Setting Up An Investment Fund For A Public Company
A prominent Public Company approached us to support the set-up of a corporate bond fund. They wanted to know where they should invest. The client was overwhelmed by differing expert opinions.
Most funds would have dived into assessing assets. Instead, we started by asking “why”. The team questioned: “Why should we invest in a corporate bond fund? At what stage of the lifecycle? In what commodity?” We looked into the demand side of the commodity market, before hunting for assets.
We explored the growing high-tech/clean-tech applications most likely to increase demand for these niche commodities.
A clearer picture emerged from the demand analysis. Assessing which commodities were attractive culminated in a market attractiveness vs. strategic fit matrix for the investor. Niche commodities such as rare earths, manganese zinc, vanadium, and cobalt were prioritised.
Our top concern was getting the fund’s focus and strategy right. Following this, the next step was to set up governance, the operating model and develop a toolkit and processes to handle the large volume of origination needed to find exceptional investments.
As a rule of thumb, We want to make sure we always reject 75-88% of the deals we look at.
There is no such thing as superior access to good deals or superior screening skills. Setting up the tools and processes to handle this large volume of screening is critical for success.
After answering “why”, it was much easier to answer “what”. Having understood why they were investing, we assisted the Public Company in defining their investment focus.
We built the fund from scratch, developing the strategy and filling the investment pipeline with over 30 opportunities.
Together with the client, narrowed down the vision and created a successful venture capital fund with a full deal pipeline.