April 27, 2025 • 24 mins
In this weeks episode, Fabian chats with Andrew Beaumont, Director of Vest Capital. Andrew reveals the inner workings of private credit and how Vest Capital is changing the game for businesses needing fast, flexible financing solutions across Australia.
Andrew's personal journey from big four accounting through management consulting to fund management provides valuable lessons for finance professionals. He emphasises surrounding yourself with exceptional talent who think differently and creating environments where ideas flow freely. Most importantly, he credits Vest Capital's rapid growth to a shared commitment to excellence and mutual support amongst their team.
If you're an aspiring finance professional, or simply keen on gaining some extra industry insight, this episode is for you!
Enjoyed the episode? Follow Finance Friends Podcast on Instagram, LinkedIn and TikTok for daily updates and more inspiring conversations. Got questions or ideas for future episodes? Send us a DM @financefriendspodcast!
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Episode Transcript
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Speaker 1 (00:05):
Welcome to the Finance Friends podcast.
Whether you have followed usfrom the beginning or you're a
new listener, we are excited tohave you here.
Finance Friends gives ourlisteners a seat at the table
with successful finance industryleaders.
Follow us on our socials atFinance Friends Podcast, linked
in the description box of thisepisode, and stay tuned for
(00:29):
weekly episode releases.
Today's episode we spoke toAndrew Beaumont, who's a fund
manager at Vest Capital, aprivate credit manager based out
of Sydney.
Really interesting story Talksabout.
He studied commerce atuniversity a university and then
worked for a large big fouraccounting firm in audit,
(00:49):
transitioning to managementconsulting, where he spoke about
the importance of having astrong team and being around
smart people to where he istoday and the unique skills
required to be successful as aprivate credit manager.
Listen in, andrew.
Welcome to the studio.
Thanks, fabian.
Nice to meet you.
Nice to meet you too.
So you currently are directorat Vest.
(01:12):
Is that right?
That's exactly right.
Tell me what you do and who areVest.
Speaker 2 (01:16):
Yeah, sure, so-.
Speaker 1 (01:19):
Vest Capital.
Sorry, Vest Capital, yeah,that's right.
Speaker 2 (01:21):
So Vest Capital is a private credit fund manager
based in Sydney.
We have an office in Brisbaneas well and, yeah, we focus on
raising capital from investorsto invest in private credit or
private debt across Australia.
So what that means is we willraise capital into our funds
(01:46):
across Australia.
So what that means is we willraise capital into our funds and
then we will go and writedirect loans to businesses
throughout Australia, backed byreal estate, backed by property.
Speaker 1 (01:52):
Yeah, okay.
So for anyone that doesn'tunderstand what private and
public credit are, can you justmaybe give us a bit of an
understanding of that?
Speaker 2 (02:00):
Yeah, sure.
So typically or traditionally,if you want to go and get a loan
or borrow money to buy aproperty or take out a loan for
your business secured by yourproperty, you would go to a bank
and you would go to talk to oneof the big banks or a small
bank and you would talk aboutwhat your business is doing and
(02:22):
your cash flows and your abilityto borrow that money.
Now, those are big publicinstitutions, typically backed
by deposit funds or otherwholesale capital instruments in
the market bonds that the banksmay issue, things like that.
So those are really big publicinstitutions.
Private credit is, and privatecapital more broadly is, where
(02:45):
you may have fund managers whoare going out and raising money
from private investors andthey're going in and writing
those loans or otherwiseallocating into private markets
directly as funds.
Speaker 1 (02:58):
Yeah, okay.
So that's the difference,because a bank is obviously a
deposit-taking institution, sothe source of funding most of
the time from a bank isobviously a deposit-taking
institution.
So the source of funding mostof the time from a bank is
people that put deposits in thebank, their cash at bank, their
term deposits.
The bank then uses that toon-lend to people that want to
buy houses or do developments.
But now the banks have pulledaway from that development
(03:20):
finance or real estate-backeddevelopments and there's an
opportunity for Vest Capital andother businesses to provide
development finance or realestate-backed developments and
there's an opportunity for VestCapital and other businesses to
provide this source of fundingto the developers.
Is that right, yeah?
Speaker 2 (03:34):
definitely.
I mean, look, the banks havepulled back from development
finance.
But we don't only focus on thatmarket.
We provide business loans morebroadly secured by Australian
real estate.
So you know the banks are doinga fantastic job in their large,
systemically importantinstitutions.
(03:54):
I think where private credit hasfilled a gap that perhaps was
always there is that ability tostep in and provide a loan to a
business that is fast andflexible.
You know, that ability to movequickly, that ability to be the
fact that we're small, the factthat we're not a giant
organisation with enormousmarket capitalisations and
(04:19):
thousands of employees, means wecan make decisions quickly, and
so that ability to be fast, tobe flexible and actually help
businesses that need to borrowcapital in that way, I think
that's just a gap that wasalways there, and so you know
there's development.
Finance is one component ofthat, but there's just more
business loans more broadlysecured by real estate.
(04:40):
That you know.
There's a real demand out therefrom businesses who are looking
to solve, you know, fundingproblems.
Speaker 1 (04:46):
So, in terms of Vest Capital, is it always the
secured against real estate, ordo you look at a business
balance sheet as well?
Speaker 2 (04:54):
Yeah, all our loans are secured by Australian real
estate and that can be a mix ofresidential, commercial,
industrial real estate, Alwayssecured by Australian real
estate.
But we obviously do look at thebroader context of the business
.
We do look at their financials,their cash flows, their assets
and liabilities and things likethat, Absolutely Just to
understand the business and makesure the lines we're writing
(05:17):
we've done our due diligence.
Speaker 1 (05:19):
So, in your role as the fund manager, yes, so are
you responsible for sourcing thedeals, as they call it in the
industry origination, or are youfocused on raising the capital?
Or do you have a responsibilityacross both sides of the
equation?
Speaker 2 (05:37):
Yeah, so we've got a team and our team fills all
those gaps.
You know it's interesting.
It's interesting you talk tofund managers who might be
equity fund managers or bondfund managers that origination
side of the business is not asmuch of a factor.
Yes, they need to go out andanalyse markets and really
(05:58):
source those great investmentopportunities.
But the difference with privatecredit is you actually need to
go out and structure the loan aswell as raise the capital
investment opportunities.
But the difference with privatecredit is you actually need to
go out and structure the loan aswell as raise the capital, and
so you've got that originationside as well as that
distribution side.
So you know, we have in ourteam directors that are purely
focused on origination.
We have directors that arepurely focused on raising
(06:21):
capital, and then we have, youknow, lots of directors, other
directors, lots of team membersinvolved in operations and
finance operations and treasuryand credit and a whole bunch of
things, et cetera.
exactly.
So myself I sit across, yeah,the funds management and raising
capital and originatingsomewhat as well.
Speaker 1 (06:41):
And what is the average turnaround time from,
say you seeing an opportunity toprovide finance to a company to
actually raising that capitaland giving that company the
finance they require?
Speaker 2 (06:58):
Yeah, it can be very short, you know, particularly if
we have some available fundsthat we're looking to deploy, we
can from inquiry through tosettlement and the provision of
those funds can be as fast as aweek or two, very, very fast.
And really that's the gap we'retrying to solve in the market
(07:19):
is somebody comes to us, theyneed some capital.
That's solving a short-termproblem.
That might be a bit morecomplex and we can step in and
solve those problems quickly.
Speaker 1 (07:29):
And how would that compare to a big four bank?
Speaker 2 (07:33):
Well, I mean, obviously it takes much, much
longer with the banks and thelarge non-banks, but you know
the cost of capital is muchcheaper.
So you know we're not trying tobe a long-term solution for
borrowers, we're trying to stepin and be that short-term
solution.
You know an example we see allthe time.
You know somebody is buying aproperty.
(07:54):
You know they're running asuccessful business.
They might have an investmentproperty.
They put a deposit down, youknow, and settlement is fast
approaching.
While they may have already hadpre-approval, the credit has
not actually been signed off andoften business borrowers may
have slightly more complexity totheir transactions than, say, a
(08:15):
typical small family, mom anddad borrower Exactly.
And so they might come to us andsay it's a week or two weeks
before settlement, we haven'tgot the final approval from the
bank.
We want to eliminate the riskon this.
Can you please help us settlethe purchase of this property?
Otherwise we're going to lose$100,000 on our deposit and then
(08:37):
we can help them settle it andthen after a few months they can
go back into bank and generallyget a better rate, get a better
rate exactly.
So we're really about thatshort-term and that sort of
slightly more complex solutionsand we're in there to help
people in a short-term natureand then get them back into the
banking system or get them backinto the non-banking system.
Speaker 1 (08:56):
And what are the key skills to understanding whether
it is a good deal for you?
And for your investors.
Speaker 2 (09:06):
Yeah, sure, I mean, we're blessed with a fantastic
team at Vest Capital and youknow we've got some of the best
people I've ever worked with,who understand risk, understand
property and understand business.
You know how to analyzebusinesses amazingly.
So that's a question that ourhead of credit would be able to
(09:27):
answer better than me.
But you know I'll do my best.
You know we're looking at arange of factors.
We're obviously going deep onthe asset.
We get independent valuationreports done on the properties.
We only use value as we trust.
We really want to understand thebusiness.
Why do they need the money?
How are they going to repaythis loan?
(09:47):
What are the other things goingon in that business that
actually may impede that orimpair that?
What are their cash flows like?
What are their assets in line?
So we'll really go in and lookat the business.
We'll look very deeply at theproperty and we're able to
accomplish this work very, veryquickly.
So we've got, as I said, we'vegot a fantastic team.
We work through these thingsreally, really quickly and it's
(10:09):
that holistic picture of theoverall risk profile of a
particular deal.
We're considering a whole rangeof factors.
That's the microcosm of thedeal.
All of this is being doneagainst a backdrop of what's our
overall portfolio, what's ourconcentration of the current
(10:29):
deals we have, current loans wehave in particular states or
industries, or againstparticular asset classes or
property types.
You know what's themacroeconomic picture at the
moment, or what's the economicpicture for a particular
sublocation like that particularregional city or capital city
or state.
How are they performingeconomically at the moment and
what's the outlook.
So all of these things willcome into play in terms of how
(10:52):
we make a decision on funding orallocating capital to a
particular loan.
Speaker 1 (10:56):
And if you are, is it a wholesale offering?
Only it is for investors, yes.
So what is the average returnan investor can expect to
receive over a 12-month term?
Speaker 2 (11:09):
Look.
Each loan is different.
Some loans are lower risk andattract a lower return.
Some loans attract a higherreturn, but we're comfortably
providing at least double-digitreturns for our investors.
So above 9% in the 10%regularly and there's been a
(11:31):
fantastic performance there.
Speaker 1 (11:32):
Which is quite attractive if you can get
something, that is, you know,you've got a real estate backed
investment and it's a debtinstrument at 9% to 10% plus.
Is that why there is so muchgrowth in this industry?
Speaker 2 (11:49):
Yeah, look, I think there's growth both from on the
investor side and on theborrower side.
You know investors are becomingmore aware of this asset class
and more comfortable with thefact that you know.
They understand it better.
They might have heard of itfive years ago, I think.
These days they actually youknow that.
(12:09):
They might have seen a numberof times and they're quite
familiar with it already and sounderstanding the risk in it
before they make theirinvestment.
I think that's more prevalentnow.
But also on the borrower side, Ithink borrowers and brokers are
becoming more aware that thisis a solution.
Previously, that person who hada $100,000 deposit down and
(12:30):
them and their broker weren'teven aware that this was a
solution, might have just donetheir money and lost a hundred
thousand dollars because,because they couldn't get the
funding on time, whereas thesedays, I think brokers and
borrowers as well in the marketare becoming more aware that
there is a solution.
You can eliminate that risk andsolve that problem, um, and
then go back to traditionalfunding.
So I think there's moreawareness on both sides of the
(12:54):
coin for this and there's greatgrowth happening on both sides.
Speaker 1 (12:59):
So how interesting.
Obviously, our listeners are alot of people that are either
studying finance or maybe workin another area, that are
looking to enter into finance orwant to become a fund manager
in private credit.
Can you talk us through yourstory from the beginning?
What did you study atuniversity and how did you get
to where you are today?
Speaker 2 (13:19):
Sure.
So I did my undergrad incommerce, majoring in accounting
and finance.
So that's pretty specific.
And then my first career wasactually in working at a large
public big four accounting firmas an accountant.
So I did a couple of yearsthere.
What type of accounting did youdo so?
(13:40):
Financial accounting, workingin audit for large listed
companies?
Speaker 1 (13:46):
And obviously what you do today audit is extremely
important.
Speaker 2 (13:51):
It was a very, very good way to sort of start a
career and hone skills andunderstanding all this stuff.
Absolutely yeah, it was one ofthe best training grounds I
could have had.
Speaker 1 (14:04):
Yeah, so from there, where did you go?
Speaker 2 (14:08):
Yeah, so obviously I did two and a half years or so
in financial audit and learnt alot and was very grateful and
then wanted to sort of expand myunderstanding of business and
so I moved into managementconsulting and both of these
opportunities with the firm.
I previously worked with,Deloitte.
I'm very grateful for my timethere so I moved into management
(14:30):
consulting.
Speaker 1 (14:32):
Yeah, I was going to say for our audience that don't
know what management consultingis, can you please share some
insights?
Speaker 2 (14:37):
Yeah, yeah, management consulting is always
ask the consultant what aconsultant does, and they'll
never have an answer for you.
Isn't that the old adage?
Management consulting isadvising businesses on how to
solve typically complex problems, so what that may entail, it
might be they might have astrategy problem, they might
(15:00):
have an operations problem, theymight have a technology problem
, and typically you're advisingvery, very large, complex
organizations whereunderstanding the problem can be
complicated, designing asolution can be complicated and
actually executing the changewithin the organisation can be
very, very complicated as well,and so bringing specialists in
(15:20):
who can understand problems,design solutions and help
execute change is often veryvaluable.
Speaker 1 (15:28):
At the Finance Friends podcast.
We love stories.
Finance Friends podcast we lovestories, so can you share a
specific story about, maybe, aproject that you were on and
some learnings from that project?
Speaker 2 (15:41):
Yes, yes, look, I can .
So my area of, or the industrythat I focused on, was, more
broadly, financial services, soI worked for some banks and some
large financial organisations.
I think some things that I canshare that I learned.
(16:03):
I think you can't underestimatethe value of good people, and
it's interesting when you getinto very large organisations,
how, if you have a small groupof high-performing people, how
effective that can be andsometimes that's all it takes is
(16:27):
a handful of dedicated, capable, hardworking people to drive
significant change across anorganisation with thousands of
people.
And you know that really stuckwith me about high performance
teams and how do you create anenvironment where you've just
got spectacular people?
(16:48):
And you know I'm very gratefulfor my time at Deloitte and
there were some wonderful peoplethere and then.
But when we went into theseother large organisations you
know I'm very grateful for mytime at Deloitte and there were
some wonderful people there, butwhen we went into these other
large organisations, you knowthere were some pods of really
spectacular people and it wasamazing to see the impact that
they would have in massiveorganisations.
Speaker 1 (17:04):
Yeah, so is there one specific situation or project
that comes to mind that youlearnt a lot from that you've
been able to implement in yourcurrent business?
Speaker 2 (17:15):
yeah, no lots, but I probably I probably won't talk
to them, if that's okay, anyspecific clients or anything
like that.
Um, just, obviously, you knowthe it's honoring that
confidentiality of of who Iconsulted to, etc.
Um, but you know I saw itacross the board and you know
that that that comment around umhow to build great, it's really
hard, really hard, and the bestteams that I saw were led by
(17:42):
people that one hired people whowere better than themselves,
two hired people that thoughtdifferently from themselves and
(18:03):
three tried to give space totheir teams to push ideas up and
were happy to be wrong andhappy to be challenged.
And you know, when you havethat sort of culture and that
sort of environment, anything ispossible.
Speaker 1 (18:13):
So ultimately, you're going to get the best outcomes
right if you're challenging more.
Speaker 2 (18:17):
You're going to get the best decisions, the best
calls from teams of amazingpeople who are all able to share
ideas and have their ideasheard.
That really stuck with me.
Speaker 1 (18:28):
So in your business, if you are looking to hire,
whether it be on the originationside, the capital raising side,
what are the key skills thatyou look for?
So, if someone was or does wantto go into private credit, what
skills do they need to besuccessful?
Speaker 2 (18:47):
Yeah, so there's various pillars to our business.
So I think, talking on thecapital raising side, you know
people who are great at raisingcapital.
They understand the productextremely well, so they have a
(19:09):
very good understanding offinance.
They understand exactly what itis that we're, how we allocate
capital, how we analyze risk,how to talk about risk, how to
talk about returns, how to talkabout the underlying loans that
we're writing and reallyunderstand the mechanics of that
.
And you know that comes fromunderstanding finance,
(19:30):
understanding accounting andunderstanding property
specifically to our fund.
But it's also a sensibility forbroader economic issues.
Why is this particular propertya good property to be investing
against at this point in thecycle, macroeconomically or
(19:51):
microeconomically for thatparticular location?
Why is allocating capital intoprivate credit at this point
good as part of a broaderportfolio, as advised by your
financial advisor when you'retrying to execute an income
strategy, more diversification,whatever it is, being able to
talk about portfolio theory,being able to talk about
(20:12):
property markets, being able totalk about macroeconomic issues.
How do some overseas factorsyou know the recent drop in the
Aussie dollar, how does thataffect X, y, z?
And so that real understandingof economics and finance and the
mechanics of it all.
I think if you can understandthat and then you've got, you
know, an ability to go ahead andconnect with people and be
(20:32):
personable and talk to them andreally you know, I think that's
very effective.
I mean, I tacked on the lastbit last.
That's probably the mostimportant bit being able to
understand investors and talk tothem and obviously not making
recommendations to them, butunderstanding, you know,
connecting with them and beingpersonable.
But I think that actualtechnical knowledge and ability
(20:55):
to understand what we do iscritical.
Speaker 1 (20:57):
So what do you most enjoy about your job?
Speaker 2 (21:01):
Look, I think when I get in the morning I'm just
grateful for the team I've gotaround me.
It's amazing.
That's what I love most.
I love working with a team thatyou know we came and created
this business together and it'sjust incredible.
But I love most I love workingwith a team that you know we
came and created this businesstogether and it's just
incredible.
But I love all aspects.
I love talking to investors.
I love talking about theinvestment opportunities we have
(21:24):
.
You know, I love working with ateam to sort of find new loans
and bring them to fruition andlooking at all the risk
parameters of it and diving intothe legal structures and legal
issues.
It's all fascinating.
Speaker 1 (21:37):
And going from, obviously, what you're doing now
and Best Capital.
How big is the business?
How many employees?
How much money do you lend outor do you have under management
whatever term you'd like to use?
Speaker 2 (21:50):
Yeah, so we have a team of nine.
We've been going for about twoyears and we've all got
significant experience infinance, working at other funds
or banks, et cetera, before, andyou know many of us have worked
together before as well, sowe're growing very, very quickly
.
I think we've managed to, youknow, double our funds under
(22:11):
management in the last sixmonths, and so you know that
growth is management in the last, uh, six months, and so you
know that that growth is reallyexciting and and, um, yeah, it's
, it's.
It'll be interesting to seewhat the next couple of years
holds for us.
Speaker 1 (22:21):
So yeah and this.
I've loved this conversation.
We can continue going forever,but one thing I'd like to ask
you just to finish up has therebeen anyone that's been a big
influence on your life andhelped you to get to where you
are today?
Speaker 2 (22:33):
Yeah, my dad has been a huge influence in my life,
how he's always had greathumility and he's always taught
me to just get up and have a go.
You know Sometimes you knowyou're just getting a bit of a
(22:56):
nudge.
You know, going off, you gothat, that that helps you know
how important is that in whatyou do today?
it's been everything.
It's been everything.
You know it's um and you knowwe, our whole team shares that.
You know there's we.
We all go out there every dayand we absolutely give it our
best.
Everyone's working incrediblyhard and everyone shares that
(23:19):
passion and and and that culture, and I think I think that's
very much part of the culturethat we have at best, capital
it's.
It's everyone is going out forthe win and you know we're all,
we've all got each other's backsand there's a, there's just a
fantastic team culture therewhere everyone is celebrated and
that's um.
In my experience, that's that'srare and we've got to hold on
(23:42):
to it as hard as we can yeah,and it can be difficult to
retain that as the businessgrows no doubt um it's.
Speaker 1 (23:50):
It's our number one priority as we Well.
That's a great way to finishthe podcast, Andrew.
Thank you.
Thanks, Fabian.
It's been a pleasure and we'llshare information on Best
Capital on our socials.
But thank you very much forcoming in, Thanks for the
opportunity and all the best inthe future growth of the
business.
Thanks so much, Fabian Cheers.
Speaker 3 (24:12):
Disclaimer this podcast exists for informational
and entertainment purposes only.
The personal opinions of thespeaker and guests do not
represent the view of any otherparty.
If this recording containsreference to financial products,
that reference does notconstitute advice nor
recommendations and may not berelied upon.
Welcome to the Finance Friends podcast.
Whether you have followed usfrom the beginning or you're a
new listener, we are excited tohave you here.
Finance Friends gives ourlisteners a seat at the table
with successful finance industryleaders.
Follow us on our socials atFinance Friends Podcast, linked
in the description box of thisepisode, and stay tuned for
(00:29):
weekly episode releases.
Today's episode we spoke toAndrew Beaumont, who's a fund
manager at Vest Capital, aprivate credit manager based out
of Sydney.
Really interesting story Talksabout.
He studied commerce atuniversity a university and then
worked for a large big fouraccounting firm in audit,
(00:49):
transitioning to managementconsulting, where he spoke about
the importance of having astrong team and being around
smart people to where he istoday and the unique skills
required to be successful as aprivate credit manager.
Listen in, andrew.
Welcome to the studio.
Thanks, fabian.
Nice to meet you.
Nice to meet you too.
So you currently are directorat Vest.
(01:12):
Is that right?
That's exactly right.
Tell me what you do and who areVest.
Speaker 2 (01:16):
Yeah, sure, so-.
Speaker 1 (01:19):
Vest Capital.
Sorry, Vest Capital, yeah,that's right.
Speaker 2 (01:21):
So Vest Capital is a private credit fund manager
based in Sydney.
We have an office in Brisbaneas well and, yeah, we focus on
raising capital from investorsto invest in private credit or
private debt across Australia.
So what that means is we willraise capital into our funds
(01:46):
across Australia.
So what that means is we willraise capital into our funds and
then we will go and writedirect loans to businesses
throughout Australia, backed byreal estate, backed by property.
Speaker 1 (01:52):
Yeah, okay.
So for anyone that doesn'tunderstand what private and
public credit are, can you justmaybe give us a bit of an
understanding of that?
Speaker 2 (02:00):
Yeah, sure.
So typically or traditionally,if you want to go and get a loan
or borrow money to buy aproperty or take out a loan for
your business secured by yourproperty, you would go to a bank
and you would go to talk to oneof the big banks or a small
bank and you would talk aboutwhat your business is doing and
(02:22):
your cash flows and your abilityto borrow that money.
Now, those are big publicinstitutions, typically backed
by deposit funds or otherwholesale capital instruments in
the market bonds that the banksmay issue, things like that.
So those are really big publicinstitutions.
Private credit is, and privatecapital more broadly is, where
(02:45):
you may have fund managers whoare going out and raising money
from private investors andthey're going in and writing
those loans or otherwiseallocating into private markets
directly as funds.
Speaker 1 (02:58):
Yeah, okay.
So that's the difference,because a bank is obviously a
deposit-taking institution, sothe source of funding most of
the time from a bank isobviously a deposit-taking
institution.
So the source of funding mostof the time from a bank is
people that put deposits in thebank, their cash at bank, their
term deposits.
The bank then uses that toon-lend to people that want to
buy houses or do developments.
But now the banks have pulledaway from that development
(03:20):
finance or real estate-backeddevelopments and there's an
opportunity for Vest Capital andother businesses to provide
development finance or realestate-backed developments and
there's an opportunity for VestCapital and other businesses to
provide this source of fundingto the developers.
Is that right, yeah?
Speaker 2 (03:34):
definitely.
I mean, look, the banks havepulled back from development
finance.
But we don't only focus on thatmarket.
We provide business loans morebroadly secured by Australian
real estate.
So you know the banks are doinga fantastic job in their large,
systemically importantinstitutions.
(03:54):
I think where private credit hasfilled a gap that perhaps was
always there is that ability tostep in and provide a loan to a
business that is fast andflexible.
You know, that ability to movequickly, that ability to be the
fact that we're small, the factthat we're not a giant
organisation with enormousmarket capitalisations and
(04:19):
thousands of employees, means wecan make decisions quickly, and
so that ability to be fast, tobe flexible and actually help
businesses that need to borrowcapital in that way, I think
that's just a gap that wasalways there, and so you know
there's development.
Finance is one component ofthat, but there's just more
business loans more broadlysecured by real estate.
(04:40):
That you know.
There's a real demand out therefrom businesses who are looking
to solve, you know, fundingproblems.
Speaker 1 (04:46):
So, in terms of Vest Capital, is it always the
secured against real estate, ordo you look at a business
balance sheet as well?
Speaker 2 (04:54):
Yeah, all our loans are secured by Australian real
estate and that can be a mix ofresidential, commercial,
industrial real estate, Alwayssecured by Australian real
estate.
But we obviously do look at thebroader context of the business
.
We do look at their financials,their cash flows, their assets
and liabilities and things likethat, Absolutely Just to
understand the business and makesure the lines we're writing
(05:17):
we've done our due diligence.
Speaker 1 (05:19):
So, in your role as the fund manager, yes, so are
you responsible for sourcing thedeals, as they call it in the
industry origination, or are youfocused on raising the capital?
Or do you have a responsibilityacross both sides of the
equation?
Speaker 2 (05:37):
Yeah, so we've got a team and our team fills all
those gaps.
You know it's interesting.
It's interesting you talk tofund managers who might be
equity fund managers or bondfund managers that origination
side of the business is not asmuch of a factor.
Yes, they need to go out andanalyse markets and really
(05:58):
source those great investmentopportunities.
But the difference with privatecredit is you actually need to
go out and structure the loan aswell as raise the capital
investment opportunities.
But the difference with privatecredit is you actually need to
go out and structure the loan aswell as raise the capital, and
so you've got that originationside as well as that
distribution side.
So you know, we have in ourteam directors that are purely
focused on origination.
We have directors that arepurely focused on raising
(06:21):
capital, and then we have, youknow, lots of directors, other
directors, lots of team membersinvolved in operations and
finance operations and treasuryand credit and a whole bunch of
things, et cetera.
exactly.
So myself I sit across, yeah,the funds management and raising
capital and originatingsomewhat as well.
Speaker 1 (06:41):
And what is the average turnaround time from,
say you seeing an opportunity toprovide finance to a company to
actually raising that capitaland giving that company the
finance they require?
Speaker 2 (06:58):
Yeah, it can be very short, you know, particularly if
we have some available fundsthat we're looking to deploy, we
can from inquiry through tosettlement and the provision of
those funds can be as fast as aweek or two, very, very fast.
And really that's the gap we'retrying to solve in the market
(07:19):
is somebody comes to us, theyneed some capital.
That's solving a short-termproblem.
That might be a bit morecomplex and we can step in and
solve those problems quickly.
Speaker 1 (07:29):
And how would that compare to a big four bank?
Speaker 2 (07:33):
Well, I mean, obviously it takes much, much
longer with the banks and thelarge non-banks, but you know
the cost of capital is muchcheaper.
So you know we're not trying tobe a long-term solution for
borrowers, we're trying to stepin and be that short-term
solution.
You know an example we see allthe time.
You know somebody is buying aproperty.
(07:54):
You know they're running asuccessful business.
They might have an investmentproperty.
They put a deposit down, youknow, and settlement is fast
approaching.
While they may have already hadpre-approval, the credit has
not actually been signed off andoften business borrowers may
have slightly more complexity totheir transactions than, say, a
(08:15):
typical small family, mom anddad borrower Exactly.
And so they might come to us andsay it's a week or two weeks
before settlement, we haven'tgot the final approval from the
bank.
We want to eliminate the riskon this.
Can you please help us settlethe purchase of this property?
Otherwise we're going to lose$100,000 on our deposit and then
(08:37):
we can help them settle it andthen after a few months they can
go back into bank and generallyget a better rate, get a better
rate exactly.
So we're really about thatshort-term and that sort of
slightly more complex solutionsand we're in there to help
people in a short-term natureand then get them back into the
banking system or get them backinto the non-banking system.
Speaker 1 (08:56):
And what are the key skills to understanding whether
it is a good deal for you?
And for your investors.
Speaker 2 (09:06):
Yeah, sure, I mean, we're blessed with a fantastic
team at Vest Capital and youknow we've got some of the best
people I've ever worked with,who understand risk, understand
property and understand business.
You know how to analyzebusinesses amazingly.
So that's a question that ourhead of credit would be able to
(09:27):
answer better than me.
But you know I'll do my best.
You know we're looking at arange of factors.
We're obviously going deep onthe asset.
We get independent valuationreports done on the properties.
We only use value as we trust.
We really want to understand thebusiness.
Why do they need the money?
How are they going to repaythis loan?
(09:47):
What are the other things goingon in that business that
actually may impede that orimpair that?
What are their cash flows like?
What are their assets in line?
So we'll really go in and lookat the business.
We'll look very deeply at theproperty and we're able to
accomplish this work very, veryquickly.
So we've got, as I said, we'vegot a fantastic team.
We work through these thingsreally, really quickly and it's
(10:09):
that holistic picture of theoverall risk profile of a
particular deal.
We're considering a whole rangeof factors.
That's the microcosm of thedeal.
All of this is being doneagainst a backdrop of what's our
overall portfolio, what's ourconcentration of the current
(10:29):
deals we have, current loans wehave in particular states or
industries, or againstparticular asset classes or
property types.
You know what's themacroeconomic picture at the
moment, or what's the economicpicture for a particular
sublocation like that particularregional city or capital city
or state.
How are they performingeconomically at the moment and
what's the outlook.
So all of these things willcome into play in terms of how
(10:52):
we make a decision on funding orallocating capital to a
particular loan.
Speaker 1 (10:56):
And if you are, is it a wholesale offering?
Only it is for investors, yes.
So what is the average returnan investor can expect to
receive over a 12-month term?
Speaker 2 (11:09):
Look.
Each loan is different.
Some loans are lower risk andattract a lower return.
Some loans attract a higherreturn, but we're comfortably
providing at least double-digitreturns for our investors.
So above 9% in the 10%regularly and there's been a
(11:31):
fantastic performance there.
Speaker 1 (11:32):
Which is quite attractive if you can get
something, that is, you know,you've got a real estate backed
investment and it's a debtinstrument at 9% to 10% plus.
Is that why there is so muchgrowth in this industry?
Speaker 2 (11:49):
Yeah, look, I think there's growth both from on the
investor side and on theborrower side.
You know investors are becomingmore aware of this asset class
and more comfortable with thefact that you know.
They understand it better.
They might have heard of itfive years ago, I think.
These days they actually youknow that.
(12:09):
They might have seen a numberof times and they're quite
familiar with it already and sounderstanding the risk in it
before they make theirinvestment.
I think that's more prevalentnow.
But also on the borrower side, Ithink borrowers and brokers are
becoming more aware that thisis a solution.
Previously, that person who hada $100,000 deposit down and
(12:30):
them and their broker weren'teven aware that this was a
solution, might have just donetheir money and lost a hundred
thousand dollars because,because they couldn't get the
funding on time, whereas thesedays, I think brokers and
borrowers as well in the marketare becoming more aware that
there is a solution.
You can eliminate that risk andsolve that problem, um, and
then go back to traditionalfunding.
So I think there's moreawareness on both sides of the
(12:54):
coin for this and there's greatgrowth happening on both sides.
Speaker 1 (12:59):
So how interesting.
Obviously, our listeners are alot of people that are either
studying finance or maybe workin another area, that are
looking to enter into finance orwant to become a fund manager
in private credit.
Can you talk us through yourstory from the beginning?
What did you study atuniversity and how did you get
to where you are today?
Speaker 2 (13:19):
Sure.
So I did my undergrad incommerce, majoring in accounting
and finance.
So that's pretty specific.
And then my first career wasactually in working at a large
public big four accounting firmas an accountant.
So I did a couple of yearsthere.
What type of accounting did youdo so?
(13:40):
Financial accounting, workingin audit for large listed
companies?
Speaker 1 (13:46):
And obviously what you do today audit is extremely
important.
Speaker 2 (13:51):
It was a very, very good way to sort of start a
career and hone skills andunderstanding all this stuff.
Absolutely yeah, it was one ofthe best training grounds I
could have had.
Speaker 1 (14:04):
Yeah, so from there, where did you go?
Speaker 2 (14:08):
Yeah, so obviously I did two and a half years or so
in financial audit and learnt alot and was very grateful and
then wanted to sort of expand myunderstanding of business and
so I moved into managementconsulting and both of these
opportunities with the firm.
I previously worked with,Deloitte.
I'm very grateful for my timethere so I moved into management
(14:30):
consulting.
Speaker 1 (14:32):
Yeah, I was going to say for our audience that don't
know what management consultingis, can you please share some
insights?
Speaker 2 (14:37):
Yeah, yeah, management consulting is always
ask the consultant what aconsultant does, and they'll
never have an answer for you.
Isn't that the old adage?
Management consulting isadvising businesses on how to
solve typically complex problems, so what that may entail, it
might be they might have astrategy problem, they might
(15:00):
have an operations problem, theymight have a technology problem
, and typically you're advisingvery, very large, complex
organizations whereunderstanding the problem can be
complicated, designing asolution can be complicated and
actually executing the changewithin the organisation can be
very, very complicated as well,and so bringing specialists in
(15:20):
who can understand problems,design solutions and help
execute change is often veryvaluable.
Speaker 1 (15:28):
At the Finance Friends podcast.
We love stories.
Finance Friends podcast we lovestories, so can you share a
specific story about, maybe, aproject that you were on and
some learnings from that project?
Speaker 2 (15:41):
Yes, yes, look, I can .
So my area of, or the industrythat I focused on, was, more
broadly, financial services, soI worked for some banks and some
large financial organisations.
I think some things that I canshare that I learned.
(16:03):
I think you can't underestimatethe value of good people, and
it's interesting when you getinto very large organisations,
how, if you have a small groupof high-performing people, how
effective that can be andsometimes that's all it takes is
(16:27):
a handful of dedicated, capable, hardworking people to drive
significant change across anorganisation with thousands of
people.
And you know that really stuckwith me about high performance
teams and how do you create anenvironment where you've just
got spectacular people?
(16:48):
And you know I'm very gratefulfor my time at Deloitte and
there were some wonderful peoplethere and then.
But when we went into theseother large organisations you
know I'm very grateful for mytime at Deloitte and there were
some wonderful people there, butwhen we went into these other
large organisations, you knowthere were some pods of really
spectacular people and it wasamazing to see the impact that
they would have in massiveorganisations.
Speaker 1 (17:04):
Yeah, so is there one specific situation or project
that comes to mind that youlearnt a lot from that you've
been able to implement in yourcurrent business?
Speaker 2 (17:15):
yeah, no lots, but I probably I probably won't talk
to them, if that's okay, anyspecific clients or anything
like that.
Um, just, obviously, you knowthe it's honoring that
confidentiality of of who Iconsulted to, etc.
Um, but you know I saw itacross the board and you know
that that that comment around umhow to build great, it's really
hard, really hard, and the bestteams that I saw were led by
(17:42):
people that one hired people whowere better than themselves,
two hired people that thoughtdifferently from themselves and
(18:03):
three tried to give space totheir teams to push ideas up and
were happy to be wrong andhappy to be challenged.
And you know, when you havethat sort of culture and that
sort of environment, anything ispossible.
Speaker 1 (18:13):
So ultimately, you're going to get the best outcomes
right if you're challenging more.
Speaker 2 (18:17):
You're going to get the best decisions, the best
calls from teams of amazingpeople who are all able to share
ideas and have their ideasheard.
That really stuck with me.
Speaker 1 (18:28):
So in your business, if you are looking to hire,
whether it be on the originationside, the capital raising side,
what are the key skills thatyou look for?
So, if someone was or does wantto go into private credit, what
skills do they need to besuccessful?
Speaker 2 (18:47):
Yeah, so there's various pillars to our business.
So I think, talking on thecapital raising side, you know
people who are great at raisingcapital.
They understand the productextremely well, so they have a
(19:09):
very good understanding offinance.
They understand exactly what itis that we're, how we allocate
capital, how we analyze risk,how to talk about risk, how to
talk about returns, how to talkabout the underlying loans that
we're writing and reallyunderstand the mechanics of that
.
And you know that comes fromunderstanding finance,
(19:30):
understanding accounting andunderstanding property
specifically to our fund.
But it's also a sensibility forbroader economic issues.
Why is this particular propertya good property to be investing
against at this point in thecycle, macroeconomically or
(19:51):
microeconomically for thatparticular location?
Why is allocating capital intoprivate credit at this point
good as part of a broaderportfolio, as advised by your
financial advisor when you'retrying to execute an income
strategy, more diversification,whatever it is, being able to
talk about portfolio theory,being able to talk about
(20:12):
property markets, being able totalk about macroeconomic issues.
How do some overseas factorsyou know the recent drop in the
Aussie dollar, how does thataffect X, y, z?
And so that real understandingof economics and finance and the
mechanics of it all.
I think if you can understandthat and then you've got, you
know, an ability to go ahead andconnect with people and be
(20:32):
personable and talk to them andreally you know, I think that's
very effective.
I mean, I tacked on the lastbit last.
That's probably the mostimportant bit being able to
understand investors and talk tothem and obviously not making
recommendations to them, butunderstanding, you know,
connecting with them and beingpersonable.
But I think that actualtechnical knowledge and ability
(20:55):
to understand what we do iscritical.
Speaker 1 (20:57):
So what do you most enjoy about your job?
Speaker 2 (21:01):
Look, I think when I get in the morning I'm just
grateful for the team I've gotaround me.
It's amazing.
That's what I love most.
I love working with a team thatyou know we came and created
this business together and it'sjust incredible.
But I love most I love workingwith a team that you know we
came and created this businesstogether and it's just
incredible.
But I love all aspects.
I love talking to investors.
I love talking about theinvestment opportunities we have
(21:24):
.
You know, I love working with ateam to sort of find new loans
and bring them to fruition andlooking at all the risk
parameters of it and diving intothe legal structures and legal
issues.
It's all fascinating.
Speaker 1 (21:37):
And going from, obviously, what you're doing now
and Best Capital.
How big is the business?
How many employees?
How much money do you lend outor do you have under management
whatever term you'd like to use?
Speaker 2 (21:50):
Yeah, so we have a team of nine.
We've been going for about twoyears and we've all got
significant experience infinance, working at other funds
or banks, et cetera, before, andyou know many of us have worked
together before as well, sowe're growing very, very quickly
.
I think we've managed to, youknow, double our funds under
(22:11):
management in the last sixmonths, and so you know that
growth is management in the last, uh, six months, and so you
know that that growth is reallyexciting and and, um, yeah, it's
, it's.
It'll be interesting to seewhat the next couple of years
holds for us.
Speaker 1 (22:21):
So yeah and this.
I've loved this conversation.
We can continue going forever,but one thing I'd like to ask
you just to finish up has therebeen anyone that's been a big
influence on your life andhelped you to get to where you
are today?
Speaker 2 (22:33):
Yeah, my dad has been a huge influence in my life,
how he's always had greathumility and he's always taught
me to just get up and have a go.
You know Sometimes you knowyou're just getting a bit of a
(22:56):
nudge.
You know, going off, you gothat, that that helps you know
how important is that in whatyou do today?
it's been everything.
It's been everything.
You know it's um and you knowwe, our whole team shares that.
You know there's we.
We all go out there every dayand we absolutely give it our
best.
Everyone's working incrediblyhard and everyone shares that
(23:19):
passion and and and that culture, and I think I think that's
very much part of the culturethat we have at best, capital
it's.
It's everyone is going out forthe win and you know we're all,
we've all got each other's backsand there's a, there's just a
fantastic team culture therewhere everyone is celebrated and
that's um.
In my experience, that's that'srare and we've got to hold on
(23:42):
to it as hard as we can yeah,and it can be difficult to
retain that as the businessgrows no doubt um it's.
Speaker 1 (23:50):
It's our number one priority as we Well.
That's a great way to finishthe podcast, Andrew.
Thank you.
Thanks, Fabian.
It's been a pleasure and we'llshare information on Best
Capital on our socials.
But thank you very much forcoming in, Thanks for the
opportunity and all the best inthe future growth of the
business.
Thanks so much, Fabian Cheers.
Speaker 3 (24:12):
Disclaimer this podcast exists for informational
and entertainment purposes only.
The personal opinions of thespeaker and guests do not
represent the view of any otherparty.
If this recording containsreference to financial products,
that reference does notconstitute advice nor
recommendations and may not berelied upon.
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