Latest / The Business Case - with Mark Wharrier and Phil Clark / Season 2, Episode 10 – Interview with Richard Pindar, CEO, & Paul Pindar, Chair, Literacy Capital

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Season 2, Episode 10 – Interview with Richard Pindar, CEO, & Paul Pindar, Chair, Literacy Capital · The Business Case - with Mark Wharrier and Phil Clark

• 0:16
  SPEAKER_00: Welcome to the business case in partnership with the leading investor presentation hub Engage Investor.
• 0:22
  SPEAKER_00: This is the podcast where we dive deep into the stories behind the UK's leading companies.
• 0:27
  SPEAKER_00: I'm Mark Warrior.
• 0:29
  SPEAKER_03: And I'm Phil Clark.
• 0:30
  SPEAKER_03: And in each episode, we'll be sitting down with top business leaders to uncover their career journeys, the challenges they faced, and the insights that have shaped their success.
• 0:43
  SPEAKER_00: We have spent our careers analyzing and investing in UK companies, meeting managements to understand the business case.
• 0:50
  SPEAKER_00: And now we want to share those insights with you.
• 0:53
  SPEAKER_00: We will hear about the companies our guests lead and how they are positioned for the future.
• 0:58
  SPEAKER_03: But we also want to find out what makes these business leaders tick, the highs and the lows that they have experienced, and the lessons of management that might apply to your life.
• 1:10
  SPEAKER_00: Please remember this podcast is not investment advice and is for informational and educational purposes only.
• 1:17
  SPEAKER_00: Well, this is a really interesting conversation with Richard and Paul Pinder of Literacy Capital, father and son team running a listed permanent capital vehicle investing in UK businesses, which is an interesting story because it flooded a few years ago.
• 1:35
  SPEAKER_00: First few years performed very well, last few years being a little bit fallow, but lots of reasons to think that the future is going to be interesting.
• 1:44
  SPEAKER_00: Anyway, I hope you enjoy.
• 1:52
  SPEAKER_00: Well, for today's podcast, we're trying something a little different with two guests.
• 1:56
  SPEAKER_00: So we're delighted to be joined by Paul and Richard Pinder, co-founders of Literacy Capital.
• 2:02
  SPEAKER_00: Paul is perhaps best known for building capita from a modest management buyer with just 33 employees into a FTSE100 company with an enterprise that ultimately reached around 8.5 billion pounds.
• 2:15
  SPEAKER_00: In 2017, Paul and Richard started again, this time as investors, establishing literacy capital to back ambitious founder-led and family-owned businesses.
• 2:25
  SPEAKER_00: But literacy is unusual.
• 2:27
  SPEAKER_00: Rather than following the traditional private equity model, it operates as an evergreen investment trust, allowing to hold businesses for longer, but also donating a proportion of the assets to children's literacy charities.
• 2:40
  SPEAKER_00: Paul and Richard, uh, welcome to the business case.
• 2:42
  SPEAKER_00: Thank you very much.
• 2:43
  SPEAKER_00: Now, for those uh listeners less familiar with uh literacy capital, perhaps we could just start off by giving us an overview of the business and what you're trying to achieve.
• 2:54
  SPEAKER_00: Thank you for that.
• 2:55
  SPEAKER_01: Um yeah, of course.
• 2:56
  SPEAKER_01: So um we uh listed literacy capital in 2021.
• 3:01
  SPEAKER_01: So it's been about nearly five and a half years or so since we have been a listed vehicle.
• 3:06
  SPEAKER_01: We were a private vehicle for just over four years before that, um, when when Paul and I set it up.
• 3:12
  SPEAKER_01: Um I guess the thesis for what we're trying to do hasn't changed over that period of time.
• 3:19
  SPEAKER_01: It's still trying to find owner-managed businesses typically at a point of change.
• 3:26
  SPEAKER_01: That point of change typically is relating to retirement or some form of succession issue within that business.
• 3:34
  SPEAKER_01: And as a result of that, the owner of the business wants there to be a change in ownership and management, typically simultaneously or or sometimes in a phased fashion, um, to help the business that they have set up over a period of time, years or decades, have a prosperous and sustainable future beyond that.
• 3:53
  SPEAKER_01: And so those are the types of I guess transactions that we look for.
• 3:58
  SPEAKER_01: Um, we've completed around 80 or so um MA transactions um since we set up Literacy Capital in the back end of 2017.
• 4:08
  SPEAKER_01: Um and despite the kind of growth in NAV, so we initially raised£54 million, NAV today is uh around£280 million.
• 4:18
  SPEAKER_01: The investment strategy hasn't changed.
• 4:20
  SPEAKER_01: So it's still trying to find two to five million EBITDA businesses, uh similar size, similar situation, and just kind of stick to that as a strategy.
• 4:31
  SPEAKER_03: Great.
• 4:31
  SPEAKER_03: Well, we'll we'll get we'll definitely get into that uh into the business in the portfolio um in a little bit.
• 4:37
  SPEAKER_03: But I think we'd just really like to start and and just spend a short amount of time, Paul, talking to you about the Kappa 2 experience as as Mark said in the introduction there£330,000 MBO, 33 people all the way to the FTSE hundred.
• 4:52
  SPEAKER_03: You you were there for 25 odd years, I think.
• 4:55
  SPEAKER_03: Um I guess be interested to hear from you what you learnt from that experience.
• 5:00
  SPEAKER_03: Obviously, it's an extended period that that's really helped you shape how literacy capital operates today.
• 5:07
  SPEAKER_02: Um I guess I mean it was 26 years, and I guess the learnings over that period are numerous and they range from kind of the practical of what you need to have in place to scale a company, and then also kind of the kind of environment that you need to create for that company to be successful, and so and I think a lot of the lessons hopefully from the Capita period we've been able to apply reasonably successfully within literacy as well.
• 5:38
  SPEAKER_02: But I guess my starting point, if you look at the pyramid of what makes a business successful, I think at the very top of that pyramid I would put culture, and one of the reasons why we did have a good chunk of success at Capita over a long period of time was we maintained the same culture which was very um non-bureaucratic, very supportive.
• 6:00
  SPEAKER_02: Um, I think people felt part of the team.
• 6:02
  SPEAKER_02: People would happily run through a brick wall to help other people be successful.
• 6:06
  SPEAKER_02: A lot of us were friends.
• 6:08
  SPEAKER_02: Um, so we had a healthy culture that was very entrepreneurial.
• 6:12
  SPEAKER_02: We managed to avoid introducing bureaucracy at any point, so we kind of had the minimum of paper.
• 6:18
  SPEAKER_02: So, unless a report was really needed, we didn't introduce it for the sake of it.
• 6:22
  SPEAKER_02: And again, if you look at UK PLC today, I think an awful lot of large companies have far, far more bureaucracy than they need, far more layers than they need, and they also introduce process for the sake of having control.
• 6:35
  SPEAKER_02: And one of the most valuable lessons is build a team of people that you trust and create autonomy and push that responsibility for management out as far as you possibly can.
• 6:47
  SPEAKER_02: You know, so again, I'll give you an example.
• 6:49
  SPEAKER_02: After I left Capita in 2014, it didn't take very long for head office to triple in size and expense.
• 6:56
  SPEAKER_02: And apart from the fact that it was just ludicrously expensive, it also moved from being a very entrepreneurial environment into one which was command and controlled.
• 7:05
  SPEAKER_02: And as soon as you do that, you lose a lot of the best of what people can deliver.
• 7:10
  SPEAKER_02: So at the top of the pyramid, I would put culture, secondly, I would put quality of leadership, and again, you know, Richard and I just focus on this relentlessly within literacy capital, that the difference between a good investment and a bad investment, provided you bought a fundamentally sound business in the first place, and provided the market is reasonably on your side, no one in the right mind wants to run into a headwind if they can avoid it.
• 7:34
  SPEAKER_02: But if you've got those things being level, then the quality of the leadership that you put into those businesses is an enormous determinant of the eventual success.
• 7:43
  SPEAKER_02: And so, again, within Capita, um, we were very successful at attracting really good people.
• 7:48
  SPEAKER_02: We retained them.
• 7:48
  SPEAKER_02: Our staff turnover at a senior level was negligible, and again, I think that learning has been equally uh applicable.
• 7:55
  SPEAKER_02: And then you kind of move into what I would call the more processy things, which is in terms of good quality financial information.
• 8:02
  SPEAKER_02: We were relentless about working capital management, how we encouraged individual businesses to manage working capital, we were relentless around cash.
• 8:10
  SPEAKER_02: Um, and again, we try and apply that, if you like, within uh literacy to make sure that people manage cash well.
• 8:16
  SPEAKER_02: And then the last comment that I would make, because again, I think it's very relevant to literacy capital, is if you're going to have businesses that involve themselves in MA activities, you've got to work out what the determinants of success for MA are actually are.
• 8:32
  SPEAKER_02: And at the risk of being very simplistic, one of the greatest determinants of whether an MA transaction is successful or not is what is your entry price.
• 8:40
  SPEAKER_02: And so we within Capita made literally hundreds of pretty small acquisitions.
• 8:47
  SPEAKER_02: So our typical EV was somewhere between 15 and 25 million.
• 8:51
  SPEAKER_02: But the corollary of that was we almost invariably ended up buying the businesses quite well.
• 8:56
  SPEAKER_02: And the benefit of that is one is downside protection.
• 8:58
  SPEAKER_02: If you get something wrong, then the amount of damage it causes to the overall group is pretty limited.
• 9:04
  SPEAKER_02: But equally on the upside, because you bought something reasonably inexpensively, then you're off at the races in terms of value creation reasonably quickly.
• 9:12
  SPEAKER_02: So a slightly long answer to your question, but it's a kind of a combination of what's the environment you want to create within the businesses, what are the processes you want to create in the businesses, and then if part of your strategy is around MA, and it is in a number of the lit cat businesses, make sure you buy well, integrate well, and look after what you bought.
• 9:31
  SPEAKER_03: Very comprehensive, thank you.
• 9:33
  SPEAKER_03: One of one of my old colleagues uh in the retail trade always said you make your money from buying, not selling.
• 9:38
  SPEAKER_03: So uh same applies into the uh into the MA programs.
• 9:42
  SPEAKER_00: Well, we make real money from creating goodwill rather than buying it.
• 9:46
  SPEAKER_00: Yes, indeed.
• 9:46
  SPEAKER_03: Yeah, indeed.
• 9:48
  SPEAKER_03: We'll throw a few more adages in along the way.
• 9:50
  SPEAKER_03: Um I definitely would love to come back to this idea of that transition of a founder into a sort of owner in into a sort of professionalised operation, but maybe we'll do it later because uh again, uh Mark and I have seen lots of listed businesses where founders leave and then you know they're hard to replace, but obviously that's an element of the of your of your business.
• 10:10
  SPEAKER_03: And then just sort of thinking sort of what happened next um after you left Capita.
• 10:15
  SPEAKER_03: I mean, I I'm sure you had a lot of people knocking on your door and there were a lot of opportunities for you.
• 10:19
  SPEAKER_03: So, what was it that really sort of made you want to go and and and start again and build a new business up from scratch rather than joining a you know well-established private equity group or other opportunities?
• 10:30
  SPEAKER_02: I think there were a combination of circumstances really.
• 10:33
  SPEAKER_02: Um so the first one uh was Richard, um, from the perspective of I left in 2014.
• 10:40
  SPEAKER_02: Uh, since leaving, Rich and I had co-invested in a number of kind of private equity style opportunities, you know, almost off the side of a desk.
• 10:49
  SPEAKER_02: So Rich was actually in full-time work with another PE house.
• 10:52
  SPEAKER_02: Right.
• 10:52
  SPEAKER_02: Um, and I was doing one or two things, so I was chairing a couple of things for other PE houses.
• 10:56
  SPEAKER_02: But we kind of had done that, we'd worked well together, and actually we'd been reasonably successful at it.
• 11:02
  SPEAKER_02: Um, my wife at the same time had also expressed a wish that she wanted to set up a literacy charity.
• 11:10
  SPEAKER_02: Right.
• 11:10
  SPEAKER_02: So she was brought up in an environment in North Wales which was pretty tough, where her mum couldn't read or write, and her dad was an abusive alcoholic.
• 11:18
  SPEAKER_02: And the trouble is when you can't read and write, is you can't get a job.
• 11:21
  SPEAKER_02: So mum couldn't get herself out of the situation with her father, and that has left quite a lasting impact on Sharon, my wife.
• 11:30
  SPEAKER_02: And so when in 2017 we were talking about what do we do next, she set out a vision for a charity which is called Bookmark Reading, of what she wanted to do, which was essentially help every child to read.
• 11:41
  SPEAKER_02: And the list of things that she wanted to do were pretty expensive, and therefore there was a conversation with how are we going to afford all this.
• 11:49
  SPEAKER_02: And so essentially, we kind of kept the triumvirate of the three of us came up with the idea that said we could do a private equity house here, which is very, very different.
• 11:58
  SPEAKER_02: So the PE house, in terms of how we operate, the long-termism, the fund structure is dramatically different from what I would call traditional PE.
• 12:06
  SPEAKER_02: But at the same time, we also had a charitable donation whereby we knew that if every year the fund gave money to literacy charities, of which Bookmark is the prime beneficiary, we would have a viable charity that could operate at scale, and that's exactly what's happened.
• 12:21
  SPEAKER_02: So today, the the bookmark business plan over the next three years is to help half a million children, and we have helped hundreds of thousands already.
• 12:28
  SPEAKER_02: So the vision that we kind of set out in 2017 of literacy capital and bookmark having this symbiotic relationship in practice has worked well.
• 12:37
  SPEAKER_03: Well, I mean, in fact, I'm sure that the visibility of that funding commitment must really help as well, because I know that's in other charity situations if you start from a zero at the start of the year is really challenging.
• 12:50
  SPEAKER_03: Yeah.
• 12:50
  SPEAKER_03: Great, okay, thank you.
• 12:51
  SPEAKER_03: And just just uh final one for you, Paul, uh, to start with.
• 12:55
  SPEAKER_03: But i in terms of you were really, I guess you you could argue you were an operator for most of your career at Capita, and then you switch to becoming an invest investor.
• 13:05
  SPEAKER_03: You might not quite recognise those two characteristics.
• 13:08
  SPEAKER_03: But do you think that's fair?
• 13:10
  SPEAKER_03: Do you think that's made you a different style of investor?
• 13:13
  SPEAKER_02: Yeah, I think I do I do recognise the characteristics.
• 13:16
  SPEAKER_02: I think it's very fair, and I have to say I also think it's helpful.
• 13:20
  SPEAKER_02: And so both Rich and I have got quite a lot of experience of dealing across the private equity industry as a whole.
• 13:26
  SPEAKER_02: And if I were to say that I think one of the shortcomings of the industry is that it's populated by quite a lot of similar types of people, where you know they've been to a great university and they've probably been to a business school, they're probably in the 30s, and their practical experience of what to do when you're two weeks away from not being able to run the payroll, or when you've got a whole range of other issues, I think actually limits the value that they can add to the portfolio companies.
• 13:55
  SPEAKER_02: And again, when we kind of set up LitCap, we wanted to be very practical in what we could do, where we were viewed as not just as an investor, but we were viewed as a friend to management.
• 14:07
  SPEAKER_02: And we often go into investments, not with a view of saying to management you must do this or you must do that, but we choose a group of people where we believe we can have a collegiate relationship and we can help them.
• 14:19
  SPEAKER_02: And also, if I'm frank with you, we can give them confidence.
• 14:22
  SPEAKER_02: You know, I'll give you one example.
• 14:24
  SPEAKER_02: Um, Rich and I were talking about it earlier, but a lot of businesses, when you buy them where you have founders, they're very nervous about pricing.
• 14:31
  SPEAKER_02: You know, they don't have the confidence to say, actually, my service is really good here and therefore I'm going to price it accordingly.
• 14:37
  SPEAKER_02: It's much easier for us to say, well, actually, I've seen this situation before.
• 14:41
  SPEAKER_02: I believe what you're offering is really valuable.
• 14:43
  SPEAKER_02: Let's put our prices up by 10% and see what happens.
• 14:46
  SPEAKER_02: And by the way, if this all goes wrong, it's our fault.
• 14:48
  SPEAKER_02: This was our idea.
• 14:49
  SPEAKER_02: And so it immediately just gives people, and pricing is an example, but there are countless other examples we could give you.
• 14:56
  SPEAKER_02: So having that operational backdrop, um, I just think it allows you to look at investment opportunities in a different way and hopefully in a helpful way.
• 15:06
  SPEAKER_03: Yeah, and I guess you'd maybe give freedom to your to your founders of the businesses you're acquiring.
• 15:12
  SPEAKER_02: Correct.
• 15:12
  SPEAKER_02: And again, it comes back to my earlier point about you know, generally speaking, have intelligent people and give them autonomy.
• 15:19
  SPEAKER_02: It's far better than having less capable management and telling them what to do.
• 15:22
  SPEAKER_02: That doesn't tend to end so well.
• 15:23
  SPEAKER_03: Yeah.
• 15:24
  SPEAKER_03: And Richard, just um thinking about your your career journey and you know, I guess curiosity around sort of the uh the emotional thought process going into working with your dad.
• 15:35
  SPEAKER_03: Um and then I guess be interested to sort of how you guys split the sort of roles and responsibilities where you are today.
• 15:41
  SPEAKER_01: Yeah, I mean I guess going back before Capita in Paul's career, his career path and mine were very, very similar.
• 15:49
  SPEAKER_01: So, you know, we both qualified at um a big four firm, did our ACA uh chartered accountancy.
• 15:56
  SPEAKER_01: So Paul was at what was then Coopers and Ibrand, and I was at KPMG.
• 16:02
  SPEAKER_01: Um Paul then joined a private equity firm 3i, which is pretty well known these days.
• 16:06
  SPEAKER_01: Um I joined a smaller P firm, um, traditional PE firm.
• 16:12
  SPEAKER_01: Um I mean, as Paul said, it wasn't necessarily the plan when I left that P firm to set up literacy.
• 16:19
  SPEAKER_01: We hadn't really thought about it or you know, planned all of that.
• 16:24
  SPEAKER_01: And I guess the initial plan from my side was I guess to do something relatively similar to what Paul had done with Capita.
• 16:32
  SPEAKER_01: So effectively find a business and join that business and get involved in running that business because I thought I'd find it interesting, I thought I'd be able to do it.
• 16:40
  SPEAKER_01: But then actually going through that process of looking for a business, which was very similar to what I'd done in my private equity days of speaking to the advisors and looking at what business what investment opportunities were out there where I might want to invest time and money into.
• 16:54
  SPEAKER_01: We actually then went through that process and unearthed quite a lot of interesting businesses.
• 16:58
  SPEAKER_01: And then we thought, well, actually, rather than just me devoting myself time and money to one business, how about we then go through this, you know, setting up a fund, and then we can, you know, divide ourselves and money across multiple different businesses and have more eggs in in more baskets.
• 17:16
  SPEAKER_01: So I think that's kind of where we ultimately um kind of got to.
• 17:21
  SPEAKER_01: Um and as Paul said, you know, the two of us had looked at well, had actually been making investments for several years before setting up literacy in in late 2017.
• 17:31
  SPEAKER_01: But you know, I'm I was probably 12 or 13, sadly, when I looked at my first financial DD report, you know.
• 17:38
  SPEAKER_01: So I had a fairly sort of warped upbringing from that perspective because you know, Capita probably most months was looking at a new acquisition.
• 17:47
  SPEAKER_01: And I'd I'd have a look at the DD report in sort of my early teenage years before, you know, just on the weekend, sort of going into the study to see what my dad was up to.
• 17:57
  SPEAKER_01: So that and that would typically be what was one of the things on his desk.
• 18:01
  SPEAKER_02: Will I be reported to social services at the end of this?
• 18:03
  SPEAKER_02: We might have to edit this, but that way.
• 18:06
  SPEAKER_01: And yeah, we'd always work very well together.
• 18:08
  SPEAKER_01: Um we quite similar in many ways, but slightly different in others.
• 18:13
  SPEAKER_01: So it was it was it was quite a useful um kind of broad um lens through which we both viewed things.
• 18:20
  SPEAKER_01: Um I guess in terms of how we divide time and I guess what we both um what we both get up to on a kind of day-to-day basis.
• 18:31
  SPEAKER_01: Um I mean there's a variety of different ways that we tend to cut it, but it I guess it tends to be reasonably obvious to us kind of just by having done it together for quite a long period of time.
• 18:43
  SPEAKER_01: You know, if if there's a if there's a difficult conversation that needs to be had with a a founder in their 60s, sometimes it's easier for Paul to be told what message needs to be delivered.
• 18:55
  SPEAKER_01: Um and that typically then goes very smoothly and easily because he's of a you know similar age and is able to have those conversations.
• 19:05
  SPEAKER_01: You know, vice versa, if they're things that I need to pick up, then you know, Paul will give those things to me as well.
• 19:12
  SPEAKER_01: Um in terms of live M ⁇ A processes, I tend to be closer to a lot of the detail.
• 19:17
  SPEAKER_01: And we've got you know a team of um four people ext separate to the two of us in the investment team.
• 19:24
  SPEAKER_01: So I'll be, I guess, much closer to the detail in that, and then I'll you know, end up we'll end up discussing it as a team.
• 19:29
  SPEAKER_00: But in terms of structure, both of you have got experience of private equity.
• 19:34
  SPEAKER_00: Um Richard, you came worked in a private equity company.
• 19:37
  SPEAKER_00: You could have just set up a kind of family office LP GP structure or fixed life.
• 19:42
  SPEAKER_00: Why did you, you know, what are the real advantages of having permanent capital?
• 19:46
  SPEAKER_01: Yeah, I mean it's interesting, and it's kind of at the heart, I think, of a question you asked before of we didn't go into literacy capital with the thought process process of we're gonna set up a private equity fund and we're gonna set up a fund manager or set up a GP as kind of the P lingo that you just kind of used.
• 20:06
  SPEAKER_01: I guess from our perspective, we kind of viewed it as this is a vehicle from which we can invest and invest our own money.
• 20:14
  SPEAKER_01: So, you know, most private equity managers will be investing, relatively speaking, a small proportion of the overall fund value.
• 20:24
  SPEAKER_01: They'll they might put in one and a half percent typically is the minimum that LPs insist on.
• 20:28
  SPEAKER_01: Let's say one and a half, two and a half percent, but of of the overall fund it's it's relatively small.
• 20:34
  SPEAKER_01: And actually, then the financial incentive to that GP is AUM and it's fees under management and charging fees on that that AUM.
• 20:46
  SPEAKER_01: And so it then becomes, I guess, a model of raising fund one, raising fund two, which is 50% larger than fund one, and then repeating the process for fund three, fund four, fund five.
• 20:56
  SPEAKER_01: And all of a sudden, by the time you've got to fund five, there's lots of zeros on the end of your fund, and you know, you've got tens of millions of pounds of of fee income on the latest vintage of funds, which just gets perpetually bigger.
• 21:09
  SPEAKER_01: Um, but I guess from our perspective, we we you know, we want to generate the best return we can for investors.
• 21:15
  SPEAKER_01: We don't just want to create a fund management business to generate lots of fees.
• 21:20
  SPEAKER_01: And we thought, well, actually, having a fund that focuses on the part of the market that we're focusing on, which is smaller businesses, which by virtue of the dynamic I just talked about with private equity, as they get bigger, they they leave the part of the market that we're solely focused on.
• 21:38
  SPEAKER_01: And as a result of that, we have very little competition quite often for the types of businesses we're looking at.
• 21:44
  SPEAKER_01: They're uneconomic, they're too small for normal private equity funds to be able to invest in.
• 21:50
  SPEAKER_01: They can't deploy enough capital into those businesses for it to justify the overhead base or you know the the fund size they've got.
• 21:57
  SPEAKER_01: They've got a certain number of businesses they want to own in that fund.
• 22:00
  SPEAKER_01: And it just isn't workable.
• 22:03
  SPEAKER_01: So I think we were always thinking about sort of, you know, what's the best thing for us as investors and what's the best thing for, you know, therefore investors full stop.
• 22:13
  SPEAKER_01: And the other the other thing, you know, with a a more traditional PE structure is I've talked about fee income and the sort of 2% typical, you know, fee arrangement that's paid on an annual basis.
• 22:23
  SPEAKER_01: There's also the carried interest side, which obviously is can be quite significant if there's a successful investment.
• 22:30
  SPEAKER_01: But again, quite naturally, if you've got a successful investment and the GP is going to take 20% of that profit when it's realized, they're incentivized to sell successful and to crystallize a successful exit and a gain for themselves.
• 22:48
  SPEAKER_01: And again, we kind of felt, well, you know, you see various examples where P fund 1 sells to P fund 2, sells to P fund 3, and they might sell it back to P fund 1 again once they've got a big enough fund to be able to buy it back.
• 22:59
  SPEAKER_01: And they've all made three times money.
• 23:01
  SPEAKER_01: And if P fund One are just kept it, they might end up sitting on 30, 40 times money after sort of 10 years.
• 23:09
  SPEAKER_01: So again, it kind of struck us as well that that's not necessarily the best thing for the investor that's missed out on all of this foregone upside.
• 23:16
  SPEAKER_01: And having a fund structure that removes that conflict of interest from GP and LP seemed like a better outcome.
• 23:25
  SPEAKER_01: And so, you know, our largest holding today, um we've only ever invested 3.3 million into it.
• 23:32
  SPEAKER_01: We've had much more back than that in cash, um, sort of 15 or 16 million currently of net cash back.
• 23:40
  SPEAKER_01: And our residual equity stake in the business is worth north of 80 million.
• 23:44
  SPEAKER_01: And that was an investment we made in 2018.
• 23:46
  SPEAKER_00: But you must have seen this so many times over the years, Paul.
• 23:50
  SPEAKER_00: These buy and build type businesses, you know, if they can get to 10 to 50 million of value, there's a good chance they can get to 200 and 300.
• 23:58
  SPEAKER_00: And why do you want to kind of um it's not the finishing line, right?
• 24:01
  SPEAKER_00: There's still a lot to go for.
• 24:02
  SPEAKER_02: Yeah, and again, I you know, it's an interesting um it's an interesting dichotomy because again, you know, when you look at literacy capital, I'm sure we'll kind of talk about the portfolio and the size of the business.
• 24:15
  SPEAKER_02: And we've learnt a lot over the nine or so years that we've been doing this.
• 24:18
  SPEAKER_02: So, for example, if you look today, we've got 18 businesses in the portfolio.
• 24:23
  SPEAKER_02: And I think one of the things that we've concluded is generally speaking, the more time and attention and love that you can throw at individual portfolio companies, the more value you can actually create.
• 24:34
  SPEAKER_02: And so if you look at how literacy capital scales to become a much larger fund in future, and you look at the options open to us, so there are varying options from, well, shall you why don't you just do more deals?
• 24:46
  SPEAKER_02: The problem with that is actually at 18 we're already reasonably stretched, and so having 25 or 30 doesn't sound like a very good idea.
• 24:53
  SPEAKER_02: The second option then is you kind of move up the chain and end up doing larger and larger deals.
• 24:58
  SPEAKER_02: But the downside with that, again, coming back to the capital analogy and what Rich has said, is you kind of move up into a much more competitive area with other private equity houses, and therefore we'd rather kind of stay in the pond that we're in.
• 25:11
  SPEAKER_02: The third option is to take the fundamentally best businesses that you have.
• 25:15
  SPEAKER_02: So, for example, if I was to look today, we obviously have no favourite children, but six to ten of our businesses are outstandingly good.
• 25:22
  SPEAKER_02: And therefore, if we focus a lot of our attention on those six to ten businesses that are outstandingly good instead, you know, rather than having a smattering of businesses where we've got a 20 million pound stake in each of them, why don't we have six to ten businesses where we've got a stake that's worth 50 to 100 million?
• 25:39
  SPEAKER_02: If you do the mathematics of saying, you know, can you one day make literacy capital into a billion pound fund?
• 25:45
  SPEAKER_02: The answer is yes, the best way of doing that is scale some of the excellent businesses that we've kind of got today.
• 25:51
  SPEAKER_02: And again, I I kind of give you this stat not to kind of show off, but to illustrate the point.
• 25:57
  SPEAKER_02: In the 26 years of time that we were at Capita, we actually grew shareholder value 480 times.
• 26:05
  SPEAKER_02: And the point of that is the power of compounding.
• 26:09
  SPEAKER_02: So it was a 28% IRR over 25 years.
• 26:12
  SPEAKER_02: And if we could get some of our portfolio companies to demonstrate those sorts of IRRs over five to ten years, again, if you look at the numbers, the impact on the literacy capital NAV would be dramatic.
• 26:25
  SPEAKER_00: And presumably, you know, you become domain experts in the businesses and industries that you have.
• 26:30
  SPEAKER_00: And it actually takes quite a while to get to know the participants and when people retire.
• 26:35
  SPEAKER_02: You're absolutely spot on.
• 26:36
  SPEAKER_02: Yeah, you're absolutely spot on.
• 26:37
  SPEAKER_02: And you know, again, one of the reasons why we have a lot of comfort from some of the businesses in the portfolio is we've got to know the management teams really well.
• 26:45
  SPEAKER_02: Uh, we know them as human beings, we know that they're honest, we know that they're competent, we know that they're diligent, we know what their aspirations are and how far they want to take the business.
• 26:54
  SPEAKER_02: And we're really lucky with some of the management teams that we have in that we have got teams that are, you know, and and and and we've kind of earned some of the luck because we've recruited, but we've recruited people who have pretty senior roles in much, much big bigger businesses and were successful, and so they've kind of already got that experience of understanding what you need to do to scale a company.
• 27:15
  SPEAKER_03: So maybe just picking up on a couple of those points there, um, obviously you're you're you're in the business of finding great companies, and and as you said at the outset, you know, this is all about targeting family-owned businesses, typically don't have any institutional shareholders.
• 27:29
  SPEAKER_03: So, what what is it you're looking for in a founder that that really is sort of fits into the the the sort of the philosophy of of literacy?
• 27:39
  SPEAKER_01: Um I guess from a founder we want somebody that wants the same things that we do, and that sounds slightly nebulous, but the founders that we speak to, we want we we want them to be fundamentally honest, and we want them to be we want to like and we want to we want to want to spend time with them, and again that sounds a bit glib.
• 28:01
  SPEAKER_01: Um but you know as Paul said, we've got 18 portfolio companies, and we we want to go into an investment where everybody has had several weeks of conversations, everyone has said what they wanted to say, everyone's been saying what's on their, you know, nagging away in the back of their heads, what whatever might be in their minds, everyone's been super transparent, super clear, everyone understands what the plan is, what everyone's intentions are, and everyone's completely comfortable with that.
• 28:42
  SPEAKER_01: Um and we're what you know the first the first question I will often ask if I'm meeting a founder is what do you want out of this?
• 28:51
  SPEAKER_01: And it it's it's not you know, tell me about your business, it's not a financial question, it's it's you know, it's just tell me what you're hoping for, either from the next couple of months going through a transaction or over the next couple of years, or whatever their time frames might be.
• 29:08
  SPEAKER_01: And you know, it's quite an open question, and then you can just see where it where it goes.
• 29:13
  SPEAKER_01: Um but you know, we've we've met founders where you know they've been difficult, they've not been very pleasant, and you know, after one meeting, you just say, look, you're not really interested in us, or vice versa, or whatever it might be, we might as well call it off here because it's only begin to it's only gonna become more difficult as time goes on.
• 29:33
  SPEAKER_01: Um, you know, people have asked in the in in the past for advice, you know, in terms of I don't know what to do, I've got a business, I want to sell it, or whatever it might be.
• 29:42
  SPEAKER_01: And I I kind of say, you know, you've got to go into a a sale or bringing on board an investor, and it's more difficult to get out of than a marriage.
• 29:51
  SPEAKER_01: Like you have to be as careful with bringing on board an investor as you would choosing who you want to marry or who you do marry.
• 29:59
  SPEAKER_01: Um, because you know, the cost and the issues relating to getting out of that are significant.
• 30:05
  SPEAKER_01: So I think you know, it's going through that process of trying to get to understand all of the people, whether it's founders or whether it's also people that you bring in to help with that succession or transition.
• 30:16
  SPEAKER_01: You kind of have to have as much confidence as you can around the likelihood of everyone working well together.
• 30:23
  SPEAKER_01: And you know, that's there's always three criteria that we have when looking at um incoming management.
• 30:30
  SPEAKER_03: I mean, not what not when you put words in your mouth, but it sounds like your sort of your investments are almost based more on the person running the business rather than the business itself.
• 30:37
  SPEAKER_03: Is that true?
• 30:38
  SPEAKER_02: Or or what we can do to add to them.
• 30:40
  SPEAKER_02: So again, you know, Rich referred to a very early investment we made, which was RCI.
• 30:45
  SPEAKER_02: Um, when we first came across RCI, there were basically four shareholders, uh, each owned 25%.
• 30:52
  SPEAKER_02: Um that had been shown to private equity, no private equity house was interested.
• 30:58
  SPEAKER_02: And one of the reasons that they weren't interested was there wasn't a CEO and there wasn't a CFO, it was effectively a kind of collegiate cooperative.
• 31:05
  SPEAKER_02: And so we're when we're looking at something, we're looking at well, what are the things that we're going to inherit?
• 31:11
  SPEAKER_02: And so, for example, the RCI case is an interesting one because we knew at the point of completion that two people wanted to leave immediately, and again, that's kind of quite a red flag to a lot of private equity.
• 31:21
  SPEAKER_02: We thought actually, that's fine because the other two people didn't want to leave immediately.
• 31:25
  SPEAKER_02: They wanted a succession plan, but they were probably the more valuable part.
• 31:29
  SPEAKER_02: We also knew we understood the business really, really well, and we also knew exactly what we were going to do in terms of filling the managerial holes.
• 31:39
  SPEAKER_02: So, my kind of reason for giving that slightly wider answer is the founders are often an important ingredient, but in many instances, if you look across our 18 portfolio companies, we've probably now added 60 or 70 executives that we brought in from outside.
• 31:55
  SPEAKER_02: And what you're trying to do is to blend the best of the old with some fresh ideas and fresh experience.
• 32:02
  SPEAKER_02: So, again, if I were to give you, I think what's a really interesting example, when we did the original Tech Point deal, which is an electronics business, it was a classic lit cap father and son deal where father was in his 60s and basically wanted to gently retire.
• 32:18
  SPEAKER_02: His son Dan was in his 30s.
• 32:21
  SPEAKER_02: The idea was that Dan would take over the running of Tech Point, and this was we would be used as the conduit, if you like, for succession.
• 32:29
  SPEAKER_02: What became apparent after a period was as we grew Tech Point and as we did MA, actually leading the business as a CEO was probably not within Dan's sweet spot.
• 32:40
  SPEAKER_02: He didn't kind of have the experience of doing it, and there were other people out in the market that would be stronger at doing it.
• 32:45
  SPEAKER_02: But Dan did have a lot of other attributes in terms of his understanding of the sector, his personality, because he's just a thoroughly nice guy and he knows a lot of people.
• 32:54
  SPEAKER_02: And so, even today, whatever it is, seven or eight years on, we now still have Dan in the team, but he's effectively our MA hunter.
• 33:02
  SPEAKER_02: He's our guy who goes out into the marketplace and looks for opportunities for us.
• 33:06
  SPEAKER_02: So, kind of the purpose of the story is to say, let's look at what people are good at.
• 33:11
  SPEAKER_02: If they have the inclination where they still want to help us and create value, we'll inevitably try and find something for them constructive to do.
• 33:19
  SPEAKER_02: But equally, we have to recognise that often businesses will get to a size and a scale where it's actually beyond the founder's capability to take them any further.
• 33:27
  SPEAKER_02: And it's kind of part of the reason why they got us involved in the first place because it's almost saying, you know what, this business is of a size where I don't think I either have got the desire or the energy or the know-how to take it to another level.
• 33:39
  SPEAKER_03: And are there particular characteristics that are kind of red flags for you or kind of essentially mean you walk away very quickly once you've kind of started to get into the DD process?
• 33:48
  SPEAKER_01: Um on the founders or on the businesses?
• 33:50
  SPEAKER_01: Well, take it as you wish.
• 33:54
  SPEAKER_01: Um I mean, if I'm honest, it's it's relatively rare that we get into DD and we find something then that we don't like.
• 34:04
  SPEAKER_01: Um it has obviously happened.
• 34:07
  SPEAKER_01: Um I mean, there's been a couple of instances where you know we're in financial DD and the numbers as they were presented to us are not what we think the numbers are.
• 34:18
  SPEAKER_01: Um there's there's been instances where the tax that should have been paid has not been paid.
• 34:25
  SPEAKER_01: So, you know, issues relating to financial or tax DD.
• 34:30
  SPEAKER_01: Um again, because we're a bit unusual because most corporate finance advisors or most investment banks, again, going back to kind of mainstream PE, they'll give you a load of information and a load of reports, and they'll say, give us an offer by this date based on this information, and subject to your offer being adequate, you and seven others can then have a meeting with management.
• 34:57
  SPEAKER_01: Um, you know, we're always um belligerent's probably the wrong word, but we're we're always direct and say, we will not give you a proposal until we've met management because it's so fundamental to us to understand and to yeah, to know what they want, for them to understand what we can offer and to all be on the same page with that.
• 35:17
  SPEAKER_01: Um so as a result, it it doesn't we don't tend to then get into DD and then think, oh actually, this person isn't quite what we thought, or now we've subsequently met this person, we we're gonna change our minds.
• 35:30
  SPEAKER_01: Yeah.
• 35:30
  SPEAKER_01: Um, because hopefully we've already done that vetting by that point.
• 35:34
  SPEAKER_02: And coming.
• 35:35
  SPEAKER_02: But taking a step back in terms of what we would and won't do, um there are probably certain types of businesses that we're not gonna invest in.
• 35:46
  SPEAKER_02: And so, for example, if we look at something we think this is actually quite hard to understand or this is hard for us to add value to, we want to believe that if we're going in as an investor, we can make a constructive contribution.
• 35:57
  SPEAKER_02: And there are some things, you know, if it's a heavy engineering business up in the north of England, the reality is none of the team are going to have a lot of know-how or experience to help with that.
• 36:06
  SPEAKER_02: We don't want to be involved in businesses where there is a huge amount of capital tied up because, you know, again, our model is again similar to the capital view, was we want operating profit to turn into operating cash reasonably swiftly because it supports our model.
• 36:21
  SPEAKER_02: And then the kind of the final comment that I would make, which again is kind of a good conscience for us, although I would hope we'd have it anyway, we're cognizant of the fact we are very heavily attached to Bookmark, and therefore, if there is anything which we think could be in conflict with what Bookmark is looking to do, then again we will stay clear.
• 36:41
  SPEAKER_02: So, to give you an example, you know, we've never done or we never will do any uh debt collection businesses because we don't want a situation of where we're knocking on a door which happens to be the same door where there's a child that we've given books to.
• 36:55
  SPEAKER_03: And just um touching on um when you when Mark was talking to you about sort of scale-ups, and you you were saying your sort of sweet spot is a s is the smaller companies that the the large-scale P houses sort of don't want they're just too small types of deals for them.
• 37:11
  SPEAKER_03: In terms of duration of that competitive advantage, are there any any risks to that duration or that that advantage fading kind of being competitive away?
• 37:20
  SPEAKER_03: I mean, is there a if I think about the investment banking world, you know, a lot a lot of the mid-cap brokers have definitely moved more down the smaller cap spectrum just to you know looking for fees and looking for opportunities.
• 37:31
  SPEAKER_03: Is is there a risk that that's happening in in the PE world, or do you think you you've got that that pond to yourselves up to a point?
• 37:38
  SPEAKER_01: I I don't think it's I don't think it's likely to change.
• 37:41
  SPEAKER_01: I mean there's always going to be some element of competition.
• 37:46
  SPEAKER_01: Um but again, as you know, we've been around longer, the track record, and people know us and advisors sort of introducing us to businesses not for the first time, that that all helps us as well.
• 38:00
  SPEAKER_01: Um and you know, some of the spin-off funds that you're now seeing uh from you know people leaving larger organizations, they still tend to focus on deals that are much larger than we would look at.
• 38:13
  SPEAKER_00: Well, I think we'll we'll dig into a couple of the companies because I think that'll you know give listeners um some colour.
• 38:19
  SPEAKER_00: But just to put it into contact context since you um floated, um concentrated portfolio, and that can be a double-edged sword sometimes, and you know, the first few years um of since the IPO returns were spectacular.
• 38:32
  SPEAKER_00: Last three years it's been a little bit fallow in terms of an NAV that's kind of tracked along, and that's caused a big discount in the share price.
• 38:39
  SPEAKER_00: I think the NAV is about 470, share price about 310 this morning.
• 38:45
  SPEAKER_00: Could you just put that in context the last two or three years?
• 38:48
  SPEAKER_00: You know, what's gone wrong?
• 38:49
  SPEAKER_00: Is it temporary?
• 38:50
  SPEAKER_00: Is it structural?
• 38:51
  SPEAKER_00: And you know, what are the grounds for believing the future is going to be a little brighter?
• 38:55
  SPEAKER_02: Okay, do you want to do that?
• 38:56
  SPEAKER_02: I'm happy to do it.
• 38:59
  SPEAKER_02: Um so I guess there's a there's a range of different things.
• 39:03
  SPEAKER_02: So if you look across our portfolio, um there are probably three businesses which have um contributed to that what you're calling the fallow period, which is a good term, um, which is RCI, tech point, and Grace.
• 39:18
  SPEAKER_02: Um I think the circumstances affecting the three are probably different.
• 39:24
  SPEAKER_02: Um so um the RCI one was um probably a hint a little bit unlucky on their front, but one of our biggest customers um was uh NHS England, and we had a very substantial contract with NHS England, and the Labour government uh announced that they were going to scrap NHS England, and so as a consequence of that, uh EBITA suffered quite a hit, and that kind of was reflected in the valuation.
• 39:53
  SPEAKER_02: And when uh RCI has essentially been typically somewhere between 25 and 30 percent of our NAV, um, that has been a headwind for us.
• 40:02
  SPEAKER_02: Um, I would also probably say that the business was at a point where it needed some fresh energy and some fresh ideas, and so the team that had been with us from the off, I think, had done a phenomenal job.
• 40:15
  SPEAKER_02: Um we probably got to the point where, as I say, some some freshening up was needed.
• 40:20
  SPEAKER_02: So uh our CEO, who is an immensely talented guy, I worked with him for a long time at Capita, actually transitioned from uh being the CEO to being the chair, and we brought a new CEO into RCI in uh April of last year.
• 40:36
  SPEAKER_02: Um, and she's had a very positive impact, and already we're seeing quite a nice return to some good organic growth within RCI.
• 40:45
  SPEAKER_02: So we're always cautious about um not wanting to overpromise, but I think the outlook for the next 12-24 months for RCI we're kind of quite encouraged by.
• 40:55
  SPEAKER_02: Um Grace combination of factors, so there was um certainly a bit of a COVID bubble uh to the business, which was then quite hard.
• 41:06
  SPEAKER_02: We did have some headwinds in that business, but again, equally, I think um we allowed the business probably to grow a little bit soft in the way it operated, and again, I think we needed some fresh energy and some fresh ideas into Grace because the business had gone backwards, which had contributed to the uh NAV being a little bit static.
• 41:29
  SPEAKER_02: And so in September uh 2025 we appointed a new CEO, and in November 2025, we appointed a new CFO.
• 41:37
  SPEAKER_02: Um we talk with them a lot, including today, and again, we're now in a position where the kind of curve in terms of growth and the number of analysts that we have out with our customers is moving in an orderly direction.
• 41:50
  SPEAKER_02: And then the last one that I would mention is Tech Point.
• 41:54
  SPEAKER_02: Um, this is an interesting one because the Tech Point team have um done something which I think is operationally very challenging and very different, difficult, and I think they've done a really good job.
• 42:05
  SPEAKER_02: But tech point essentially was built through five separate acquisitions, and for a period the management team ran those five businesses as kind of individual units, and the downside with that was we lost quite a lot of economies of scale, we lost potential synergies, we lost the opportunities to cross-sell with customer base.
• 42:26
  SPEAKER_02: And so, because we didn't think that tech point was moving forward at the pace we wanted again a couple of years ago, we made a number of management changes at a senior level, and the new team said that they wanted to integrate as far as possible those five acquisitions.
• 42:40
  SPEAKER_02: Um they've now done that, so basically 75% of the group is now run through one operation in Basingstoke.
• 42:48
  SPEAKER_02: And the reason why I kind of say um it's quite brave is because operationally, when you're moving things hundreds of miles, which are actually quite sophisticated operations, it's a hard thing to do.
• 42:57
  SPEAKER_02: They've also had to go out and recruit in excess of a hundred new staff to make sure that they can deliver the products that we're promising to our customers.
• 43:05
  SPEAKER_02: And so, again, during that period, which was very disruptive, eBITDAR across Tech Point Group declined.
• 43:12
  SPEAKER_02: And because it declines, we mark things down quickly where we feel we need to.
• 43:17
  SPEAKER_02: Um, and again, without sounding overly optimistic, the actual move took place last August, which was 13 months ago, and we're now on that upward curve where we're seeing a lot more um consistency, a lot more stability coming out of the Bayesian soak operation.
• 43:32
  SPEAKER_02: And I would be very surprised if Tech Point is not quite a material contributor to NAV over the next 12 months or so.
• 43:41
  SPEAKER_02: So I think your comments are fair.
• 43:44
  SPEAKER_02: We've had a kind of combination of circumstances which has made growth harder.
• 43:48
  SPEAKER_02: But what I would say is um I think in each of those cases we've tried to tackle the challenges swiftly and kind of try to take action.
• 43:57
  SPEAKER_01: It's worth saying as well those three businesses.
• 44:00
  SPEAKER_01: Which have contributed have detracted from the last couple of years.
• 44:04
  SPEAKER_01: They were probably the three strongest performers in 21, 22, 23.
• 44:09
  SPEAKER_01: So, you know, in 21 when we listed our nav growth was over 90%.
• 44:13
  SPEAKER_01: In 22, our nav growth, I think from memory was about 56%.
• 44:18
  SPEAKER_01: In 23, our nav growth, I think, was 19%.
• 44:22
  SPEAKER_01: You know, all of those three periods showed very strong performance due to the strong performance from those three businesses.
• 44:30
  SPEAKER_01: And actually, it was for different factors that Paul's just touched on.
• 44:33
  SPEAKER_01: Those went into reverse in 24-25.
• 44:37
  SPEAKER_01: And so all three of those businesses or investments today have are profitable investments.
• 44:42
  SPEAKER_01: It's just they're not as profitable as they were two or three years ago or whenever their peak may have been.
• 44:48
  SPEAKER_02: So it's also by virtue of if you're going to get yourself involved in a segment of the market we're in, which is you know small businesses, the reality is they're not going to produce that, you know, every year's a record year and consistent year-on-year growth.
• 45:03
  SPEAKER_02: You have to accept the fact that occasionally you're going to hit some bumps in the road.
• 45:07
  SPEAKER_02: I know it suits us to say this, but if you look at what we're, you know, when we go into an investment, our overriding thesis is we want to build a great company.
• 45:16
  SPEAKER_02: Building a great company might take five, ten, fifteen years, but it's the long-term value creation that's important to us, not how much value we've created after two or three years.
• 45:25
  SPEAKER_02: We've now been listed for a fraction over five years.
• 45:28
  SPEAKER_02: If you look at our NAV growth from the day that we listed to today, we're compounding our NAV growth at 25% per annum.
• 45:36
  SPEAKER_02: So on that measure, it's a good performance.
• 45:39
  SPEAKER_02: What we can't do is produce neat and tidy 12-month periods where every period is a strong period of growth.
• 45:45
  SPEAKER_00: Yeah, it's going to be non-linear, isn't it?
• 45:47
  SPEAKER_00: It's going to be non-linear.
• 45:47
  SPEAKER_00: And then something like, I suppose, tech point, you know, to consolidate all of those businesses.
• 45:51
  SPEAKER_00: Um, I mean, if that was just a listed business, that would be impossible to do.
• 45:55
  SPEAKER_00: We couldn't do it.
• 45:56
  SPEAKER_00: It's a choice.
• 45:57
  SPEAKER_01: Exactly right.
• 45:57
  SPEAKER_01: I mean, it's a choice where you know the business is going to go backwards.
• 46:01
  SPEAKER_01: And as Paul says, that's a conscious choice whereby you think you will make the business and the group more prof more valuable in three years' time than you will in six months' time.
• 46:11
  SPEAKER_01: So, yeah, you're entirely right.
• 46:13
  SPEAKER_01: We're able to do things as a, you know, whilst the businesses are private, that you'd never be able to do as a listed business.
• 46:18
  SPEAKER_00: So I suppose in terms of long-term value growth, you've got um the level of gearing in the business, and you've got the valuation multiple, and kind of leave those two to one side.
• 46:27
  SPEAKER_00: You know, what sort of organic growth, top and bottom line, do you think the the the portfolio is capable of over the medium term?
• 46:35
  SPEAKER_02: That's an interesting question.
• 46:37
  SPEAKER_01: Yeah.
• 46:37
  SPEAKER_01: Um I mean, we publish sales growth figures for the top 10 uh by value, the portfolio, which is the vast majority of NAV, call it 83% of NAV.
• 46:49
  SPEAKER_01: Um and in recent times the sales growth performance has been more muted than it was in 21, 22, 23.
• 46:57
  SPEAKER_01: But it still remains sort of double-digit, sort of 10 to 20% revenue growth.
• 47:03
  SPEAKER_01: Um, but you know, there were periods going back a few years where things were a lot easier, where you know, revenue growth again from a smaller base because the businesses were smaller, the the constituents in the top 10 holdings back then, where revenue growth would have been comfortably in excess of 50%.
• 47:20
  SPEAKER_01: Um but you know, that's the macro environment now is very different to what it was then.
• 47:26
  SPEAKER_01: Um you're starting off with much smaller businesses.
• 47:29
  SPEAKER_01: So, you know, if you add a couple of million of revenue now to RCI, it's barely going to notice.
• 47:33
  SPEAKER_01: It's it's a much it's a much larger, um, you know, a much bigger number you're starting with.
• 47:39
  SPEAKER_01: Um but equally there are a couple of businesses, you know, we reference um Red Sky and Trinitatum in the last couple of fact sheets where they're the most recent investments that we completed in 2025.
• 47:53
  SPEAKER_01: They're the only two new investments we completed last year, where you know the rate of sales growth in those businesses is extremely strong.
• 48:02
  SPEAKER_01: Um, but at the moment they're still relatively small holdings, but as they become larger, the weighting obviously then will become larger and they'll have a more meaningful impact on some of those metrics.
• 48:14
  SPEAKER_01: So I th I think from memory, Q1 was our lowest reported sales growth figure year on year.
• 48:22
  SPEAKER_01: Q2 showed meaningful improvement.
• 48:24
  SPEAKER_01: Um, and we've alluded to you know momentum in the portfolio generally being pretty positive at the end of Q2, and I would hope that you know future periods will will improve on what we what we presented at the end of Q2.
• 48:38
  SPEAKER_03: Maybe we can just delve into Red Sky or if you've got other examples that you think bring to life kind of where you add value, because because through through the conversation you've been talking about you work very closely with founders, you sort of operate get involved operationally.
• 48:51
  SPEAKER_03: So Red Sky is a relatively new investment in the portfolio.
• 48:54
  SPEAKER_03: So practically, what what are you guys what are you guys doing?
• 48:57
  SPEAKER_03: How how do you really see that you're adding value versus you've identified a asset that's a good asset and you're just providing capital for it?
• 49:04
  SPEAKER_02: It's probably worth going back 12 months with the relationship with Mark.
• 49:08
  SPEAKER_01: Yeah, I mean Red Sky, I would I would say in some ways is not a normal investment for us, but it it does it does have lots of aspects to it that are quite normal as well.
• 49:20
  SPEAKER_01: The the reason it's abnormal is we've done it effectively as a kind of 50-50 investment alongside the individual that is is now the executive chair of Red Sky.
• 49:30
  SPEAKER_01: Right.
• 49:31
  SPEAKER_01: Um and he's reasonably heavily involved in that business.
• 49:36
  SPEAKER_01: So he's got, you know, um he's got a very similar stake to us.
• 49:41
  SPEAKER_01: Um and going back to where all of the genesis of that came from, um, so the very first investment that Red Sky made or acquisition was a a sausage manufacturer in Wales called Langford's.
• 49:54
  SPEAKER_01: Um Mark's background, um, he had run a family business, food manufacturing business, but in the dairy space and had really good experience there.
• 50:04
  SPEAKER_01: Um, you know, he'd grown that business probably eightfold in terms of profitability over probably a seven, eight, nine year period that he had worked in that business and he'd been CEO for probably the majority of the time whilst he was at that business.
• 50:19
  SPEAKER_01: He'd taken it through three private equity uh sales.
• 50:23
  SPEAKER_01: Um and by the time it was it was sold and he stepped down from the business, it was worth nearly half a billion.
• 50:31
  SPEAKER_01: And he liked the model that we had um at literacy and kind of the way in which we work with portfolio companies, and he kind of said, I want to do something with you in the food space, find a platform business, improve it organically, um, grow it organically, and then also do MA along the way, as we often do, and he had done in the past as well.
• 50:54
  SPEAKER_01: Um and I guess that's that's kind of what we what we have done.
• 50:58
  SPEAKER_01: So we started with the first platform, um it was extremely lean.
• 51:05
  SPEAKER_01: So one of the founders, her son, was running the business.
• 51:08
  SPEAKER_01: Everything went through Josh, every decision, you know, sales, probably less so finance, but that was outsourced, there wasn't really anyone internally.
• 51:18
  SPEAKER_01: Um production, he was you know spending a lot of time within the factory itself, um dealing with suppliers, dealing with customers, everything would go through him, um, which which wasn't really sustainable for him nor the business.
• 51:34
  SPEAKER_01: Um, so I guess first thing was we wanted to get the the infrastructure of the team right.
• 51:39
  SPEAKER_01: Um so kind of Mark assisted Josh with that.
• 51:41
  SPEAKER_01: So we brought in you know commercial managers, production managers, uh finance managers, so people to take away various responsibilities away from Josh so he can focus on the most valuable things that he can spend his time on.
• 51:54
  SPEAKER_01: Um and the businesses just perform really steadily, really well, really consistently.
• 52:00
  SPEAKER_01: Um margins are looking solid, um, performance operationally is is good, and the team led by Mark is looking at other acquisitions as well.
• 52:10
  SPEAKER_03: So both do you help with the diligence on the deals?
• 52:14
  SPEAKER_03: Are you helping with with origination?
• 52:16
  SPEAKER_03: Are you helping with transaction?
• 52:19
  SPEAKER_02: We help we help with origination, we help with negotiating the deal with the founder.
• 52:25
  SPEAKER_02: Um, we do quite a lot of the heavy lifting on the MA, we make sure that the diligence is right, we also bring in the lawyers to do the legal work, we also help with the funding.
• 52:36
  SPEAKER_03: Right.
• 52:36
  SPEAKER_03: So you're sort of providing a turnkey solution to portfolio.
• 52:40
  SPEAKER_01: Yes, I mean Mark's been great sort of looking after the business and sort of having those day-to-day conversations with a senior management.
• 52:47
  SPEAKER_01: Yeah.
• 52:47
  SPEAKER_01: But John Fass was somebody that was on our bench.
• 52:50
  SPEAKER_01: We'd spoken to him probably two to three years before.
• 52:52
  SPEAKER_01: Right.
• 52:53
  SPEAKER_01: Um, and we were waiting to find the right opportunity to put him into exactly.
• 52:58
  SPEAKER_01: Um, but yeah, in terms of you know, the MA that has been done or will get done, you know, it's two members of our team that ends up running that, which again, you know, Mark doesn't have the bandwidth or the capability to be necessarily doing.
• 53:12
  SPEAKER_03: And but that is that way you would typically describe the biggest value add that you bring as literacy capital to the portfolio company.
• 53:20
  SPEAKER_02: I kind of think it's threefold.
• 53:21
  SPEAKER_02: So one is structuring and building out the team, so we do a lot of work um helping, you know.
• 53:29
  SPEAKER_02: I I was with a headhunter this morning, and so for example, we're trying to add one more senior head into Grace at the moment, and I was talking to the headhunter about specifically what we wanted.
• 53:37
  SPEAKER_02: And I also said, if we've got somebody really, really good and we need to get them over the line, put them in front of me.
• 53:43
  SPEAKER_02: So, you know, we will we will literally physically make sure that we get the right people.
• 53:47
  SPEAKER_02: So I think recruitment is key.
• 53:48
  SPEAKER_02: MA is pretty key, and as Rich said, we've done kind of quite a high volume, and yeah, in pretty much all instances, before we turned up as a shareholder, none of those businesses has done any MA.
• 53:59
  SPEAKER_02: So that adds a degree of expertise.
• 54:01
  SPEAKER_02: And then the last thing I would say is kind of confidant mentor provider of confidence, where you know someone will phone up and say, trusted advisor.
• 54:08
  SPEAKER_02: We've got a problem here, you know.
• 54:10
  SPEAKER_02: This is what I think we should do, what do you think?
• 54:12
  SPEAKER_03: Yep.
• 54:13
  SPEAKER_03: Which I guess comes back to what we were talking about at the start, which was about you being an operator and an investor.
• 54:18
  SPEAKER_02: Yeah, it helps if you've it helps if you've seen the problem before.
• 54:21
  SPEAKER_03: Yeah.
• 54:22
  SPEAKER_00: So just sort of bringing uh a lot of this together, if we're coming to the end of this fellow uh period, I suppose there's a bit of a puzzle here, isn't there?
• 54:31
  SPEAKER_00: The shares are trading at a big discount to NAV.
• 54:34
  SPEAKER_00: This is clearly a long-term project for you.
• 54:36
  SPEAKER_00: You're obviously you know dominant shareholders.
• 54:39
  SPEAKER_00: So there's a kind of you want to close the NAV gap, but you don't want to crystallize something at the the wrong time and leave value on on the table.
• 54:47
  SPEAKER_00: I I just wonder if the LSE has a role here in terms of, you know, I'm looking at a lot of the companies in the portfolio, and you know, they would make good listed businesses to begin with, right?
• 54:57
  SPEAKER_00: I mean, you know, they're they're buying bills, there's a lot of deals that could be done, you can dilute your holding over time through through MA.
• 55:04
  SPEAKER_00: Is that kind of a live topic uh around the boardroom table?
• 55:07
  SPEAKER_02: It is a topic that we discuss.
• 55:09
  SPEAKER_02: Um, and again, um I don't want to be too critical of life on a listed on a market because I was there for a very long time.
• 55:18
  SPEAKER_02: Um, I don't think the London market is functioning as well as it could at the moment, and I think it's quite upsetting or sad to see so many high-quality UK businesses being bought at the moment, and it kind of implies that the valuation that the market's putting on those businesses is kind of not right.
• 55:33
  SPEAKER_02: Um, we have a liquidity issue, you know.
• 55:36
  SPEAKER_02: So, again, unless your market cap is half a billion or above, the reality is it's quite hard to get your shares traded.
• 55:43
  SPEAKER_02: And so, to give you an answer to your question, yes, there are two or three businesses where we think actually, if we had a fully functioning market and it was an attractive place to be, for all the reasons you say, which are absolutely spot on, of the London market would be a great place to be because it would provide some liquidity, we could de-risk a little bit, the valuation hopefully would be acceptable.
• 56:04
  SPEAKER_02: It does provide a route that if you want fresh equity to go and do MA, it does that as well.
• 56:10
  SPEAKER_02: So the logic is absolutely right, and over the next 12 months, we will probably try and explore it a little bit with one or two portfolio companies.
• 56:18
  SPEAKER_02: But at the moment, our confidence in that as a route is not that high.
• 56:23
  SPEAKER_02: And it's interesting, you know, again, just reflecting back on kind of the journey of a lit cap company.
• 56:29
  SPEAKER_02: If you look at the journey that we've talked about, when we're investing in the very early instances with these businesses, we rarely come across big PE competition.
• 56:39
  SPEAKER_02: And that's either because the size is not at a level where they can deploy enough capital or the business is not in a form where they're very comfortable investing, either because the management team is not complete or whatever.
• 56:51
  SPEAKER_02: And so part of the journey we're trying to take those businesses on is invest at them at a point that PE is not interested, but get to them to the point where they're beautifully presented and they're of a size and scale where PE is interested.
• 57:03
  SPEAKER_02: And so the reason for giving you that kind of backdrop is if you look now at the fact that since we listed Litcat, we've exited five businesses.
• 57:12
  SPEAKER_02: In those five instances, four have been sold to pure PE, and one has been sold to trade backed by PE.
• 57:20
  SPEAKER_02: And so the thesis of create a beautifully formed business that PE will be interested in, we've kind of proven, and that at the moment is our most reliable exit.
• 57:30
  SPEAKER_02: It would be nice over the next few years if we could prove that IPO was going to be a good exit, but we're not there yet.
• 57:35
  SPEAKER_01: And and a lot of those things you talk about as you know, on paper what the virtues of an IPO are you now can do with private investors.
• 57:43
  SPEAKER_01: Yeah.
• 57:44
  SPEAKER_01: Um, and they've kind of had to plug the gap that it does exist because public markets have been, as Paul said, not really functioning particularly well for a prolonged period of time.
• 57:55
  SPEAKER_03: There's certainly a lot of banks out there that would desperately like to see that IPO pipeline cut come back.
• 58:00
  SPEAKER_03: I just think it would be healthy for the market.
• 58:02
  SPEAKER_02: But um and it would be good for the country.
• 58:04
  SPEAKER_03: Good good for the country, yeah.
• 58:05
  SPEAKER_03: I'm speaking at a IPO forum tomorrow, so I'll be doing my bit to encourage companies to think about it.
• 58:11
  SPEAKER_03: So, yeah, I mean, maybe just wrapping it all up.
• 58:14
  SPEAKER_03: Um I guess sort of if we had to distill the business case, what what would you say is the business case for for literacy capital?
• 58:23
  SPEAKER_01: Um I think from our perspective, um, you know, we're focusing on a part of the market that we think is most interesting and most attractive, where you know the risk and reward of investing in smaller businesses means there's greater upside, um, there's less competition, the entry prices are lower.
• 58:42
  SPEAKER_01: Um so I think fundamentally we should be able to generate outperformance um from the types of investments we're focused on.
• 58:50
  SPEAKER_01: Um and I guess secondly, also um I guess it's the degree of alignment from manager alongside investors that's also unusual.
• 59:02
  SPEAKER_01: Um yes, private equity wants to do sort of well for their investors, but I don't think they're probably seeking to maximize returns for investors in quite the same way.
• 59:13
  SPEAKER_01: As long as they can deliver a um, you know, top quartile performance and it's good enough to justify raising the next fund and the next fund, that tends to be more of the focus in terms of you know selling something and distributing proceeds and doing so swiftly enough to ensure that the LPs can re-up for the next fundraise.
• 59:37
  SPEAKER_01: That that's a lot more of the focus for traditional private equity, whereas for us it's solely on managing the one fund we've got and generating the best possible return we can.
• 59:46
  SPEAKER_01: And if we do that successfully, then it then we benefit and investors benefit.
• 59:49
  SPEAKER_03: Yeah.
• 59:49
  SPEAKER_03: And we talked earlier about the fact that you've had this fantastic track record of return, 25% compound return since the IPO.
• 59:57
  SPEAKER_03: It's been it's been sort of front-loaded in terms of the the first few years of the uh of the journey and more fallow uh to coin a phrase for the the last couple.
• 1:00:07
  SPEAKER_03: What are the sort of three or four lead indicators, positive sort of green lights that you're seeing across a you know the dashboard that that gives you confidence that we're sort of now in a maybe a more favorable returns environment again for the group?
• 1:00:21
  SPEAKER_02: I think if you look at the quarterly information we release to the market, I think the um revenue growth is a good indicator.
• 1:00:30
  SPEAKER_02: Um I think the e-bit dollar growth is a good indicator.
• 1:00:33
  SPEAKER_02: Again, you'll see across our portfolio, we tend to have businesses that have kind of reasonably healthy margins.
• 1:00:38
  SPEAKER_02: I think continuing to be able to exit businesses on uh attractive valuations.
• 1:00:44
  SPEAKER_02: So again, if you look at the last three businesses we sold, we actually sold them on an average premium to NAV of 37%.
• 1:00:52
  SPEAKER_02: So that indicates that our NAVs are reasonably cautious.
• 1:00:56
  SPEAKER_02: If you look at the returns we generated since IPO, it's 10 times, 10 times, 15 times, 5x, and 2.5 times.
• 1:01:04
  SPEAKER_02: So every return has been healthy.
• 1:01:07
  SPEAKER_02: And again, I think part of our responsibility is to continue to exit businesses where appropriate.
• 1:01:12
  SPEAKER_02: If we do exit businesses to the point where we feel we have surplus cash within LitCap, I think we've also got a responsibility to return that back to shareholders because the best possible way we can demonstrate to shareholders that our NAV is fair stroke understated is to give money back at a level where we demonstrate that that NAV was fair or understated.
• 1:01:34
  SPEAKER_02: And so that's what we kind of try and do.
• 1:01:35
  SPEAKER_02: And so, you know, again, if you look back over the last five years, our NAV has compounded at 25%, our share price has only compounded at 15%.
• 1:01:44
  SPEAKER_02: Because when I say only, 15% is not so bad, but it is 15% because of the discount that's opened.
• 1:01:49
  SPEAKER_02: I would hope over the next five years, even if we just reverse those two and we grew the nav at 15% per annum compound and the share price at 25% per annum compound, I think that would be quite a nice target for us to have.
• 1:02:01
  SPEAKER_03: Well, I mean, it makes it a quite hard uh investment decision for you guys, thinking about your own shares uh trading at a 35% discount to now versus follow-on capital into your portfolio companies, though.
• 1:02:14
  SPEAKER_03: You know, the IRR conversations must be must be slightly complex.
• 1:02:19
  SPEAKER_01: Yeah, I mean it it's I guess part of the reason why we've not done loads of new deals but in the last 18 months.
• 1:02:26
  SPEAKER_01: But the two deals we have done, um, I think we're at six times money in 18 months.
• 1:02:31
  SPEAKER_01: So I mean, was it a better use of capital to buy those buy those stakes and those two new deals or buy back equity at a discount?
• 1:02:39
  SPEAKER_01: Clearly, it was better to do those two new deals.
• 1:02:42
  SPEAKER_01: Absolutely.
• 1:02:43
  SPEAKER_01: Um and also if we provide follow-on capital, we're typically providing very, very modest sums of capital um to do relatively large bits of MA.
• 1:02:52
  SPEAKER_01: So again, the return on capital there, you know, we should generate a very, very strong return there if things go remotely close to what we'd expect.
• 1:03:00
  SPEAKER_01: So yeah, I think certainly on the on the platform deals, but on the boltons, the the return on equity we invest should be very, very, very high.
• 1:03:08
  SPEAKER_03: Um if things go to plan.
• 1:03:10
  SPEAKER_03: I guess it's what you were saying earlier, Paul, which is that if you've got six to eight portfolio companies that you're just backing your winners and backing your winners and and you just get that compound compounding effect, which it's part of the characteristic of the model.
• 1:03:22
  SPEAKER_03: Yeah, I think that's right.
• 1:03:24
  SPEAKER_03: Concentration risk, but you you at least know what you you you know what you're getting yourselves into.
• 1:03:27
  SPEAKER_03: Yeah.
• 1:03:28
  SPEAKER_03: Okay, cool.
• 1:03:29
  SPEAKER_03: And then just in terms of sort of biggest investment mistakes that you've you've made at literacy and what you're now doing differently because of that mistake, be interested to hear.
• 1:03:40
  SPEAKER_02: Um, you know, again, I'm I'm a great simplifier and things if I can be, and you can basically reduce a lot of what we do down to two things, which is what do we think about the markets that we're operating in, and what do we think about the management we're operating in.
• 1:03:58
  SPEAKER_02: And you obviously want to be investing into a market which is at least benign and ideally has a tailwind, but what you don't want to be doing is investing in a market which has got a headwind.
• 1:04:10
  SPEAKER_02: Um, and then on the other side, management is a fundamental ingredient to value creation.
• 1:04:15
  SPEAKER_02: And so I kind of say if you look at our mistakes, there's probably been one or two instances where we've misjudged a market and we thought it was better than it was, and there's probably been more instances of where we've misjudged the capability of people, and I think one of the worst sins that you can commit is when you live with a situation which is average when it could be great, and there are probably one or two instances where we've known portfolio companies are not flying in the way that they should, but we've stuck with a status quo for too long.
• 1:04:48
  SPEAKER_02: Um, and again, I I don't revel in any way on wanting to be seen as being ruthless, but equally we owe a duty to our shareholders to make every portfolio company as good as we possibly can, and I think we are probably increasingly focused on making sure that we have the best teams we possibly can.
• 1:05:07
  SPEAKER_03: Final question for me is that you've clearly demonstrated this ability to generate great returns from a relatively small total asset base.
• 1:05:16
  SPEAKER_03: You've got ambitions, aspirations to move towards a billion.
• 1:05:19
  SPEAKER_03: What what are the strongest arguments that you can you can give our listeners that you're still able to generate similar levels of returns as you get bigger and what what becomes harder as you scale up?
• 1:05:30
  SPEAKER_01: I I think it I guess goes back to Paul's comment before of um having a smaller number of assets that we stick with for a bit longer and they become larger.
• 1:05:43
  SPEAKER_01: Um but also obviously making sure we do make new investments that can then in years two, three, and four, really kind of contribute positively in turbocharged nav growth because, as mentioned, you know, the two that we We completed last year, you know, we only invested initially two and a quarter million and three point six million in those two.
• 1:06:07
  SPEAKER_01: So they're they're relatively small outlays for us uh relative to the fund size.
• 1:06:11
  SPEAKER_01: Um, but but both of those businesses today are, you know, worth comfortably eight-figure sums, um, you know, sort of five, six times money apiece on each of those.
• 1:06:21
  SPEAKER_01: And one of them's actually returned almost all of that initial investment back in cash on top of that.
• 1:06:25
  SPEAKER_01: And, you know, a comment that Paul didn't make before is actually many of our businesses get easier to manage as they get bigger.
• 1:06:32
  SPEAKER_01: Um, and actually they become they become less needy as they become bigger because we're able to attract and we do have management that's more capable.
• 1:06:41
  SPEAKER_01: The businesses themselves can afford those people or afford more people as they get bigger because we're not thinking, you know, this is a two million E-bit dollar business, a 200 grand salary is quite prohibitive.
• 1:06:52
  SPEAKER_01: You know, if we've got a business that's churning out more than 10 million operating cash flow a year, it's suddenly it's not.
• 1:06:59
  SPEAKER_01: You've got more options and you've got more people that are more attracted by that as a platform.
• 1:07:05
  SPEAKER_03: Great.
• 1:07:05
  SPEAKER_03: Paul, Richard, thanks very much for joining us on the business case.
• 1:07:08
  SPEAKER_03: Thank you.
• 1:07:09
  SPEAKER_03: Thank you very much for time.
• 1:07:11
  SPEAKER_00: Well, Phil, the first uh father and son guests that we've had on the podcast, um, what was your take on literacy capital?
• 1:07:18
  SPEAKER_03: Yeah, very, very interesting business.
• 1:07:20
  SPEAKER_03: Um, I think you know, if I think back to our conversation with Simon Rogerson from Octopus, you know, for very you know, in theory, doing somewhat of the similar things, but it from a coming at it from a very different perspective.
• 1:07:34
  SPEAKER_03: Um, I think there's there's clearly an interesting story here.
• 1:07:39
  SPEAKER_03: Um teasing it out, I think, is sort of part of the challenge because they are doing something a bit different.
• 1:07:45
  SPEAKER_03: And as you said during the conversation, you know, it's a different operating model, different structure for the firm.
• 1:07:51
  SPEAKER_03: I like the idea that they are fishing in a pond with relatively few others.
• 1:07:57
  SPEAKER_03: Um, I I think you brought it to life a lot around the concentration risk in the portfolio, you know, and they and they talked about it as well, you know, that they really have a small portfolio where they're making big bets and then they're continuing to back those winners.
• 1:08:12
  SPEAKER_03: And as in life, things don't normally go in a straight line.
• 1:08:15
  SPEAKER_03: And you know, I think it's been unfortunate for them that you know three or four of their bigger, bigger ass you know, NAV contributors have all hit some sort of slightly softer trading and some some turnarounds all at the same time, and that's that's clearly been a been a drag and it's taken off some of the shine of the business.
• 1:08:32
  SPEAKER_03: But yeah, the things I liked about it was that they do seem quite hands-on, so they are, you know, I think we didn't quite get to the bottom of how they really add value.
• 1:08:40
  SPEAKER_03: I mean, I think Paul sort of summarised it uh a little bit later in the conversation, but they are added, you know, they they are they are a point of difference so that they're not just providers of capital.
• 1:08:49
  SPEAKER_03: I thought that was quite interesting.
• 1:08:51
  SPEAKER_03: The fact that they sort of back their winners ultimately does feel like the right model to me.
• 1:08:56
  SPEAKER_03: I can see sort of how that that really sort of taps into that compounding story that we've picked up in in some of our real estate conversations, actually.
• 1:09:04
  SPEAKER_03: But um, what were your what were your key takeaways?
• 1:09:06
  SPEAKER_00: Yeah, no, really interesting.
• 1:09:08
  SPEAKER_00: Um I I think one of the uh striking things in private equity, it's grown so quickly over the last 20 years.
• 1:09:15
  SPEAKER_00: There are too many PE companies doing exactly the same thing.
• 1:09:19
  SPEAKER_00: And I think if you can just go a little bit below the uh the red R and find much smaller businesses, but they've got a lot of scale to grow, you can compound um a lot of wealth.
• 1:09:30
  SPEAKER_00: And you know, as a fund manager, I remember you know talking to companies like Woolsley and Halmer, Judge of Scientific, and they all said, you know, it takes five, ten years to build up that pipeline of companies to buy because it's about building trust, multiple conversations, you have to wait for an event, somebody to retire.
• 1:09:50
  SPEAKER_00: And the idea that you can do that in a in a nice sort of three to five year window of a the lifespan of a P firm, you know, a fund is just not realistic.
• 1:09:59
  SPEAKER_00: So um I think they have got something that that's scalable.
• 1:10:03
  SPEAKER_00: Clearly, it's been a sort of flatlining um few years for reasons that they talked about.
• 1:10:08
  SPEAKER_00: Um but you know, I think this is definitely one to watch.
• 1:10:11
  SPEAKER_03: Yeah, look, I think uh definitely one to watch.
• 1:10:14
  SPEAKER_03: That they you know, I always think it's great that companies, you know, when the share price isn't being in sparkling form are prepared to come in and and want to proactively tell the story.
• 1:10:24
  SPEAKER_03: And you know, they're clearly confident that they've that they've got they've got a good story to tell and that they've that they feel that the NAV discount is is unjustified.
• 1:10:33
  SPEAKER_03: You know, you know, there was clearly nothing in our discussion today that would suggest that there's a sort of big write down at NAV coming, but you know, watch this watch this space, so to speak.
• 1:10:43
  SPEAKER_03: Um, and yeah, like I think you know we we want more of these success stories on on the LSE, and it would be great um picking up on Paul's point about whether a couple of these portfolio companies could come to market and then we kind of stimulate growth.
• 1:10:56
  SPEAKER_03: And you know, I don't think it's gonna take much for them to address this NAV discount point, you know, whether it's looking at returning capital to shareholders, whether it's a couple more crystallizations of some exits.
• 1:11:09
  SPEAKER_03: Um, but yeah, one to one to keep a close eye on.
• 1:11:12
  SPEAKER_00: Great.
• 1:11:12
  SPEAKER_00: Well, I hope you enjoyed that conversation.
• 1:11:14
  SPEAKER_00: Uh, do leave us a review and any feedback or any guests for the future.
• 1:11:18
  SPEAKER_00: But we've got some great guests coming up in the next few uh episodes, so stay tuned.