Recently, as part of the Conversations series, I chatted with Jono Chisholm, an Associate with private equity firm, BGH Capital, in their Melbourne office. A former UAIC Investment Committee Chairman, Jono graduated with a Bachelor of Commerce and Bachelor of Science in Finance, Mathematics and Statistics in 2018. I am excited to share Jono’s insights into the world of investment banking and private equity, as well as words of advice for younger students. On behalf of the club, I’d like to extend a huge thank you to Jono for participating in our Conversations series.

About Jono:

Like myself, Jono is also a Cantabrian and grew up in Lincoln, a small town just outside Christchurch. A familiar face around the business school during his time at university, Jono served as an executive committee member for both Management Consulting Club (now UACC) and UAIC.

“I first got properly involved in the Investment Club halfway through my second year, joining the Investment Committee as an analyst. We met weekly to discuss investment pitches, work on valuations and report back to the general club. In my final year, I carried on as the chairman of the Investment Committee. My involvement on the committee piqued my interest in investing and has undoubtedly contributed to where I am now.”

Working in Finance:

Jono started his career as an intern and then as an analyst with New Zealand investment bank Craigs. The next step in his career saw him land initially as an analyst and then as an associate in the Investment Banking division of U.S. bank Morgan Stanley. At Morgan Stanley, Jono worked with the Financial Institutions Group team, and after 18 months, joined Australian private equity firm BGH Capital, working as an associate in their Melbourne office.

Australia and New Zealand Investment Banking:

Very few people around our age have worked in both Australia and New Zealand investment banking so Jono was able to provide some unique insights into the differences between working in these two countries.

“In New Zealand, the investment banking (IB) industry is very small; the banks normally hire about 10 new analysts a year in total. In comparison, some Australian banks will hire 10 analysts themselves every year. As a result of being in smaller offices, junior bankers tend to work across a broader variety of industries and get better exposure to senior bankers than in Australia.

“However, as a result of working at a global bank like Morgan Stanley, you have the opportunity to work on multinational deals and work with some of the best operators around the world. In a smaller market such as New Zealand, the deal flow can be quite sporadic. At times, New Zealand IB can be hectic and, at other times, quite slow. The Australian market is much larger, and the deal flow is much more consistent. The final major difference between the two is the nature of the work itself. The New Zealand market tends to be quite advisory focussed, whereas the larger balance sheets mean you get exposure to more product transactions in the Australian market.”

Transition to Private Equity:

A common exit out of investment banking is private equity. Jono talked about the differences between the two and why private equity was a natural fit for him.

“A lot of the qualitative and quantitative work you will do in private equity (PE) and IB is not too dissimilar. The differences between the two lie in your role. IB is a client-facing role with the client being your principal decision-maker. At a PE firm, this is flipped; you’re now the principal decision-maker. The remuneration model between private equity and investment banking is also very different. Banks get paid advisory fees, whereas PE firms get paid to make good investment decisions. I find my skill-set better suited to that as an investor, and so PE was a natural fit.”

The Australian private equity market is quite complex, with a variety of actors represented both domestically and internationally. In this snippet, Jono was able to provide a high-level overview of the industry. “Private equity is more developed and globalised in Australia than NZ, but still far less prominent than in the US. There are several large international funds, such as Blackstone, Carlyle, Bain and TPG, who typically have small Australian teams looking to make one large ($300m+) investment every 1-2 years out of an Asia-wide fund. There are also a number of active Australian firms, such as Quadrant, Crescent, Adamantem and Mercury, who are quite active but typically make smaller (“mid-market”) investments ($50m - $250m). Exceptions to the rule include KKR, who have a bigger and more active local team than their global peers, and Australian houses BGH and PEP, who have large ($2.5bn+) funds and hence compete for larger deals with the global funds.”

Private equity recruitment is notoriously hush hush and Jono was able to provide valuable insights into his experience navigating the waters. “The PE recruitment process is very opaque - you won’t see jobs advertised online. The process tends to be very recruiter driven, with several recruiters recruiting talent for these firms. The recruitment cycle is also a rolling timeline - PE firms don’t always hire at a certain time every year. They hire to fill vacancies. This is far different from investment banks, which advertise their roles heavily and hire large numbers of analysts at a certain point every year.”

Living in Melbourne vs. Sydney:

Having lived in both Melbourne and Sydney, Jono shares his thoughts on the two cities both from a work perspective as well as a personal one. “From a work perspective, Sydney is a much larger financial hub in terms of the size of the investment banking offices, whereas consulting offices are much more evenly split. Melbourne has a more ‘New Zealand’ feel, with smaller and more close-knit offices - Sydney can feel quite big. The cities themselves are quite different. Sydney has a lot of natural beauty and is well-positioned on the waterfront with nice beaches, gardens and weather. Melbourne is well designed with lots of good bars and restaurants and obviously has the fantastic sporting events like Formula 1, the tennis, cricket, and AFL.”

Advice to Students:

Finally, it wouldn’t be a UAIC Conversations series without some advice for students entering the workforce. “Don't let work dictate your life. Make sure to keep up your hobbies, such as sport, exercise, arts and music. At the end of the day, it’s important to have activities outside of work that you enjoy.”

FEATURED IN: