Stafford Capital Partners, First Super team up to manage $220m co-investment to back local SMEs

Stafford’s original private equity program with Melbourne-based First Super, which has been operating since 2010, has generated a net internal rate of return (IRR) in excess of 20 per cent per annum since it was formed.

For several years, the firm has worked closely with First Super to develop a specialised ESG (Environment, Social and Governance) diligence framework that will continue to be applied to the co-investment program.

The private equity program is also being converted into an Evergreen structure, meaning proceeds received from exits can be reinvested into new co-investment opportunities. The co-investments will focus on Australian SMEs forecast to generate strong returns.

Stafford’s Australian Private Equity lead Daniel Bowden said that investing in private equity through a strong ESG lens had proven a successful investment theme for First Super.

“This strategy’s strong focus on active management of ESG risks sets it apart within the private equity asset class, delivering strong benefits beyond the significant bottom line net returns,” he said.

“It is exciting that following several recent exits from First Super’s original program, there is dry powder available to reinvest under the ESG PE co-investment program.”

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 USD$7.9 billion for more than 150 clients worldwide.

Since the beginning of 2024, Stafford’s private equity team has secured an aggregate of $340 million of new capital to invest in co-investment opportunities, both locally and globally.

The agreement with First Super comes after Stafford recently secured a $250 million mandate – known as QP4 – with $83 billion superfund HESTA. The previous global PE mandate with HESTA led to investments in a diverse range of industries, including healthcare technology, cyber security, sustainable packaging, financial payments and others.

Stafford has also been working with First Super, which manages around $4 billion in FUM for 50,000 members, for almost two decades.

First Super was founded in 2008 following the merger of three industry super funds: Furniture Industry Retirement Superannuation Trust, Pulp & Paper Workers’ Superannuation Fund, and the Timber Industry Super Scheme.

“First Super is looking forward to continuing to support this important part of the Australian economy,” First Super CEO Bill Watson said.

“Our size means we can continue to invest our members’ retirement savings in Australia, rather than in offshore private equity.”