Investment Strategy

The Potentum Partners team have developed innovative methodologies for separating the managers driving returns using skill from those lucky with timing or exercising leverage in a rising market.

Our process is highly qualitative, with a strong focus on culture and organisational factors, important given the long time frames of private equity commitments.

Importantly, the Potentum Partners team have developed a market reputation for thought leadership and quality. Over time, this led to a sourcing advantage, with private equity managers seeking a commitment from Potentum Partners as a sign of quality endorsement. We believe we can exercise these advantages on behalf of a small set of client relationships.

World-class access

To achieve market leading private equity returns, investors need to identify, access and build relationships with the best private equity managers.

Portfolio concentration

In order to outperform, a private equity portfolio needs to be concentrated into relatively few relationships. Overly diversified portfolios tend to underperform the market and do not compare well with public equivalents.

In order to offer the types of relationships that will maximise information flow and deliver opportunities for co-investment, those relationships will need to be sized to suit the program.

It is critical that an investor be important to its managers and that each manager be relevant to a program.

Potentum Partners has a deep set of relationships with top tier private equity managers, which have been developed over the course of a decade, along with a deep pipeline of investment opportunities.

Strong Alignment

Potentum Partners believes that extreme alignment with its clients is necessary to give its partners confidence that they are accessing the best opportunities possible. Potentum Partners aims to be a low-cost provider, incentivised by performance outcomes.

By limiting itself to a handful of clients, Potentum Partners will be able to avoid the conflict of opportunity between its clients and provide an unprecedented amount of transparency.

Built-in co-investment

A critical means of cost reduction in private equity is accessing fee and carry free co-investment. We would caution that such cost reduction is only worthwhile as long as the investor can be confident that:

  • Co-investment is not being made available because a manager is seeking to lay-off risk or because it has moved into a very unfamiliar size of deal; and
  • The investor is not being adversely selected. The investor needs to be sure it is seen as a core and key relationship to the manager offering the deal and that it is the first or one of the first investors to be offered it.

In order to attract quality co-investment, an investor needs both strong relationships and an ability to convince managers that it has the appetite and internal processes to move at the speed required by a competitive private sale process.

Potentum Partners has a very strong track record in co-investment, having deployed between 25% and 50% of capital deployed over the last three years in fee-free co-investment.

 

Tailored structures

Potentum Partners offers parallel discretionary “funds-of-one” to a small handful of clients. Given the concentrated client base, we are highly consultative with each of our clients while maintaining the responsiveness required to secure the best opportunities in the market.

Potentum Partners is available to work closely with internal investment, strategy and operational teams within each of our clients, with a view to helping develop their internal capability to eventually replace Potentum Partners.

We believe that Potentum Partners’ success is the success of our partners.

Get in touch

Melbourne

Suite 1920, Como Centre, 644 Chapel St
South Yarra, Melbourne, VIC 3141

New York

Level 18, 104 5th Ave
New York, NY 10011