Following the close of its latest fund on £144.5m, healthcare-focused private equity firm Apposite Capital promoted Valerie Auffray to head of investor relations and operations. The Drawdown catches up with Auffray to find out how her role has evolved over the last 10 years.
TDD: It’s rare to see someone taking on both investor relations and operational leads, can you tell me about the responsibilities of both aspects and how you plan to tackle them simultaneously?
VA: It’s not that unusual for a company of our size. When you do investor relations in a small firm, you tend to do more on the operational side of the business as well, which includes the coordination of information flow and implementation of new systems. Since I became head of investor relations and operations, my responsibilities are more formalised than they were before.
As the company is still small, my role will continue to focus on the fundraising and investor relations, which involves reporting to LPs and handling their enquiries. On the operational side, I look at how to optimise our information flow systems and processes, the back office as well as taking care of our marketing activities, office management, etc.
TDD: In what ways has your role changed over the 10 years you’ve been at Apposite, and especially since you’ve been promoted to head of IR and operations?
VA: It’s more an evolution of the role because I’ve taken on more responsibilities over the years, the longer I’ve been with the company. On the investor relations side I have always been focused on fundraising and LP reporting; I’ve just taken on more responsibilities and ownership in leading the fundraising process, LP reporting as well as managing some of the back-office aspects.
TDD: Apposite recently closed its latest fund, Apposite Healthcare Fund II on £144.5m in June 2018. What was your part in the fundraising process?
VA: Overall, I covered most aspects of it. I managed the preparation work for the positioning of the fund as well as all marketing documentation. I targeted prospective investors, organised the road shows, managed LPs’ due diligence requests and organised LPs’ due diligence site visits. Essentially, I was the main point of contact for them. I also set up the data room and was involved in the negotiation of the fund terms.
A key aspect of my role during the fundraise was to brief the partners and the rest of the team ahead of investor meetings. I also coordinated the legal aspects with our legal advisors and worked with our fund administrators to onboard new LPs.
TDD: What are the challenges of raising sector specific funds?
VA: The pool of potential investors you are targeting is smaller than for a generic fund, so you need to be abreast of LP preferences. Not all investors are interested in sector funds, but they are becoming more and more popular because LPs seek differentiated funds and specialist managers who can add real value to their portfolio.
Healthcare is great because it’s a resilient sector. Investors recognise you need specialism to invest in healthcare, given how regulated it is.
TDD: Are there particular operational concerns for healthcare focused strategies, given your portfolio companies face much tougher regulation compared with other sectors?
VA: Healthcare is a sector where being an expert is an advantage. Healthcare is regulated, complex and has its own ecosystem and language, so you need to be a specialist to understand it thoroughly, to make informed decisions on investments and support your portfolio companies in a meaningful way. When you look at Apposite’s partners’ backgrounds, they all have 15 years or more of experience in healthcare, so they are part of this ecosystem.
TDD: Do you see investor appetite for healthcare or specialist sector focus funds increasing?
VA: In North America, LPs had exposure to sector funds much earlier than Europe, so they are more familiar with them. Specialist managers have been in North American investor portfolios for longer. In Europe it has increased dramatically over the last five to six years because LPs are looking at specialist managers to further diversify their portfolio.
Investors also realised, given the maturity of the private equity market today, where many of the well-established large buyout funds are becoming asset managers and financial engineers, they need to add specialist managers whose expertise is as important as capital to enable them to build successful companies.
TDD: Given your UK and Europe focus, did this cause any difficulties for LPs when considering their investment to this fund?
VA: During our latest fundraise, which started before the Brexit referendum, we came across several LPs who made the decision not to back new managers in the UK for the time being as they wished to limit their exposure to the UK. Of course, not all LPs felt this way so we attracted new investors to our fund because they recognised the resilience and countercyclical aspect of the healthcare sector.
TDD: What new technologies, systems or processes did the firm implement in order to help it through this fundraising process?
VA: We used an online data room to facilitate the due diligence around the fundraising process.
TDD: What are the highlights of your role now?
VA: It’s so varied! From the IR side of things, fundraising, promoting the firm and our funds to the LP community, managing investor relationships and reporting. Then from an operational perspective, implementing processes and information flow between the deal team and the back office team. That’s really the core of what I do. I also have insights on portfolio construction and management and manage the marketing activities of the firm in general, which includes the website and PR activities.
TDD: What challenges have you found since being given these extra responsibilities?
VA: My initial focus is reviewing the needs of the back office and the way it is organised as well as how we can strengthen it and be more efficient.
TDD: You mentioned assessing the need for new information systems and resources capacity as the firm’s AUM grows – what changes/adaptations have you implemented to IR and operations since being given this more senior role?
VA: I am currently assessing our needs and preparing proposals and action plans to discuss with the partners. One of the things we’re looking at in terms of systems is implementing a formal CRM. We have also recently started implementing a portfolio monitoring tool to be more consistent in the way we collect information from portfolio companies.
TDD: What are you most optimistic/hopeful for over the coming year?
VA: Looking at Apposite, the firm currently has a solid LP base. We have already made five investments from our new fund and the prospects of our current portfolio are very promising, so things are looking rather positive from that perspective.
With regards to the macro side of things, what’s going on in geopolitics or economics, then being a UK manager, we will have to see how Brexit will pan out and the impact it will have on LPs’ allocations. Apposite continues to strengthen its team and we have a good reputation in the market so we continue to see a lot of compelling investment opportunities. Only time will tell what impact Brexit will really have and it will be interesting to follow how investors will adapt their strategies.