Expert Investor: Susan Oliver – Searching For Strategic Assets

Bryce: [00:01:29] Equity Mates, episode number 13. Thanks for joining us. As always, I'm joined by Equity Mates by the Ren. How are you going, bro? [00:01:37][7.9]

Alec: [00:01:38] I'm good, Bryce. Good to be with you again. [00:01:39][1.5]

Bryce: [00:01:40] Yes, likewise. Well, we haven't done an interview for 2018 yet. So this episode, we're going to be going into our first interview with an expert investor or business man or woman entrepreneur, whoever it is that interests us. And we think we'll give you guys some value. So Ren to sat down with Susan Oliver last week and had a great conversation. So if you want to just give us a rundown on what you spoke about, Ren. [00:02:59][79.4]

Alec: [00:03:00] Yeah, definitely. So Susan Oliver is very notable person in the Australian business landscape. She has sat on a number of company boards in both public companies and private companies and then also in the not for profit sector. And she's worked on both sides of market. So she's worked in companies by sitting on boards. And then she also works as an investor. So she does a lot. Her resume is extremely long, but I've just pulled out some of the highlights. She was a board member of Transurban, the Australian infrastructure company, and she oversaw their growth from a pretty small infrastructure player to one of the largest companies in Australia. She has founded a company scale venture capital, which is the it's a female only venture capital firm. So they only invest in companies with female founders. And then she also is an advisor for IFM, which is a global investment or infrastructure investment company that has over 100 hundred billion dollars in assets under management. So that can do a bit of an idea. She invests literally from the smallest of Scott start ups with scale to the largest of investments in big infrastructure with AFM, and she sits on a number of boards as well. [00:04:26][86.0]

Bryce: [00:04:27] So each Equity Mates tour? . [00:04:30][3.1]

Alec: [00:04:31] We'll save that for interview number two. But yeah, look, she's very well respected, very notable person in Australian business. So we thought no, no one better to sit down with and discuss her investing and business career and to try and learn some things from her experience. [00:04:48][17.1]

Bryce: [00:04:49] Yeah, nice. Well, we're very lucky to get time with Susan. She's very, very busy woman and we hope you enjoy this interview. [00:04:56][7.5]

Alec: [00:04:57] Yeah. Now, there was a bit disappointing that you couldn't join us, but you had to pull out at the last minute due to a terror related injury. [00:05:05][8.0]

Bryce: [00:05:06] Yes. [00:05:06][0.0]

Alec: [00:05:08] We you're the first Equity Mates member to be on an injury report. [00:05:11][3.5]

Bryce: [00:05:13] Oh, I won't let that happen again. [00:05:15][2.3]

Alec: [00:05:16] Yeah, yeah, yeah. And just one last night before we get into the interview, we've got to apologise for the quality of the sound. We've done our best to clean it up. And it's fine in a lot of places. But there are some places where there's a bit of background noise or it's a little bit muffled. We're sorry about that. But hopefully the quality of the interview makes up for the quality of the audio, which I'm sure it will. [00:05:39][23.5]

Alec: [00:05:43] Alrighty. Well, I hope you guys enjoy Alec sitting down with Susan Oliver. [00:05:47][3.8]

Alec: [00:05:54] All right, so here at Equity Mates, we're fascinated with how people got started. Now, Susan, your background is particularly fascinating coming from a small town of Bondsteel and being the first woman to complete a bachelor of building at Melbourne Uni. So can you tell our listeners what got you first interested in business and investing and how you got started? [00:06:13][19.6]

Susan: [00:06:15] The Building course has got quite a lot of business because you're actually being taught at the beginning and being taught in that course the business of running a building company or construction company, the financing and the management of large capital projects. So while I was quite interested in the technical side of the course when I began, I was always interested in the business side and what private? The big group, which is different from me is that my parents teachers background in business, in my family or my wider family so that teachers, medical doctors, nurses, that sort of thing. But no, not really business people. So I became very interested in finance and I've always been a bit of a computer and back in the early 70s and solve all the problems and the huge stack of punch cards that the older people understand to calculate rates of return and the need for decision making that capital projects. And that was something that I wanted to learn. And I was introduced to Financial Review of the that I wanted to understand the mysteries within it. So I guess the Coast Guard and open the door of my curiosity to understand better the way the financial world operated [00:07:58][103.3]

Alec: [00:08:00] from those early experiences in business and in investing. What were some of the hardest things you found about getting started and what was some of the things you took away from those experiences? [00:08:09][9.3]

Susan: [00:08:14] So how does things. In my career, I have probably been to do the fact that I have such a broad range of interests that I've never really specialised in so many people who are really tough in this department, really good at either accounting or very good at some aspects of finance. I'm really good at contracts or and I just have a very general knowledge across the board of interests. So I like technology, all of the engineering, I like infrastructure and Covid make it more difficult for me what I'm investing in rather than the process of investing. And I really like investing in strategic assets. So I guess what's happening hard is actually being positioning myself to have the opportunity to do all of that, because I can't go somewhere and say I'm a financial analyst. I'm not. Well, I'm a great account of what it's really been finding my way to the general knowledge experience and the places I want to be, and I love the role that I have, the Dollars. And so I count myself as being very lucky to be there. [00:09:46][91.9]

Alec: [00:09:47] So for all the listeners out there who may not know what you mean when you talk about strategic assets, can you can you just explain what you mean by that? [00:09:54][7.6]

Susan: [00:09:55] That's a good question to me, because, yes, it is something we're investing in today. But, you know, that fund estimates that you actually do and grow and even change the nature of the assets that it's like buying a house. You might repurpose it. I renovated you may end up aggregating with the next door neighbours to get a better price or to do a better job in terms of where you live and the amenities looking for. So I think this is really taking place into infrastructure and potential in this space. It becomes we've got that long term look at things. I like looking at an asset for the next 30 or 40 years or so on and about how that needs to change and evolve, changes in society, changes in demand, changes pension. So there's a perfect example of that, because while the very first Transurban and the board at the time that I was on the board start a company, we had to sit in that room and by taking a strategic and gathering information Bryce the courage to understand the road network is a whole transorbital of being able to grow and improve on that work. And so the asset I have today is an asset that I had that when it started in 1990s. [00:11:25][89.5]

Alec: [00:11:27] So so that's really interesting and it makes a lot of sense when you're talking about a Transurban or an industry super fund who has capital or a large amount of capital or even Transurban, in the early days, they had a somewhat large amount of capital to deploy. How does that how does that strategic assets philosophy played into your personal investing choices? Are you looking for companies that are pursuing strategic assets or are you looking for smaller scale strategic assets that you can purchase on a personal level? [00:12:06][38.8]

Susan: [00:12:07] Or any investment portfolio has to have a range of investment types, risks and opportunities. I do have some capital invested in infrastructure directly and the share market and for an industry super fund. On his style, investing perhaps can be bought here, which is a woman's angel network with angel members invest in women start-ups and I was one of the founders of their shares and invest as a as an angel. And of course, we are investing in the opportunity to invest in today. We're investing in the opportunity that that entrepreneur trouble. So it's very much a strategic investment. I was just because it's a Start-Up that it's and it's very much a strategic opportunity. [00:13:10][62.9]

Alec: [00:13:12] Yeah, definitely so when I was researching for this interview, I read an interview you did talking about scale, and you mentioned that less than 10 percent of people seeking venture capital in Australia are women. So what do you say? [00:13:26][14.7]

Susan: [00:13:27] Well, I have to correct you, OK? It's less than 10 percent to take a [00:13:33][5.6]

Alec: [00:13:33] risk, say, oh, my my apologies. Well, I guess the question then is, what do you think are the main drivers of such a lawyer such a low? Right. And how do you say an improvement in your time? [00:13:46][12.6]

Susan: [00:13:47] Well, Skyrim obviously has contributed Ren invested more than seven million dollars in 12 or 13 start-ups. So I think we've made a contribution that's a small sum of money compared with the total pool available. But it's so small. Yes, I have seen change. We started in 2013. 10 percent is probably very optimistic on Bryce because this whole process and I heard in the UK last year in London when I said that to half the money in that. Early stage capital area is going to remain so I can speak to myself that I am seeing more and more of the angel and venture capital investors backing women and women to participate. More so, yes, since we started in 2013. It's a much more dynamic company and start-ups in Australia, still in the job is still a long way to go, really to see the government participating in this. I don't mean that the government has to do it all, but alongside us and partnering with the plan is to scale back a long way to go. We should be thinking about different tax treatments etc to encourage the investors and supporters and noting that we are just now angels work alongside of the entrepreneurs to help them succeed. So we've got a very hands on supportive approach which which start-ups need. It's a lonely and difficult place. [00:15:38][111.6]

Alec: [00:15:40] Yeah, definitely so picking up on what you said about governments assisting a sort of venture capital, culture and entrepreneurial culture developing, what do you see around the world? You know, foreign governments doing well in this space? And what do you wish the Australian government would emulate and bring into the Australian market? [00:16:02][22.4]

Susan: [00:16:04] It's the text that the Typewriter House has traded. Tax or investment in start ups is really sensible and it's dynamic and it's a huge amount of money into the sector. Australia has been very slow to Bryce equity crowdfunding, and that's that's good. Probably millions of pounds into the Start-Up sector. I don't see the government to invest, but I think we should enable the private sector to see the incentives and as a Start-Up, investing in my own area as well. It's not tax deductibility for the tax Bryce. It's actually increasing year on year and less. But I do think the tax incentives and disincentives for this category. [00:17:19][75.4]

Alec: [00:19:15] Yeah, definitely. So I guess going to the other end of the scale as a pun not intended at all, but as well as working on Fishscale investors, you're also a member of the Investment Committee for IFM. Investors who who are quite a large investor, are quite a large asset manager with I think it was 92 billion dollars in assets under management. You've passed one hundred now. So so how do you approach markets in investing with such a large war chest? And does the thought process and the investment identification process change from, you know, working on in smaller scale with smaller amounts of capital? [00:20:04][48.8]

Susan: [00:20:06] Obviously, security is different. Also, my role is let's be very clear, I'm not a I am not part of a dual team. I don't go out looking for the deals, putting together the structures of the negotiating them and and reporting to the business owners the super funds. My job is quite clear. I still sit on the investment committee as an independent member. And so I help my colleagues and my colleagues together look at the objectives of the investment, look at the risks of the investment and consider the opportunities of the investment. Is this strategic opportunity focussed very closely on those sort of environmental social governance issues? Because I often has a very high reputation, very high hurdle to in terms of that obligation to society in the future. And we either agree or disagree to support investment or we ask the questions and data to make sure that the analysis is done as complete as it should be when you look at investments. There's no rich, there's no and the final decisions are made by the board. So we are just a step in the process. So, yes, I do need to be able to look at those investment opportunities, but I'm not identifying them. And and what we have, which is really fabulous, is ensuring that we do that is doing very well. But also, I mean, these investments do have that longer term. And so we're investing into a foreign country. We have a pretty good sense of the stability of the government, the demographics, the policies and the laws which governments feel that you are putting at risk frameworks around that investment. [00:22:24][138.5]

Alec: [00:22:27] So picking up on what you were talking about with environmental and social responsibility, we've definitely seen an increase in shareholder activism of late, firstly targeting political donations. And then more recently, we've seen a lot targeting modern slavery, especially with the big retailers in Australia has has that pressure. Have you noticed that pressure increase in recent years, especially from the super funds? And do you think that it's it's having positive change on the companies that you're investing in? [00:23:01][34.8]

Susan: [00:23:04] And dynamic change, or whether they think that Americans had a very strong philosophy. You go to the trade union movement as a whole as they had a strong social agenda. So I wouldn't say this is suddenly become popular. It's not popular issue is a substantial underlying issue that is addressed very, very seriously. Also, I think has some very great innovations and positive aspects of solar power in many quarters is an example beyond ports which have been cleaned up and really looking at how we roll that technology, innovation and clusters investments, as well as an aspiration to keep this practise in such a big portfolio. And I think that's where the responsible responsibility that we have. [00:24:13][69.2]

Alec: [00:24:14] Yeah, well, that's really interesting. And feel free to not answer this next question if it is if you can't. But what I'm interested in is when you're valuing different opportunities, different infrastructure opportunities. So, for example, solar power, solar powering the airport in Darwin or something else. Is there a lower return hurdle for investments that have a social good or do you put them all under the same scrutiny? And these investments in things like clean up ports or solar farms, are they now stocking up just commercially against other infrastructure projects? [00:24:53][39.7]

Susan: [00:24:56] I don't think that it's better we don't go looking for the asset that's necessarily the best performing environment. We say that managing that asset for 10 years, 20, 30, 40 years, we introduce your operating systems to this practise as far as we can with this. So. Absolutely compromise on investment return in order to enable us to I think we would see more development costs. It's not part of the system. [00:25:38][41.6]

Alec: [00:25:40] Yeah, OK, that's interesting. Now, one last question about if'n you mentioned that it has a global outlook when looking for opportunities to invest. So in your research and your work at IFM, are there any countries that you've noticed that you think might be flying under the radar and that investors should take a closer look at? [00:26:02][22.0]

Susan: [00:26:03] I think our investors and what I saw during the two different things I asked them is investing in certain forms of collective super funds, if you like, into really big investments, several billion dollars where they're going to hold and manage and continue to invest in the years to come. I think the mom and dad in this case, just Bryce is much different to the time, so much this opportunity to influence the outcome of the investment. It's a direct investment right now, angel investing. That's the only viable what we call high net worth individuals under Australian financial law. So I don't I wouldn't trying to pay them, but I think that it's a very different investment strategy for them. And they've got a big portfolio. One hundred billion and much of that of that is going to require further capex. It's just a very different time. I would like to draw any lines of comparison. [00:27:24][80.3]

Alec: [00:27:25] Fair enough. So moving on to your your body experience, you are on a lot of boards throughout your career, notably Transurban in its early days, and you saw it become the massive company that it is today for our listeners who are new to investing. Can you explain what function, what. Yeah, what functions the board play? And does this differ for public and private companies? [00:27:52][27.3]

Susan: [00:27:54] But I'll answer the last it first is that perhaps we shouldn't distinguish between public and private because we're still working on behalf of shareholders, whether they're the owners, whether they're private owners or shareholders. And that's the role of the board, is to represent shareholders in the equation and to represent owners in the equation. And so I go through quite a lot of things very directly. That is in the decision making. You go to a group of people that I like to call a decision making team. So you need a whole different set of skills around the table that together the group decision making, think about all the pieces and go forwards. And so we also need some people on the left wing, some very different areas that can be troublesome or at least prepared to challenge. So it's not just skills, but it's some ideas, approaches to thinking. So that's what I do. And owning and management will have certain delegations of decision making that I can make. And these are decisions that get taken to the board that the board has obligations. So the delegations vote is usually around strategy. That's the CapEx capital expenditure. It's around the first annual budget and ensuring that that budget is going to achieve its ensure that the strategy is also it's not just a green strategy. It's reviewing the risks and localisation and ensuring that the risks are being managed or mitigated or addressed as best I can. So it has a high level but really important role. And the board also sets the tone of the organisation, the ethics, the honesty, the approach to gender. So I think that the board has a very important role and for investors will be looking at the quality of the board and the number of people who can make sure that this representation of women on both sides, we want quality people. Range of skills and. [00:30:37][162.6]

Alec: [00:30:40] Yeah, definitely no touching on female representation on boards, because obviously that is a it's a big issue these days. Would you support a quota system or some affirmative action to increase representation in the hopes of getting to equal representation on boards? [00:31:01][21.3]

Susan: [00:31:03] I'm I'm in the point of time in my life wondering whether or not I have to sign that. Sometimes the rough is just to be where it is not sexy and the parties split and common sense prevail, perhaps. Certainly, I'm no different from Rich's group, which we have an Australian association working to achieve, 30 percent of his patients remain in the top of the polls and in doing that, realise that we also have to ensure participation of women and girls and and so on. So it's actually a broad, systemic issue that we need to address, given the four years of my life, to encourage women support, women trying to ensure that I had a career as well and very male dominated industry. Are threw a little bit exhausted that they're still struggling to make sense. So I guess in my words, what the hell that puddles and over my men say, oh, well, perhaps we have a good communications and education strategies and the. So I'm kind of disappointed in myself. [00:32:41][97.3]

Alec: [00:32:42] Well, so out of interest, the 30 percent club is striving for 30 percent in Australia on the ASX 200. Do you know what it is now for the ASX 200? [00:32:57][14.5]

Susan: [00:32:58] That's thirty seven. [00:32:59][0.6]

Alec: [00:33:00] OK, that's a lot better than I thought. But I guess that shows how low my expectations [00:33:06][5.7]

Susan: [00:33:08] that we've got to remember that. So it's a sort of not moving from there. Obviously this is where we should be. So 30 percent is a mild mannered. [00:33:22][14.0]

Alec: [00:33:26] Yeah. [00:33:26][0.0]

Susan: [00:33:26] So in that sense what we should say is that twenty seven I think is a bit disappointing. Yeah, definitely. The research and evidences that diverse things and Ren is that a number of them, not just one, not just one of them. That said, more women participating, actively confident we have better things to do than disposables. So it's just our logical there is no shortage of tells women. [00:34:00][34.0]

Alec: [00:34:04] Yeah. And we can look to Europe where they have put those quotas in and they've they've worked well. Yeah, yeah. Yeah. So getting getting back to your your time on boards, you most notable board position was your time at Transurban where you, when you saw it grow from a small infrastructure company in Australia to one of Australia's largest. What was that journey like to be sitting on the board of a company as it grew into one of Australia's largest? And maybe if you can, can you shed some insight onto what the board did in shaping the company's journey? [00:34:47][43.0]

Susan: [00:34:48] First of all, it will into a certain investment class that people knew much about and will take a public private partnership approach, which was brand new. And so it's a great time to be part of something pretty new. And you've got lots of opportunities. Create something. It's also something that the systems and processes in place. And so there's an opportunity to create those systems and processes and do something a little bit innovative and genuinely well-connected around what we then call corporate social responsibility. What is the agenda that your company had? So that was in the 90s. You had a corporate social responsibility approach and we had management. So that's helpful. So it's a broad philosophy and culture and so on and money to invest in the discipline processes and the quality stuff. So we start up with Banquo's because the people spacing's public private partnerships beginning and starting to roll out the means by which governance structure that I needed to participate in that growth in Australia. Very early on, we found U.S. and you're interested in the building. And so Transurban pulled out of bidding for you call them and saying, well, let a few other people in in early March on them, and then had done very well in picking up on Brambles. Then it was a company that always had the opportunity to have that right, because all the trains were going to move the technology, the the transport aircraft varsities. So it was about the company not looking for the market. Not to say. [00:37:28][160.5]

Alec: [00:37:31] Yeah, interesting. So I guess you've known for all your work on company boards. Both in the public markets, private private sector, and the not for profit sector. And you also had experience as an investor in both venture capital and start-ups and then in more sort of infrastructure based and markets based investing. So you have a great diversity of views and a breadth of experience. How is this how has this breadth of experience shaped your views of markets and investing? And is there anything you wish people understood better or more people understood and [00:38:12][41.1]

Susan: [00:38:14] I guess something a little bit if you're not of what you thinking is just what is. I think that confidence is important part also the other thing, which is can and and the parents this and understanding and understanding what my capacity is. And so if I can keep my angel investing, that's something that I'd say sum of money. I'm not trying to use this more because in my portfolio, I can't have that much more money at risk. So I'm quite sincere about that. And then I look at how capital and so an element of my investment capital. And then I love to have I want exposure to certain equities or policy equity. But so it's it's having something here and what you're investing in and. How would the company and ensuring that miscategorised [00:39:41][87.3]

Alec: [00:39:44] carried away [00:39:44][0.3]

Susan: [00:39:46] one of those investments? [00:39:47][1.3]

Alec: [00:39:49] Yeah, I think I think that's good advice and it's advice that I am definitely learning. You know, when I was starting out, I was very much focussed on Australian equities, and that was all I sort of knew. So I'm definitely learning to branch out and diversify a bit more and and just stay risk myself from the Australian equities market. [00:40:11][21.8]

Susan: [00:40:12] Yeah, most people have, and obviously many people are in a home that is so that investment properties are some investment in sustaining bonds is another part of the portfolio of equities because mining financially. So it's understandable that you want to have a diverse portfolio and all your eggs in one basket. Yeah. [00:40:48][36.2]

Alec: [00:40:52] Yeah, definitely. All right, Susan, so we have reached our final three questions now. These are the three questions that we end every interview with. So the first question is, what book or books do you consider must raise Bryce? [00:41:09][17.8]

Susan: [00:41:10] That's a very good question. I'm going to guess. Because I was securing the borders and our borders are always words last. And when I was the trauma, Sarah, which I've got another one, there was the Museum of Words Australia very narrowly missing, and the one that I've started, which is not a word that is absolutely captured many times in the name of this, is certainly enough to survive the loss of the author. And it's called The Choke. And it was on the bottom. And I'm experiencing. [00:42:08][58.5]

Alec: [00:42:11] Perfect, well, that's for great titles for us to look at and read. The second question is, what is your go to source for information on this? On investing or just on current events or anything, really, [00:42:28][16.5]

Susan: [00:42:28] I don't have a single source, I'm actually I have three newspaper subscriptions, which I try to read reasonably well online. The Financial Times decisions, and I get it from brokers and investment advisors. And I sit and I them to understand the specifics and politics and countries and so on. So I'm I'm sort of the information. [00:43:10][41.6]

Alec: [00:43:13] Fair enough, but what what I'm not hearing there is social media, so, hey, you don't get your information from Twitter or anything like that. And then our last question is, what advice, investing or otherwise, would you give your younger self when you were just starting out as an investor? [00:43:35][22.0]

Susan: [00:43:38] If I was actually going back to the 1970s, I'd say buy 100 houses in California. I don't [00:43:47][8.8]

Alec: [00:43:47] think that would be great advice [00:43:49][2.2]

Susan: [00:43:52] because the very first one is 18 and it was up from six or something a year earlier. So it would probably be great advice at the time. But if I was making content for today on. Who are pulling out all the guys need to look at global technology stocks. Although whether or not we anticipated what's happening on others, that's still. I think there's going to be amazing pharmaceutical buyers. Science is going to come along so that all the advice to myself is to keep an eye on those emerging areas because this enormous, intractable problems in the world. And I think that the solutions will come out of the science and technology that. [00:45:04][71.2]

Alec: [00:45:07] Perfect. I think that's that's great advice and that was our final question, so thank you so much for coming on, Susan. We really appreciate your insight and advice. [00:45:17][10.2]

Susan: [00:45:18] That's it for your Equity Mates. [00:45:20][1.9]

Speaker 6: [00:45:20] And the people appearing in this programme may have positions in the company's pension. This is general advice for me. Please speak to a financial professional to understand how they pertain to your individual situation. [00:45:20][0.0]

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