HESTA commits $250m to co-investment PE strategy

Stafford Capital Partners has confirmed a new $250 million global private equity co-investment mandate, dubbed “QP4”, with HESTA.

The new mandate will enable Stafford’s private equity team to build on the co-investment strategy first implemented in 2011 for HESTA, and to access and complete smaller strong-returning deals on the fund’s behalf.

Previously, its $200 million global private equity co-investment mandate - or “QP3” - was fully invested in 3 years and, according to the investment firm, is currently generating strong risk adjusted returns since inception.

In particular, co-investments have been made alongside global private equity managers into companies operating in a range of industries including healthcare technology, cyber security, sustainable packaging, and financial payments.

HESTA head of portfolio management, Jeff Brunton said the continued development of the relationship with Stafford reflects the fund's focus on collaborating with key investment partners.

“We see this co-investment vehicle as effectively an incubator for ideas around certain thematics and gives us valuable perspectives around expertise and successful businesses that can lead to further deal flow,” Brunton noted.

“This is a great example of how we’re looking to leverage cutting-edge thinking from across our ecosystem of investment partners to help generate ideas and innovation across the portfolio.  

“It’s this total portfolio approach that’s effectively bringing the best global investment thinking to our decision making, which helps us to continue to deliver strong, long-term investment returns for members.”

Commenting on this latest mandate, Stafford Australian private equity lead Daniel Bowden said that the strategy sought to open up smaller deal sizes, providing access across a wider spectrum of the private equity market.

Single-asset style continuation vehicles, where HESTA would represent long-term patient capital, were also an area of focus, according to Bowden.

“HESTA, as a large institutional investor, is looking for investment opportunities of appropriate scale that can be efficiently executed. This can mean that potentially strong-returning smaller deals may be more difficult to access. QP3 - and now QP4 - enables Stafford to access and complete smaller strong-returning deals on behalf of HESTA,” he explained.

Bowden further clarified that QP4 is also able to complete co-investments sourced by both the HESTA and Stafford investment teams, which he said underscores the importance of a “partnership” style approach to investing.

“This latest mandate further builds on the strong relationship Stafford has with HESTA that has been cultivated over the past 20+ years, and spans multiple regions and business lines.”