INVESTMENT PROCESS
Our investment process is designed to focus on “the deals that matter”. It ensures a significant throughput capacity and speed of decision-making, but also a consistent quality of independent challenge and diligence for every deal.
It is a dynamic blend of rigorous qualitative and quantitative analysis and insight. It is continuously reviewed and refined with the goal of facilitating identification and selection of superior investment opportunities in Australia and within selected emerging markets. Investment opportunities are monitored closely by senior management and the risk and investment committee at each stage of review.
We follow a rigorous, four-stage approach for each investment, be it a direct investment or a fund investment. The general process is described below, although we do adjust it to reflect our wide range of asset classes and investment types.
Our typical process adopted for any portfolio investment is outlined below:
ORIGINATION OR DEAL IDENTIFICATION
Our teams originate deals from multiple sources. This includes proprietary sources, both in-house and through strategic partnerships as well as a network of leading institutions and partners. In other words, we identify potential businesses and industries of interest by drawing on proprietary networks, investment banks, private equity funds, governments, corporate finance advisors, etc.
When pre-screening potential investments, we conduct a consistent set of analyses to assess whether the deal should enter the pipeline. The factors analysed at this stage include:
• Fit with our strategy regarding industry, region and deal size
• High-level investment thesis
• High-level risks
EVALUATION & DUE DILIGENCE
Deal evaluation is at the core of what we do. We conduct thorough evaluation that includes financial and legal due diligence.
The key parameters of the evaluation include:
• Financial and legal due diligence
• Detailed investment thesis
• Detailed risk assessment
Examples:
1.Ascertain the eligibility and investment fit of the identified opportunity in the context of HLG’s investment criteria.
2. Research the industry, relevant segments and analyse the business model of the potential investment.
3.Ascertain the potential of scaling up business operations on a regional and global basis.
4.Develop the business valuation and conduct negotiations to determine the project’s feasibility.
5.Conduct due diligence into all aspects of the investment opportunity comprising financial, legal, tax and commercial matters.
INVESTMENT APPROVAL & EXECUTION
After the evaluation, prepare the investment thesis to seek approval from the executive committee.
Once approved, investments are executed by our dedicated Investment Team or fund manager (where applicable) , who specialise in implementation of asset-purchase programmes/fund management, managing risks where appropriate or negotiating complex deals.
ACTIVE PORTFOLIO MANAGEMENT & VALUE CREATION
Work closely with the management of portfolio companies to develop and implement a growth strategy to expand regionally and globally.
We manage our portfolio actively to create value. We frequently assess the performance of our portfolio against the initial investment thesis.
We exercise our shareholder rights and are represented at shareholders’ meetings of companies in which we have a significant stake.
The same diligence is applied to our investments in third-party funds: just as we may select external managers using a thorough process, we also continue to manage and monitor them in this way.
INVESTMENT EXIT
Successfully exit the investment through any one of the recognized techniques, e.g., strategic MBO (management buy-out), or IPO (initial public offering).
