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Strong returns over the past three years from a $200 million global private equity (PE) co-investment mandate between Stafford Capital Partners and HESTA have led the superannuation fund to team up with the UK-based group again, agreeing to another $250 million mandate known as QP4.
Originally founded in Sydney, Stafford Capital Partners was born out of a merger between Quay Partners and Stafford Timberland in 2014, creating a firm that now has grown its funds under management (FUM) to US$7.9 billion.
This is but a fraction of the $83 billion managed by HESTA, which has had a co-investment strategy in place with Stafford since 2011, also including a sustainability-focused private investment program with more than $650 million committed as of the start of 2023.
Stafford Capital Partners notes the previous global PE mandate QP4 led to investments in a diverse range of industries, including healthcare technology, cyber security, sustainable packaging, financial payments and others.
Stafford's Australian private equity lead Daniel Bowden says the strategy seeks to open up smaller deal sizes, providing access across a wider spectrum of the private equity investible universe.
Single-asset style continuation vehicles, where HESTA would represent long-term patient capital, are also an area of focus.
"HESTA, as a large institutional investor, is looking for investment opportunities of appropriate scale that can be efficiently executed," says Bowden.
"This can mean that potentially strong-returning smaller deals may be more difficult to access. QP3 - and now QP4 - enables Stafford to access and complete smaller strong-returning deals on behalf of HESTA."
Bowden adds QP4 is also able to complete co-investments sourced by both the HESTA and Stafford investment teams, benefiting from the relationships both organisations have, and underscoring the importance of a 'partnership' style approach to investing that HESTA prefers.
"This latest mandate further builds on the strong relationship Stafford has with HESTA that has been cultivated over the past 20+ years, and spans multiple regions and business lines," says Bowden.
HESTA's head of portfolio management, Jeff Brunton, says the continued development of the relationship with Stafford demonstrates how the fund is looking to collaborate with key investment partners.
"We see this co-investment vehicle as effectively an incubator for ideas around certain thematics and gives us valuable perspectives around expertise and successful businesses that can lead to further deal flow,” says Brunton, who previously spent more than 12 years at AMP (ASX: AMP) and 15 years at Queensland Investment Corporation (QIC) before that.
“This is a great example of how we’re looking to leverage cutting-edge thinking from across our ecosystem of investment partners to help generate ideas and innovation across the portfolio.
“It’s this total portfolio approach that’s effectively bringing the best global investment thinking to our decision making, which helps us to continue to deliver strong, long-term investment returns for members."
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