The growth of enterprise software companies in the Asia-Pacific region is expected to increase exponentially, according to Robert Smith, founder of Vista Equity Partners, a private equity firm that invests exclusively in this sector.
Smith said his company has spent the past 20 years investing in its own internal infrastructure to ensure it has access to markets and regions that he believes will see growth in the enterprise software market.
“We have $ 750 million in revenue from APAC. The growth of our space will be exponential in the APAC region, ”he told delegates at the Investor Trust Symposium.
The private equity manager has been investing in enterprise software since its inception, partnering with organizations in every phase of growth, from the lower middle market to the high growth market.
Smith said the company and its portfolio companies have not only survived the COVID-19 pandemic, but the use of technology has accelerated and benefited many investments.
“There has been a massive turnaround to adopt the technology and software so that large companies around the world can have more visibility into their supply chain and reorganize their businesses,” he said.
“For example, we built a software platform for curbside delivery for a food company. It is one of the small businesses that would have been closed, but they are now more profitable than before. We had 68 companies in the portfolio by the time COVID hit and we didn’t have to provide $ 1 in funding. Now there are favorable winds for some companies and we can grasp that, we have great operating leverage in these companies. “
Vista is touted as one of the world’s most successful private equity firms with $ 75 billion in assets under management and has participated in 480 private equity transactions. Its current holding companies employ 70,000 people.
“Our strategy has remained focused on enterprise software and bringing capital across the spectrum of enterprise software. It’s an evolution of what we can provide, but the fundamental element we focus on is how to create sustainable solutions to grow their businesses faster and give them institutional scale.
Smith echoed a theme from the conference that big tech companies are so big they can’t innovate anymore. He said that one of the benefits of Vista is its organizational design, including Vista Consulting, where it hosts and redistributes knowledge across all companies in the portfolio.
“A company may not have a CTO, we can take knowledge from a company and repopulate it into portfolio companies that are ready to embrace new technology to disrupt the space in which they are located. It’s a very unique design that allows us to do it at scale. “
Smith responded to the risk that technology could further divide society by saying that “we, as a society, have to make sure this doesn’t happen.”
Part of this is ensuring connectivity and access for some people who may have difficulty accessing capital to buy a home or start a business.
“These are the things we need to focus on as a company. I strongly believe in capitalism as social mobility, but opportunities are something we need to focus on to make sure everyone has opportunities. If you don’t have access to it, you have no choice, ”he said.
Smith was the first African American to sign the Giving Pledge and declared that “there is no greater joy than freeing the human spirit”.
“For some of us who have been lucky in business, it means using our capital and knowledge to do it.”
Meanwhile, another speaker at the conference, Ricardo Scavazza, chief investment officer, private equity at Patria Investments, touted the benefits of investing in Latin America, especially Brazil.
He says the region requires investors to be selective, both across countries and across sectors.
“Over the past decade, growth in Latin America has lagged behind global growth in other emerging markets such as Asia. But if you take selected industries like healthcare, they have grown 5% in Latin America over the past decade. By being selective and looking at particular sectors such as healthcare and agribusiness, Latin Am really stands out as a compelling growth opportunity, ”he said.
“Some countries are not as favorable, for example we exclude Venezuela, but there are good environments to invest like Brazil and Colombia.”
Scavazza also pointed out that the food and beverage industry has enormous potential for growth. Many industries also have consolidation opportunities, he said.
“Lat Am is one of the largest consumer markets in the world. The big global conglomerates will never cancel a presence here. But it is difficult for them to build themselves an acquisition strategy linked to family businesses in the region, so there is a good valuation to have a quality platform already established. We are taking over traditional family businesses, which are good businesses but old fashioned, and digitization is a great tool to become more efficient and modern, ”he said.
“Lat Am has its own specific trends and industries to watch out for. If you have a well-constructed portfolio with the right exposure to the right industries, it could add a lot to portfolios, not just in terms of absolute returns, but through diversification. “