:57:42.079
just not sort of... the complexity of the project

00:57:42.079 --> 00:57:44.159
it's also about the counterparties and with sydney

00:57:44.159 --> 00:57:46.559
water for example you know contractors have had

00:57:46.559 --> 00:57:49.300
really nasty experiences in terms of change scope

00:57:49.300 --> 00:57:52.000
and well okay so now it's you know the contract

00:57:52.000 --> 00:57:55.159
form they have standard contract forms they have

00:57:55.159 --> 00:57:57.519
a change scope and well that's now your problem

00:57:57.519 --> 00:58:01.079
it's not our problem okay so it's that experience

00:58:01.079 --> 00:58:04.239
that helps um you know avoid the business killer

00:58:04.239 --> 00:58:07.380
type type sort of project so so if you if you

00:58:07.380 --> 00:58:11.789
invest um what's the multiple You know, what's

00:58:11.789 --> 00:58:13.309
the time, what's the duration you're holding

00:58:13.309 --> 00:58:16.150
this for? What multiple are we targeting? What

00:58:16.150 --> 00:58:18.369
type of exit are you targeting? Is there a dividend?

00:58:18.630 --> 00:58:22.670
Like, you know, what are we talking? Sure. So

00:58:22.670 --> 00:58:26.670
in terms of the return profile, the expected

00:58:26.670 --> 00:58:30.429
overall multiple on capital that we're investing,

00:58:30.510 --> 00:58:33.510
the MOIC, the multiple invested capital from

00:58:33.510 --> 00:58:38.210
day zero for investors entering today, we expect

00:58:38.210 --> 00:58:42.469
that to be... 2 .5 times so two and a half times

00:58:42.469 --> 00:58:44.510
your investment you get to the back end in t

00:58:44.510 --> 00:58:48.269
plus three so in three years time okay so that's

00:58:48.269 --> 00:58:53.070
like a 36 irr so if you do 1 .36 the power three

00:58:53.070 --> 00:58:56.530
um you know you get your you get your two and

00:58:56.530 --> 00:59:04.449
a half now i guess the um the the the um you

00:59:04.449 --> 00:59:07.239
know The fear, I guess, for investors is, well,

00:59:07.300 --> 00:59:10.960
hold on a second, you know, if I tie my money

00:59:10.960 --> 00:59:13.360
up for that time, I'm not getting sort of any

00:59:13.360 --> 00:59:15.800
running yield and completely understand, you

00:59:15.800 --> 00:59:18.800
know, both the US economy and the Australian

00:59:18.800 --> 00:59:20.619
economy, we're all running in negative returns,

00:59:20.739 --> 00:59:25.639
right? So our actual system growth is less than

00:59:25.639 --> 00:59:29.030
inflation. So even with low inflation. you know,

00:59:29.050 --> 00:59:31.289
our economies are stalling. So capital protection

00:59:31.289 --> 00:59:33.889
and running yields really important. So what

00:59:33.889 --> 00:59:36.050
we've basically built into our forward estimates

00:59:36.050 --> 00:59:40.170
is the flexibility to pay a 10 % dividend on

00:59:40.170 --> 00:59:43.590
the amount invested today. That's a pretty big

00:59:43.590 --> 00:59:47.329
dividend. Is that on top of the two and a half?

00:59:47.570 --> 00:59:51.610
I was sorry. So that's inclusive of the, that's

00:59:51.610 --> 00:59:53.969
included in the two and a half. So that's built

00:59:53.969 --> 00:59:58.590
into the two and a half. So 10 % income. So 10

00:59:58.590 --> 01:00:00.570
% income. As a distribution, yeah. How's that

01:00:00.570 --> 01:00:02.510
paid? Is it quarterly, monthly, half yearly,

01:00:02.630 --> 01:00:06.789
annually? So we will potentially pay that annually.

01:00:07.550 --> 01:00:11.309
But, you know, there is flexibility to potentially

01:00:11.309 --> 01:00:15.519
pay that. semi -annually. One of the things that

01:00:15.519 --> 01:00:18.380
I'm cognizant of, and again, this comes back

01:00:18.380 --> 01:00:20.440
to that whole risk management thing is that we

01:00:20.440 --> 01:00:23.239
want to maintain as much liquidity in the business,

01:00:23.420 --> 01:00:26.920
not just for growth, but another piece of the

01:00:26.920 --> 01:00:29.380
secret sauce is that we're doing accelerated

01:00:29.380 --> 01:00:34.059
repayment. of the senior debt. And our aim is

01:00:34.059 --> 01:00:39.260
to get that debt down to about 0 .7 of a turn

01:00:39.260 --> 01:00:42.719
of EBITDA at T plus three. Why is that important?

01:00:43.039 --> 01:00:45.099
That's important for us to be able to deliver

01:00:45.099 --> 01:00:49.460
that exit for investors because that gives us

01:00:49.460 --> 01:00:52.300
flexibility to raise potentially another 30 million

01:00:52.300 --> 01:00:54.239
at the exact same leverage that we're at now.

01:00:54.880 --> 01:00:56.960
that gives us flexibility to raise another 30

01:00:56.960 --> 01:00:58.960
million and exit any investors who don't want

01:00:58.960 --> 01:01:04.380
to continue on that journey with us. Our intention

01:01:04.380 --> 01:01:10.719
is to get to an IPO sort of scale. And that requires

01:01:10.719 --> 01:01:13.400
revenues anywhere between sort of, as I said,

01:01:13.460 --> 01:01:17.380
350 to 500. And we think we'll get there within

01:01:17.380 --> 01:01:19.679
three years. But if we don't, and investors,

01:01:19.840 --> 01:01:23.219
we want to give investors, we want to hold to

01:01:23.219 --> 01:01:26.659
our... original thesis of giving investors that

01:01:26.659 --> 01:01:29.300
two and a half again i'd be risked that through

01:01:29.300 --> 01:01:32.400
structuring the accelerated debt repayment and

01:01:32.400 --> 01:01:35.099
that's why we're still able to pay that um you

01:01:35.099 --> 01:01:38.179
know 10 coupon like i'm just trying to wrap my

01:01:38.179 --> 01:01:40.780
head how to how to value a government contract

01:01:40.780 --> 01:01:43.630
yeah because like i look Everyone out there that's

01:01:43.630 --> 01:01:45.769
listening, probably half of everyone listening

01:01:45.769 --> 01:01:47.250
is probably in the industry, half are clients.

01:01:47.590 --> 01:01:49.730
We've all done this a thousand times. We look

01:01:49.730 --> 01:01:53.250
at valuing how to buy a property for your house

01:01:53.250 --> 01:01:55.809
or look at valuing how to buy a miner or an industrial.

01:01:57.809 --> 01:02:01.489
We understand how to value businesses because

01:02:01.489 --> 01:02:05.309
you're essentially valuing to grow, scale, bolt

01:02:05.309 --> 01:02:07.469
on acquisitions. There's numerous different strategies

01:02:07.469 --> 01:02:10.309
out there. What I don't understand is how do

01:02:10.309 --> 01:02:15.460
you value you know council you know contract

01:02:15.460 --> 01:02:18.739
to essentially build a sewage plant yeah yeah

01:02:18.739 --> 01:02:20.920
where i'm also going with that is essentially

01:02:20.920 --> 01:02:23.260
you've got the multiple two and a half times

01:02:23.260 --> 01:02:25.880
what's that done has that taken in consideration

01:02:25.880 --> 01:02:28.940
you know are you looking to roll up um another

01:02:28.940 --> 01:02:32.019
competitor are you trying to expand the number

01:02:32.019 --> 01:02:34.219
of councils you're working in you mentioned queensland

01:02:34.219 --> 01:02:36.519
i'm just trying to get an idea of how have you

01:02:36.519 --> 01:02:41.429
valued this yep sure so i i think it's important

01:02:41.429 --> 01:02:47.050
to think of this business as a at any point in

01:02:47.050 --> 01:02:52.349
time as a portfolio of government contracts as

01:02:52.349 --> 01:02:55.650
opposed to a single government contracts um and

01:02:55.650 --> 01:02:58.349
i i want to be absolutely clear right you know

01:02:58.349 --> 01:03:00.769
yes you've got a government pound counterparty

01:03:00.769 --> 01:03:04.239
and and that obviously you know um creates a

01:03:04.239 --> 01:03:06.619
certain anchoring in your mind about the counterparty

01:03:06.619 --> 01:03:09.559
risk and and i think that's that's a valid uh

01:03:09.559 --> 01:03:12.519
consideration but there's still contract risk

01:03:12.519 --> 01:03:14.760
there's still execution risk you know there's

01:03:14.760 --> 01:03:17.960
there's supply chain um risk and so on so it's

01:03:17.960 --> 01:03:21.360
you know this is not a bond okay but it's in

01:03:21.360 --> 01:03:25.039
the diversification of the execution of those

01:03:25.039 --> 01:03:28.059
government contracts uh over multiple periods

01:03:28.059 --> 01:03:29.940
of time as well because there are different stages

01:03:29.940 --> 01:03:32.800
in terms of execution right some are in ramp

01:03:32.800 --> 01:03:34.840
up some are in maturity some are sort of at the

01:03:34.840 --> 01:03:38.099
back end of delivery and you're getting a mix

01:03:38.099 --> 01:03:40.599
of those cash flows and that mix you know gives

01:03:40.599 --> 01:03:44.019
you that mark of its diversification benefit

01:03:44.019 --> 01:03:47.340
that reduces the risk of the overall cash that

01:03:47.340 --> 01:03:50.019
you're then present valuing but in the current

01:03:50.019 --> 01:03:53.179
model it's just arithmetic growth all it basically

01:03:53.179 --> 01:03:57.599
is is just getting to a higher EBITDA number

01:03:57.599 --> 01:04:00.840
based on growing that revenue, managing your

01:04:00.840 --> 01:04:02.980
cost base. So you get the operating leverage

01:04:02.980 --> 01:04:05.739
that gives you the higher EBITDA and then effectively

01:04:05.739 --> 01:04:09.599
accumulating that cash, paying it out conservatively,

01:04:09.599 --> 01:04:13.159
making sure that you have that 10 % cash return

01:04:13.159 --> 01:04:16.840
to investors so that you then have the reinvestment

01:04:16.840 --> 01:04:18.920
required to get to the EBITDA number that you

01:04:18.920 --> 01:04:22.519
require in T plus three. to re -leverage, to

01:04:22.519 --> 01:04:26.039
repay the original investors. But also you get

01:04:26.039 --> 01:04:29.960
that simple five times multiple on the target

01:04:29.960 --> 01:04:34.559
exit EBITDA. So you said five times multiple.

01:04:34.619 --> 01:04:36.579
I thought the multiple target was two and a half.

01:04:36.860 --> 01:04:42.719
No. So the multiple on invested capital is two

01:04:42.719 --> 01:04:46.400
and a half times. the multiple the earnings multiple

01:04:46.400 --> 01:04:50.260
the EBITDA multiple to get to valuation is five

01:04:50.260 --> 01:04:52.280
times and that's the valuation that's the valuation

01:04:52.280 --> 01:04:54.119
multiple we're getting investors in right now

01:04:54.119 --> 01:04:57.219
and that's the multiple that we're just we've

01:04:57.219 --> 01:05:00.800
built into our forecast as well so again the

01:05:00.800 --> 01:05:04.380
forecast does not include any IPO based multiple

01:05:04.380 --> 01:05:11.360
so the IPO the listed compatibles trade at seven

01:05:11.360 --> 01:05:14.900
to nine times earnings in terms of market cap,

01:05:15.039 --> 01:05:20.119
sorry, in terms of EV. And we've effectively

01:05:20.119 --> 01:05:22.420
just assumed a private market multiple for that

01:05:22.420 --> 01:05:25.579
as well. So being really conservative in terms

01:05:25.579 --> 01:05:34.739
of that as well. Okay, so what I'm hearing, is

01:05:34.739 --> 01:05:39.389
this accurate? The business has just been valued

01:05:39.389 --> 01:05:42.530
on the basis as a private and the contracts are

01:05:42.530 --> 01:05:44.469
the contracts and it's just steady as she goes.

01:05:44.610 --> 01:05:47.590
You've intentionally tried not to put any growth

01:05:47.590 --> 01:05:49.349
into the valuations. Is that what you've done?

01:05:49.829 --> 01:05:52.489
That is. And there is a reason for that, right?

01:05:52.590 --> 01:05:55.190
So one of the things, my background is fixed

01:05:55.190 --> 01:06:00.550
income. I'm trying to make this as bulletproof

01:06:00.550 --> 01:06:02.900
from a fixed income standpoint. as possible.

01:06:03.780 --> 01:06:06.119
One thing, I'm just trying to bring something

01:06:06.119 --> 01:06:09.719
up as well now. Their pipeline, PwC signed off

01:06:09.719 --> 01:06:11.940
on this, and this is the model that NAB basically

01:06:11.940 --> 01:06:16.260
provided their two times debt to EBITDA. So,

01:06:16.260 --> 01:06:23.199
you know, for a big four Australian bank to provide

01:06:23.199 --> 01:06:29.690
leverage, to a sponsored takeout of a vendor,

01:06:29.750 --> 01:06:34.050
I think, is probably a first. And they've done

01:06:34.050 --> 01:06:36.389
it with the confidence that they've had in the

01:06:36.389 --> 01:06:38.510
due diligence, the professional due diligence

01:06:38.510 --> 01:06:41.610
that's been done on this. It is a big call. I

01:06:41.610 --> 01:06:43.329
don't think we should tread lightly on that one

01:06:43.329 --> 01:06:48.030
because the banks have quite literally got rid

01:06:48.030 --> 01:06:50.280
of all their growth -based lending. There is

01:06:50.280 --> 01:06:52.619
a number of guests that we've had on that literally

01:06:52.619 --> 01:06:54.960
have been bankers. They got angry and then they

01:06:54.960 --> 01:06:57.760
went and set up their own shop to fulfill this

01:06:57.760 --> 01:07:00.300
particular service because the banks just refused

01:07:00.300 --> 01:07:02.559
to do it. The only transactions they'll look

01:07:02.559 --> 01:07:05.820
at is $100 million plus or maybe like substantially

01:07:05.820 --> 01:07:08.139
larger than that or they do a warehouse facility

01:07:08.139 --> 01:07:10.980
for someone else to do it. So for them to consider

01:07:10.980 --> 01:07:14.699
this. And this is where I was going back to the

01:07:14.699 --> 01:07:16.780
risk. Have I missed something with the risk on

01:07:16.780 --> 01:07:19.539
this? Like, okay, let me rephrase. When people

01:07:19.539 --> 01:07:21.179
speak to you and you're having conversations,

01:07:21.739 --> 01:07:25.880
what question are they asking you that pops up

01:07:25.880 --> 01:07:27.920
the most that I suppose really concerns them

01:07:27.920 --> 01:07:32.139
about this type of project? It's very similar

01:07:32.139 --> 01:07:33.480
to the ones that you've been asking, Murdoch,

01:07:33.480 --> 01:07:37.519
but it's really sort of a misunderstanding with

01:07:37.519 --> 01:07:41.849
the capital required for growth. OK, and I think

01:07:41.849 --> 01:07:45.210
this is where sort of the disconnect between

01:07:45.210 --> 01:07:48.010
how are you generating a two and a half times

01:07:48.010 --> 01:07:51.769
return with a business that's, you know, a bog

01:07:51.769 --> 01:07:54.869
standard construction business? They just the

01:07:54.869 --> 01:07:57.610
cognitive dissonance of that kind of like, you

01:07:57.610 --> 01:08:00.070
know, just blows their minds. Right. So, again,

01:08:00.210 --> 01:08:06.250
we talked about this being a portfolio of short

01:08:06.250 --> 01:08:09.190
duration government contracts where they're squeezing

01:08:09.190 --> 01:08:12.960
profit. on a consistent basis, on a diversified

01:08:12.960 --> 01:08:15.900
basis. But we're also talking about a business

01:08:15.900 --> 01:08:20.859
that generates working capital through business

01:08:20.859 --> 01:08:24.119
growth, which is insane, right? So when they

01:08:24.119 --> 01:08:26.720
win new contracts, they generate this mobilization

01:08:26.720 --> 01:08:29.720
payment up to 20 % up front, and that generates

01:08:29.720 --> 01:08:36.060
cash. Cash out is what juices up my returns.

01:08:36.180 --> 01:08:39.460
And instead of effectively... dumping all that

01:08:39.460 --> 01:08:41.800
cash on investors and potentially risking the

01:08:41.800 --> 01:08:43.319
sustainability of the business, what I'm doing

01:08:43.319 --> 01:08:45.079
is I'm retaining some of that cash. I'm paying

01:08:45.079 --> 01:08:49.960
out a 10 % dividend, but I'm using it to deleverage

01:08:49.960 --> 01:08:52.979
the business really, really quickly so that at

01:08:52.979 --> 01:08:55.739
T plus three, investors don't love the business.

01:08:56.159 --> 01:08:59.119
You know, I'm only looking at like an EBITDA.

01:08:59.260 --> 01:09:01.960
And again, just for sensitivity reasons, I can't

01:09:01.960 --> 01:09:04.380
obviously talk about sort of what our forecast

01:09:04.380 --> 01:09:08.120
number is at that particular point in time. But,

01:09:08.120 --> 01:09:10.739
you know, you can just do the math, right? It's

01:09:10.739 --> 01:09:13.840
five times something in the mid -20s in terms

01:09:13.840 --> 01:09:17.420
of EBITDA to get to that sort of capital return.

01:09:17.960 --> 01:09:20.520
And then you have this 10 % return in terms of

01:09:20.520 --> 01:09:24.140
dividends. And, you know, the business effectively

01:09:24.140 --> 01:09:27.140
did not have to take material risks to deliver

01:09:27.140 --> 01:09:30.119
that return. And previously what happened, and

01:09:30.119 --> 01:09:32.220
we believe that this is why this business isn't,

01:09:32.220 --> 01:09:35.939
you know, a $300 to $500 million business, is

01:09:35.939 --> 01:09:37.970
because the vendors... effectively just took

01:09:37.970 --> 01:09:40.510
all that out in dividends right they were just

01:09:40.510 --> 01:09:42.170
i'm not saying they were dividend stripping but

01:09:42.170 --> 01:09:44.949
they were taking out a healthy amount of dividends

01:09:44.949 --> 01:09:48.829
and the business continued to grow so what we

01:09:48.829 --> 01:09:51.729
all we're doing now is we're retaining that capital

01:09:51.729 --> 01:09:54.550
in the business um and then giving it the balance

01:09:54.550 --> 01:09:57.630
sheet to be able to bid on more contracts rather

01:09:57.630 --> 01:10:00.449
than bigger contracts diversified across multiple

01:10:00.449 --> 01:10:02.329
states giving you the geographic diversification

01:10:02.329 --> 01:10:05.550
benefits as well and effectively de -risking

01:10:05.550 --> 01:10:08.710
the business further as it grows through Markowitz

01:10:08.710 --> 01:10:12.210
diversification. So when you talk about the exits,

01:10:12.289 --> 01:10:14.250
are you looking at exiting out of all completely

01:10:14.250 --> 01:10:17.430
or is the intention just to exit a bit out, get

01:10:17.430 --> 01:10:20.289
some cash, and then you want to hold and maintain

01:10:20.289 --> 01:10:23.010
this business? Because it sounds like the business

01:10:23.010 --> 01:10:24.789
is just a solid business, but I just need to

01:10:24.789 --> 01:10:27.430
explain unless I'm missing something. Why would

01:10:27.430 --> 01:10:34.489
you sell a good business? Exactly. Capital flexibility

01:10:34.489 --> 01:10:37.569
I'm building into the business in terms of retaining

01:10:37.569 --> 01:10:40.369
that cash to SD plus three is to exit investors

01:10:40.369 --> 01:10:44.170
who need that exit, right? Are you creating a

01:10:44.170 --> 01:10:46.550
liquidity event for investors that want to exit

01:10:46.550 --> 01:10:49.529
but then you're looking to stay on? Spot on.

01:10:49.630 --> 01:10:53.010
That's not us, right? So that's for investors

01:10:53.010 --> 01:10:55.270
that are coming in as core investors into this

01:10:55.270 --> 01:10:59.750
investment now. Right. Is there anything we haven't

01:10:59.750 --> 01:11:02.260
covered? that we were kind of kicking around

01:11:02.260 --> 01:11:05.539
before we jumped on the podcast. I think we were

01:11:05.539 --> 01:11:07.939
talking about agentic AI and what I've been building

01:11:07.939 --> 01:11:11.079
in all cap for private credit, but probably a

01:11:11.079 --> 01:11:13.159
story for a different day. Story for another

01:11:13.159 --> 01:11:16.859
day. That's episode two. Absolutely. If anyone

01:11:16.859 --> 01:11:19.079
wants to learn more about all cap securities

01:11:19.079 --> 01:11:24.399
yourself or the project which we just discussed,

01:11:24.720 --> 01:11:26.859
what's the best way for them to reach out and

01:11:26.859 --> 01:11:30.970
find you? So just Johan at... Allcapsecurities

01:11:30.970 --> 01:11:37.369
.com .au. And what's the web address? Allcapsecurities

01:11:37.369 --> 01:11:41.789
.com .au. Fantastic. Well, thank you very much

01:11:41.789 --> 01:11:44.329
for coming on. That was brilliant. And we'll

01:11:44.329 --> 01:11:59.800
catch up soon. are the third party and are the

01:11:59.800 --> 01:12:02.659
sole personal opinions of the speaker. Any reference

01:12:02.659 --> 01:12:04.840
to financial products does not constitute advice

01:12:04.840 --> 01:12:07.699
or recommendation and before any action you should

01:12:07.699 --> 01:12:10.380
seek proper advice from your financial professional.

01:12:11.319 --> 01:12:15.220
Australian listeners should head to www .moneysmart

01:12:15.220 --> 01:12:18.039
.gov .au to find more information on obtaining

01:12:18.039 --> 01:12:20.539
financial advice. To get in touch with York,

01:12:20.680 --> 01:12:25.500
head to our website www .yorkwealth .com .au.