Beer, bacon ‘n rollercoasters Rob Stock. What was your first paid work? Explain the role of private equity in our fund management system.
Phil Veal has a KiwiSaver private equity vision, writes
Private equity firm Rangatira Investments owns Tuatara Brewing, Hellers, and Rainbow’s End. That makes Rangatira’s chief executive Phil Veal chief executive of ‘‘beer, bacon and rollercoasters’’.
He started his career as an engineer. Now he’s a professional builder of companies who believes KiwiSavers should have more of their in the medium-sized companies that are the engine of the economy.
Veal’s has been a career with few regrets. His biggest is not getting in on the ground floor of Airbnb, which is now worth billions.
How financially savvy are you?
As someone who’s worked in investment roles for some time, I would say I’m relatively financially savvy, but I am always learning. Investing successfully is all about what might happen next, which means there’s always something new to learn.
How did you pick up your savvy money skills?
My parents, especially my mother, helped shape my attitudes to money and taught me basic financial skills.
But the single biggest learning experience was heading off to university aged 17 in the 1980s.
It was a very different environment then. There was no easy credit. You really had to learn good money management skills pretty fast. My very first paid job, aged 11, was lawn-mowing for a neighbour (for the princely sum of $1.50 each time); through my teens I did all sorts of jobs, including picking fruit, chopping firewood, and even skinning possums. The most interesting job I had was driving a taxi on the night shift while I was in my early 20s studying at the University of Canterbury – it taught me some great skills for business, including how to build rapport quickly with all sorts of people.
How did your upbringing shape your attitude to money?
It was a pretty typical Kiwi upbringing, shaped by the prevailing attitudes of the time. As a child in the 70s and 80s, our family’s approach was pay the basic bills, put a bit away for a rainy day/ retirement, and if you were lucky put the remainder aside for a family holiday (Arrowtown was our preferred escape). Nowadays households tend to run on credit. I’m really grateful to have had the experience I had. Easy credit is tempting and it puts younger generations who’ve known nothing different at a real disadvantage.
If a child asked you the best way to make money, what would you say?
Having spent their formative years in the US, my four daughters do the traditional ‘lemonade stand’ in the neighbourhood to make some money. They also use me to help them buy and sell items on Trade Me, which I think is a really valuable way for them to learn how to trade. My advice to them is to be proactive in identifying an opportunity and come up with ways to extract value from it. While they don’t get paid to do their share of household chores, they might see a fence that needs painting and offer to do it for a price! It’s all about creating value.
You’ve seen the world of the ‘‘money people’’ from the inside. Do you trust them?
I guess my approach is summed up by the ‘‘trust, but verify’’ maxim. You need to do your own due diligence, you need to have a connection with the individual you’re dealing with, and you need to make sure they’re earning and deserving of your trust. Most importantly, you need to try and make sure your interests as an investor are aligned with those of the person or entity investing your money. If they get paid when you do, that’s a rock solid basis for trust.
How do you decide whether to trust someone with your money?
I look at the quality of the people, their track record, their plans/ strategies for the future, and how the individual or company’s interests are aligned with those of their investors.
What has been your biggest investment mistake?
On a personal level, I turned down Brian Cesky for an opportunity to be a first round angel investor in Airbnb. I think it’s valued at about US$30 billion now.
You are chairman of Tuatara, which makes lovely beer. As a private equity man, do you have genuine affection for your companies, or is it all just business?
For me, it is about business first and foremost. We are focused on delivering returns to our shareholders who are 66 per cent community and charitable organisations that rely on dividends from their investment in Rangatira Investments to continue to deliver meaningful social impact. As someone who started their career as an engineer building bridges and buildings, it’s not too surprising that I’m now building businesses. It is a lot of fun – in our portfolio I get to work with iconic Kiwi brands like Hellers, Tuatara and Rainbow’s End. What could be better than beer, bacon and rollercoasters? People would be surprised at how little exposure they have to private equity. Most New Zealanders have the bulk of their investment in property, and maybe some KiwiSaver. And KiwiSaver has virtually no private equity exposure.
What this means is that they don’t have access to investment in the ‘productive economy’ - middle market businesses like those Rangatira invests in. Yet this is where the real opportunities lie both for individual investors and for New Zealand in terms of driving growth.
If you could change one thing to improve the money lives of Kiwis, what would it be?
I would create pathways allowing some of the $90 billion of retail investor funds in NZ, including $30b Kiwisaver funds, to be able to diversify and invest in the ‘productive economy’.
You need to have a connection with the individual you're dealing with. Phil Veal