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ROBERT Shand says people have asked him how he has stayed so relaxed in taking control of Blue Sky Alternative Investments (ASX: BLA) from its founder and talisman Mark Sowerby.
When Sowerby stepped down in August, 10 years after founding the company, it came as a shock to many.
At the time, the company had a market capitalisation of almost $500 million on the Australian Securities Exchange, had reached $2 billion in funds under management and had grown its share price by more than seven times since its listing six years earlier.
But Shand (pictured), who had been Sowerby's right-hand man since assisting with the company's IPO, says it was a non-event for those within the organisation.
"People have commented that since I took over the job that I have seemed very relaxed, and one reason that has been the case is because Mark and I and the board have managed the transition so well," says Shand.
"The other part of the of the reason I am relaxed is because the business is performing well. There have been ups and downs, but we are on fire at the moment."
The 35 year old spoke to Business News Australia last week in the days following Blue Sky's annual investor day, which attracted around 1,500 people to the Brisbane Convention Centre to see speakers including Harvard Business School academics Rawi Abdelal and Josh Lerner.
Shand talks about how the business managed the leadership transition, why his skill set is best for the business right now, and how the company intends to grow.
What has the reaction been since you have taken over the role of managing director from Mark Sowerby?
Pretty good to be honest. This is a business that was started by Mark Sowerby, and a lot of the investors know Mark - he is a passionate guy and he loves this business - so they were surprised when he announced he was standing down.
It was a bit like if (Graham) 'Skroo' Turner had tried to leave Flight Centre a big step to take.
Mark took that step as he trusted the team to do a better job than he could, which is a tremendous endorsement.
I have been with Blue Sky for six years and I worked very closely with Mark since preparing the IPO in 2011.
The reaction from within the team was that it made sense. A complete non-event.
Over the past few years, I have made presentations to investors and stockbrokers and our biggest shareholders and they have all met this decision warmly.
Will you change anything at Blue Sky?
Nothing at all. I have been asked that question a couple of times. As boring as that answer is, in reality I have been working closely with Mark on the strategy for his business for six years, and working closely with the board as well. The current strategy is mine, as well as Mark's and the board's.
I do have a different style to Mark, however, and one of the reasons why Mark stood down is the business did need a different style of leadership.
The business has moved to a point where institutional capital groups such as First State, Goldman Sachs and Partners Group (the $54 billion European investment house) have become interested.
Mark is the entrepreneur and has an agricultural background, whereas I have a management consulting background with experience at corporations both here and overseas.
Because Blue Sky has moved into the institutional space, my background was more suited to where we were going than Mark's was.
Having said that, if you go back to read the letter that was released when Mark announced he was leaving, he quite deliberately said he would stay as an advisor to the business. He was in the office yesterday, and today. He still helps, he still owns some $40 million worth of shares in the company.
You recently completed capital raising for the Blue Sky Alternatives Access Fund (ASX:BAF), and the investors didn't mind that he was gone.
That opened and closed in a day. Going back five years ago, Mark was quite involved in capital raising for the business, but in the last couple of years the business has gained a capital raising team, which is a distinct team of key individuals, and it has grown beyond a one-man band.
What is next for Blue Sky?
What I have said publicly is that I see my job as taking this business from $2.4 billion funds under management (FUM) to a $10 billion position. We won't need to change our strategy to do that, you can already see it is working, as we have grown from $1 billion to $2 billion in FUM in just 13 months.
It took us nine years to get from zero to $1 billion FUM, then just 13 months to get to two billion. The distribution team has done a superb job. Those numbers speak for themselves.
We will continue to focus on the four main alternative asset classes. We will focus on raising capital from high net worth individuals, family offices, and institutions.
For us, it is about keeping our heads down and focusing on delivering great investor returns that is why we exist. If we don't do that, then that is when we could get into trouble. So, it is important not to get ahead of ourselves and to keep focus.
Are there enough alternative investments out there to continue such growth?
The FUM market in Australia is worth $2.4 trillion. Currently, alternatives are allocated 5 per cent of that market, but that is expected to rise to 20 per cent within 20 years it is the fastest growing part of the market and will be the biggest by 2021.
There is more to alternatives than equities. It is the part of the market that is growing the fastest. It is not a car manufacturing business that is facing strong headwinds, this is a business with tailwinds behind us and we are really focused and really disciplined.
What we do as a business is focus on investing in the essentials. We focus on investing in scaleable platforms student accommodation is a multi-billion-dollar opportunity for us. Water entitlements. Agriculture. We will invest in US property, in the retirement industry.
Mark Taylor and Tim Russell sold their business, RetireAustralia, to a New Zealand super fund two years ago (for $640 million). Russel was the founder and CEO and was Taylor the CFO they built that business into a multi-billion business. Two years on and their non-compete clause has ended, they are going again and have chosen to partner with us to do that.
They have a scaleable platform that is already developed. We will grow that. We have investors with a lot of money to deploy.
The market has supported of Blue Sky's development so far.
Blue Sky was worth $1 per share when it listed and now it is worth more than $7, and it has a market capitalisation of more than $500 million today. The share price reached over $8 recently.
When we are at $10 billion FUM we will be a $20 stock for sure. There are smart investors out there looking for massive market growth and when they look at the Blue Sky team and look at the areas we are investing in the essentials, the things people need, rather than want they will work out Blue Sky has enormous growth prospects and is also very defensive, which is a unique combination.
There are not too many others out there that are like that. And that is reflected in the share price growth to date.
You had a panel talking about entrepreneurship at your investor day. What is your take on the scene in Queensland right now?
There are two halves to that answer. Things have improved dramatically over the past five to 10 years that is my first thought. The second is that when you look at what Mark is doing now as Queensland's chief entrepreneur, what he is witnessing, and what I have seen, is there is a lot of activity around startups and a lot of energy around the young people starting businesses and that is fantastic.
What we don't necessarily do well is provide that support through investors to help startup businesses transition to mature businesses and I think that is the next piece of the puzzle.
One other thing I would say, from a personal perspective, is that in Australia the worker is put on a pedestal the Great Aussie Battler. I have got no issue with that, it is fantastic. But there is a big difference between Australia and the United States in that in the US the businessman gets put on a pedestal, but in Australia we don't see that at all and I think that does hold us back as a country.
It is a deeply ingrained psyche in Australia and it might change over time. It will be a gradual change if it does change. Right now, the US does have both a deep respect for the worker, but also a deep respect for those who take risk, those who have a crack. Over the past 10 years there has been some improvement, and we are heading in the right direction, but it could be faster.
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