AIC Conference Day Two Wrap-Up

Risk and Diversity Remain Key Challenges

Proving that the ‘Adapt’ theme is extremely apt as the theme of the AIC conference, the second day highlighted how industry sectors successfully responded to the pandemic. The morning session opened with governance insights from Board Matters Managing Director Jennifer Robertson. Robertson cited the 2016 Dreamworld tragedy as an allegory for the responsibility of boards. “Many of the points outlined in the coroner’s report surprised me,” she says. “Safety culture is key for boards and in this case, the board failed.”

She added that many boards focus on major risks but as the Dreamworld case showed, the ‘tamer’ risks can have major consequences.

“Boards also need to consider their climate action plans,” she says. “Currently, there are 1500 pieces of litigation concerning climate change globally; Australia has 96. Therefore, it’s important to think about how climate change applies to your business.”

Healthcare offers opportunities despite disruptions

Meanwhile, healthcare was the topic of conversation for the first panel of the day. The sector contributes $200 billion of expenditure to the economy, of which 30% is private. This presents a number of opportunities in the post-COVID environment, says Stephanie Newey, Partner, L.E.K Consulting. “While there’s been plenty of changes over the past two years that have offered challenges, there’s also been opportunities, particularly around telehealth and the benefits it brings.”

Steven Rubic, CEO, Healthscope says some of these opportunities for his organisation include forming better relationships with the government through greater cooperation and delivering mental health support more effectively. “We’re also making better use of technology including increasingly using AI to diagnose x-rays.”

Like most sectors, healthcare has been affected by supply chain issues. Matt Muscio, CEO of EBOS Medical Technology (formerly LifeHealthcare) says the disruptions have been a challenge, being a medical device supplier. “The cost of freight has more than doubled and operating our warehouses has also been challenging. The silver lining through the pandemic is that the industry came together to solve the shortages. It was phenomenal how we all worked together to get what we needed.”

More needed to embrace diversity

The panel of Champions of Change provided insights around accelerating the industry’s progress on diversity and inclusion, with Anne-Marie Birkill, Venture Partner, OneVentures confirming women remain a minority in this sector. “As we embrace one dimension of diversity, others will be addressed,” she says. “From 2019-22, women in senior positions in private equity increased from 2% to 6%, so we have a long way to go.”

Diversity is quite an easy thing to address, she added, if we have willingness. “We need to show women a path to satisfying careers where they can achieve their career goals. But the more we talk about it, the more things will change. We just need the conversation.”

Meanwhile, Rob Koczkar, Managing Director, Adamantem Capital, says diversity within this sector is crucial. “Offshore investors aren’t going to be supportive if they don’t see domestic investors supporting diversity. You need the investment team to look like the community it is investing in.” Andrew Major, CRO, HESTA, says while there has been progress in this area, there is an issue with women at the mid-level leave the industry. “More work needs to be done here to keep them engaged with the sector,” he says.

Viewing manufacturing as a capability, not a sector

In the session on exploring growth opportunities in manufacturing, Jens Goennemann, Partner, HorizonTwo Capital Partners, says we need to view manufacturing as an opportunity for investment. “Manufacturing’s contribution to Australia’s GDP is $100 billion,” he says. “We need to view it as a sector where it is not about what you make, but how you make it: rather than a sector it’s a capability.”

He says successful Australian and global manufacturing firms share three key features:

  • better not cheaper

  • globally competitive

  • embrace the entire manufacturing value chain.

Kristi Riordan, Co-founder and CEO Harvest B says investing in manufacturing is different to investing in SAAS, which is where more people tend to put their money. “Your fundamentals are reversed – you need a lot of capital upfront,” she says. “But when speaking with investors you need a vision – and it can’t be an old-world vision.”

Adam Gilmour, Co-Founder and CEO, Gilmore Space Technologies says to attract investors to manufacturing, you need to be solving a problem and have the capability to solve it. “Space is hard as it’s expensive,” he says. “But it’s a global problem and investors see that – they don’t want to invest in a business that is solely Australia’s.”

How to approach a family office

The session on partnering with family offices highlighted the different styles of offices and how they advise their clients. John Russell, CEO, Myer Family Investments advised investors not to ‘spray and pray’ when seeking to raise capital. “We get about 200 proposals each quarter and with a team of six we don’t have time to read them,” he says. “Instead understand what the investment strategy of the group is that you’re targeting and why, and appeal to that.”

Lucinda Hankin, Director, Grok Ventures, says there is an enormous benefit to find out who to talk to. “Family offices are private so try and build a relationship with a single family office who can help you gain access to other offices,” she says. Meanwhile, Jenny Wheatley, CEO, Cambooya says underestimate the next generation at your peril, citing an EY report that found 70% of this generation will change their adviser when they inherit their wealth. “This is important,” she says. “They will want their adviser to present options that provide returns but also value alignment; they want to invest with purpose.”

The next panel discussed the breakneck speed of technology-driven change and the appetite for investors to be part of it. Neil Stanford, Managing Director, V-Ignite says he’s seeing a lot of convergence, especially coming out of life sciences with robotics and Ai. “Robotics in agriculture is a huge area with many opportunities for new business models that previously weren’t economical to invest in,” he says.

Stepstone’s Managing Director Phil Cummins agrees the PE landscape is very different to what it looked like 10-15 years ago. “The opportunities are different now, they’re much wider and there are multiple fund strategies. The mindset of investors has also been driven by the change in technology.”

Elicia McDonald, Partner, AirTree Ventures says COVID was a tailwind for the industry. “It’s never been easier or cheaper to start a business and our local industry has matured,” she says. “A decade ago, there wasn’t the experience in Australia to train others but now we’re able to bring people through the ranks and develop them locally.”

Transforming an airline business during turbulent times

In the final session of the day, Jayne Hrdlicka, CEO Virgin Australia Group shared her vision for the transformation of the business. “We have had to fix bad habits,” she says. “You don’t lose $2 billion over seven years without bad habits being formed. We’ve had to build discipline at management level and introduce greater discipline. We made fast decisions, but they were good decisions.”

And it wouldn’t be an AIC conference without a poem from moderator Ali Moore, and she didn’t disappoint with an excellent encapsulation of all the sessions during the event.