Apera's David Wilmot: Private Debt
Hiring Circle caught up with David Wilmot – one of the founding Partners at Apera Asset Management to discuss their strategy, current market opportunities and some valuable career advice for anyone pursuing a career in Private Debt.
David established Apera in late 2016 alongside Klaus Petersen and Joanna Hislop. Prior to Apera, David spent over 15 years at Babson Capital Europe as joint head of Private Finance.
Apera had the accolade of being named 2018 Credit Newcomer of the Year by Alt Credit Intelligence.
Great to see you again. It looks like you’ve been very busy – please can you tell us about your new fund?
DW: Apera provides private capital to mid-market companies in the DACH, UK, Nordics, France and Benelux regions. We focus on secured unitranche debt facilities but have the flexibility to provide subordinated debt and equity co-invests, so we can be a truly supportive partner to the sponsors and corporates we work with. Given our relationship driven model it was important to us to have boots on the ground in the local markets - we therefore have offices in Munich and Paris, as well as London which is unusual for a fund at our stage in development. However – it has been well received by sponsors and investors.
We have just completed our initial fundraising exercise at a total of €750m and it was great to see support from the investor base Joanna, Klaus and I have been working with for many years as well as new investors.
Klaus, Joanna and I have known each other for several years both as competitors and colleagues, and this helped to develop a strong common culture on which to build Apera. Through our respective experiences in the leverage finance and private debt markets, we identified a developing structural need in the European lower mid-market for a fund manager focussed upon transactions in our target EV range. Amongst other things we bring to the table strong capital availability, extensive origination relationships, and a commitment to high service standards, and this enabled us to quickly score significant successes in deploying our fund in high quality investments demonstrating attractive risk/return.
Where do you see the market opportunities?
DW: We typically finance companies with EBITDA of c.€3m upwards providing financing packages from c.€15-50m. We see the smaller mid-market as being particularly attractive from a risk-return perspective. As many private debt providers raise ever larger funds – they continue to move up the deal size spectrum - reducing focus on the smaller deals. This combined with the banks continuing to take a back seat means there is far less competition in this area. That’s the space we like to operate in and there are plenty of opportunities.
How do you see the market developing in the next 12-24 months?
DW: The competitive situation in our target market is quite stable as there is not the same level of capital inflow as has occurred for mangers with larger cap investment strategies. Thus, I see a continuation of the positive market dynamics which we have experienced since we commenced investment activity.
What would you say to a junior banker/accountant considering a career in private debt?
DW: It goes without saying I find it a fascinating area and I would encourage people to think about it. I would suggest they ask themselves a few key questions:
- Are you genuinely interested in the way businesses work? Fundamentally it’s a credit investment role so understanding the drivers of a business, the markets it operates in and the risks it faces are central;
- Can you manage a range of tasks? As your experience grows - at any one time you could be doing a highly detailed analysis of the financials, discussing macro drivers with industry experts, negotiating legal documents and commercial terms with the sponsor. It’s never boring but you need to be able to move between these roles without blinking; and
- Do you want to originate deals? An important part of the job as your career develops is the ability to build a network of advisors and sponsors who know, like and trust you. That doesn’t suit everyone – but I’ve always enjoyed it and it’s an important competitive advantage for a private debt fund. It you want things neatly packaged for you to work on – it’s probably not for you!
- The less glamorous aspects of portfolio management such as valuations and reporting are highly important. Do not ignore them. Effective communication internally and with investors through clarity and transparency of ongoing portfolio company analysis and reporting is vital and a key focus area for investors.
- Be team orientated. The best teams which I have been involved with or managed have had a shared commitment to common objectives. This is not always easy to achieve but is a pre-requisite of sustained success in my view.
If someone has decided it is for them – what tips would you give them when making a move?
DW: First - research the market. Make sure you understand it as best you can. There are a range of strategies and that will impact the role, your ability to deploy funds and your career development. Also understand who you are going to be working with. What’s their track record, ability to raise funds and network? Make sure the fund has a clear place in the market and an ability to execute its strategy.
What about interview tips?
DW: Demonstrate that you understand the role. Link your experience to the key elements of that role. Also show that you have a real interest in the transactions or projects you have worked on. You’ll find most investors love to talk about a whole range of businesses so they’ll be looking for the same from you.
Show enthusiasm, confidence but also humility. At a junior level – employers are looking for someone smart, with the core training in place and ability to learn. We will want to see individuals who we can see would fit well in the team, and who we can see growing in responsibility, but who are prepared to work hard at the nuts and bolts of portfolio management as well as the more exciting investment side of the business. Both are important and there is always something new which you can learn regardless of how long you have been involved in this market.
Finally - what’s the best piece of career advice you were ever given?
DW: The first two things I was told on my first day was to always focus on maintaining high levels of integrity, and in communication with clients to always consider what the other side cares about and to bear that in mind in how you interact with them. A few decades on and both are still core to how I think about working in a fund management environment and how we can achieve high levels of performance. I would add to that you should be prepared to learn from others but never underestimate the importance of your own view and articulating it clearly and with confidence.