The world of stockbroking conjures up images of massive financial wins, risk and excess.
While the directors of PAC Partners have seen great success throughout enough upside for investors to be interested.
The core team at PAC Partners has worked together for 15 years, with a previous venture acquired by a large international financial services group and opening the door to the current operation almost four years ago.
“We began as a research and corporate advisory group, and are now a full service independent stockbroker with clients across Australia and Asia,” explains PAC Partners managing director and co-founder, Craig Stranger.
“We often describe ourselves as a wholesale and institutionally focused stockbroker. We have raised more than $120 million in the last eight months for Australian emerging companies, both listed and unlisted. Our investor clients are either institutions (for example, superannuation money), high net worth and family offices, or our own growing internal emerging companies fund.”
PAC Partners is also one of the more active capital providers in what Craig describes as the “small end of the market”. They pride themselves on achieving the balance of matching vendor expectation whilst providing enough upside for investors to be interested.
The opportunity for PAC Partners, explains Craig, is often in initial public offerings (IPOs), with three successful outcomes in 2017 already, and another six in the pipeline crossing such diverse sectors as 3D printing through to cobalt and Fijian kava.
“We seek to be specialists in certain areas, with deep research lead analysis,” he says. “Our focus sectors are where Australia has global differentiation; namely agribusiness and food which we are probably most known for, but also in technology, life sciences, resources and other specialist small companies.”
This approach has naturally led PAC Partners into some interesting business. Bubs Organic Australia and Murray River Organics are two IPOs that they have successfully led in recent times with high growth rates and expanding end markets proving to be very attractive to investors. The agribusiness area is considered an emerging market and therefore holds interest for vendors and investors alike – however Craig also believes that the resources sector is becoming popular again – thereby highlighting the variety of possibilities.
“Pockets of the market are good and the outlook for equities is relatively strong we believe. The world is flush with liquidity and super low interest rates make equities very attractive; however the IPO market will always have its challenges. Vendor expectations have been too high for much of the last six months and there isn’t enough reward for the risk new investors are being asked to take.”
While success stories are the basis of building a name, sustained reputation comes from hard work and honesty around expectations. Craig says they strive to always supply conservative numbers with realistic valuations.
“An IPO investment has a lot to do with trust in management, so we work hard to over-deliver,” he says. “We have long term relationships with most of our corporate clients and we like to think there is a good two-way trust.”
The relationship and trust component has been an integral part of PAC Partners growth – a point that Craig believes is underwritten by the staff.
“I am well aware that any business is only as strong as the team around you, and I’m fortunate to have Brooke Picken as my 2IC and COO for much of the last 15 years; together with Paul Jensz as a co-founder who runs the agribusiness franchise. We have a team that are generally friends as well as colleagues.”
This is reflected in the staff numbers which have increased three-fold in the last three years – with the majority coming from professional connections and a desire to be part of a team with great culture.
While PAC Partners has clearly achieved great success, Craig keeps the feet firmly on the ground with a realistic view of the industry and the challenges they face.
“A lot of what we do is, understandably, success based – and that presents some unique challenges in this field of work. For example, we did an enormous amount to jointly underwrite a $220 million dairy transaction involving the largest set of dairy farms in Australia. We were overbid at the eleventh hour by an overseas group, and that was 18 months work that evaporated in a minute. It’s the ups and downs of the game and the reminder that you can’t control everything.”
This sort of honesty is a positive in an industry which is often accused of being over-zealous in its approach. Some may suggest it’s a by-product of being a small, independent broker; however Craig is quick to highlight that PAC Partners has the same relationships with investors and corporates as the “big end of town”.
“There is some misunderstanding in this area,” Craig explains, “we are just as well placed to underwrite hundred million dollar transactions as global or offshore brokers. In fact the large superannuation funds of Australia support most transactions and they are all close clients of us all; provided we each deliver the required service levels.
“Investors perceive us as the main broker to stocks or sectors where we have a long history of coverage and a strong history of interaction. We specialise in industry sectors and know those stocks we cover well. Funds know we know those stocks well and, more importantly, we know the funds’ views on those stocks. For a successful capital raising, it is important that the whole sales team of a lead manager is able to explain the capital raising with credibility and to make sure there is an orderly, well informed aftermarket.”
With such a strong platform, Craig sees a bright future for PAC Partners. Growth is likely to come through adding more specialists to service wholesale clients, whilst providing the same level of service to clients in pre- and post- transaction. In other words, business as usual in an often unusual business.