Original interview: View from the Top, Livewire Markets.
No matter the investment, whether it’s a public stock, a private asset or a fund, investors should “follow the money” to ensure that management has their best interests at heart.
That’s according to Roc Partners’ Michael Lukin who, backed by nearly three decades of experience in investment markets, has learnt that alignment is everything. In fact, it is the biggest fundamental lesson he teaches to up-and-coming investors.
“Where’s your money going? Is it allowing people to take money off the table and leave you stranded? Is it being used to help grow the business? Is the management team or founder aligned with you in terms of owning the same instrument that you own?” Lukin recommends investors ask themselves.
“If you don’t know who’s the sucker on the table, the sucker’s probably you.”
It’s a lesson that has served Lukin and his team well. While Roc Partners has so far flown under the radar, it now manages $8 billion in investor capital. It offers private credit, private equity and real asset solutions to some of Australia’s largest institutions and superannuation funds, as well as high-net-worth investors and family offices.
In this Views from the Top interview, Lukin breaks down some of the red tape surrounding private markets. He outlines why Australia is still playing catch-up compared to the rest of the globe when it comes to investments in unlisted assets, and names the sectors that he believes provide the best risk-adjusted returns in Australia.
He also discusses why investors may need to turn to private markets in their search for growth, and provides the best explanation for why private debt will remain on investors’ radars in the coming years that I have heard in some time.
Plus, he outlines why investors need to be very wary of separating the wheat from the chaff when selecting private credit managers – that is, if the returns sound too good to be true, they probably are.
