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Repositioning Global Fixed Interest
QICs storyDamien Frawley and Brian Delaney
3PREDICTABILITY HAS BUILT OUR REPUTATION. TO DELIVER IT, WE HAVE TO GO BEYOND. WE WERE BORN WITH AN INVESTOR MINDSET4 and have grown into a global diversified alternatives business
Global InfrastructureGlobal Real EstateGlobal Liquid StrategiesGlobal Private EquityGlobalMulti-AssetSolutions Established in 1991 by the Queensland Government to serve its long-term investment responsibilitiesGrown to $77.2 billion in funds under management1We have over 90 clients including government, pension plans, sovereign wealth funds and insurers. Spanning Australia, Europe, Asia, Middle East and US.With over 500 staff with offices in Brisbane, Sydney, Melbourne, London, Los Angeles, San Francisco and Copenhagen1As at 31 March 2014. 5
Global infrastructure6Ranked in the top ten infrastructure managers globally by funds under managment1Our heritage as a solution provider to sovereign wealth funds has created our global infrastructure platform1Towers Watson Global Alternatives Survey 2013 . 2 As at 28 February 2014. 3Current as of today but excludes junior debt investments that have been realised. Over $11.2 billion2AUM10 direct investments, 7 fund investments and 2 co-investments3 97% by value are direct investments, which range from minority stakes to 100% owned assetsStrong 8 year track record in global infrastructure investing218 professionals with over 270 years of combined infrastructure advisory, investment and management experience2Tight knit, high conviction infrastructure expertsGlobal infrastructure (Contd.) 7Largest port operator in SpainLargest water utility in the UKOur team are infrastructure experts. We specialise by sector and seek investments that deliver predictable long-term cash flows and sustainable returns.
Client outcomes drive everything and capital preservation is key.
We invest with a long-term mindset, looking beyond the assets to the business. We build value over the long term through human capital not just investment capital.
We have a quality global platform: Transport: roads, airports, ports, parkingUtilities: gas, electric, water Telecommunications PPP investments
Global real estate8Consistently ranked as a top performing client-focused investment manager vs. peers1Long standing, respected team with true depth of expertiseWe are known for our discipline, consistent returns and focus 1Source: Peter Lee Associates Investment Management Surveys 2009-2013. 2QIC economic interest in AUM as at 31 December 2013, converted to AUD at Spot FX rate for offshore assets. Does not include QIPF indirect funds FUM. 3Includes 100% AUD value of QPF, QIPF, QGOF and FCJV assets. Source : QIC GRE as at 31 December 2013. 4As at 31 December 2013.
Over $11 billion2 AUMLong-term strategic focus 33 direct real estate assets with average value of circa $450 million3 23 years in domestic and international real estateMore than 150 professionals in offices in Brisbane, Sydney, Melbourne, Los Angeles and London4Global real estate (contd.)With over A$11 billion* invested in Australian and international retail and office, we have developed a reputation for delivering predictable outcomes for clients over the long term.
Our team has true depth of experience from deal origination and execution to asset management, leasing, marketing and development.
High-quality assets: Focus on investments with high barriers to entry with ongoing scope to add valueAll strategic services in-house: fully-integrated real estate ownership, management and development platform and risk management
* As at 31 December 2013.
Global liquid strategies10A leading manager of global fixed interest solutions including inflation, absolute return and hedge fund strategiesProvider of innovative overlay and implementation solutions across global listed marketsA strong risk culture supported by a proven and disciplined, repeatable investment process to clearly articulate accountability and effectively manage portfoliosOver $36.8 billion1 AUMWe construct portfolios for outcomes not just benchmark returnsA 12 year history of successfully managing strategies that are structured to meet changing market dynamics to meet client objectivesExperienced team of 24 professionals across Research & StrategyPortfolio Construction Execution1As at 28 February 2014.
Global private equity11One of Australias largest and most sophisticated global private equity investorsWeve evolved with the market and actively invest in all forms of global private equity, including direct investmentsWe back great management teams and provide the support to build great companies that ultimately deliver outcomes for our clients 1 Total NAV and unfunded commitments as at 31 December 2013. 2 Inception 2005. Over $5.2 billion1 AUMA global investment platform with:- Over 150 funds across multiple clients- 17 direct/co-investments with NAV over $400m18 year track record2A global team of 11 investment professionals based in Australia, Europe and North America1
Global multi-asset12We were born with an investor mindset - we know that predictability of outcomes is what our clients value mostOur research defines our thinking. We analyse the consequences of every investment we make at an individual and a whole of portfolio levelWe apply this mind set to our specialist strategies as well as portfolio managementManaged multi-asset portfolios since QICs foundation in 1991Our entire investment framework is built around delivering against our clients objectivesOur proprietary multi-asset class risk model has been developed and refined for more than a decade20 year heritage in managing multi-asset class portfolios13OUR PEOPLE. WE BELIEVE OUTCOMES ARE THE END-ALL AND KNOW THAT GETTING THERE ISNT OBVIOUS. Our people14QIC has some of the best investment and technical professionals in the industry and through their efforts we drive strong returns for our diverse range of clients.
Corporate structure QIC is independent and operates with pure investment management focusShareholders are Queensland State Government MinistersQIC has a Board of Directors, who delegate day-to-day operation to QICs Executive Committee (ExCo).ExCo consists of Chief Executive Officer and senior executives.16DAMIEN FRAWLEYQIC Limited Chief Executive OfficerCorporate Management GroupCLAIRE BLAKEChief Financial OfficerADRIAAN RYDERChief Investment OfficerBRIAN DELANEYChief of Global Clients and MarketingDAVID CLARKEChief Risk OfficerPAUL LEITCHChief Operating OfficerAsset Management GroupADRIAAN RYDERGlobal Multi-AssetSUSAN BUCKLEYGlobal Liquid StrategiesMARCUS SIMPSONGlobal Private EquitySTEVE LEIGHGlobal Real EstateROSS ISRAELGlobal InfrastructureGovernance, risk & compliance17
QIC Limited: Three lines of defence designed to proactively identify, assess and manage risks1st line of defenceBoard committees, executive, investment teamsExecution policies and proceduresCounterparty selection guidelinesLiquidity polices
2nd line of defenceIndependent investment compliance and risk management teamCompliance training, advice, corporate policies and standardsGLS portfolio risk and construction meeting
3rd line of defenceInternal and external audit functionAssurance over risk management control activities.Excellent feedback from internal audit review Environmental, social and corporate governance QIC became a signatory to the United Nations-backed Principles for responsible Investment Initiative (UNPRI) in 2008.QICs approach to Responsible Investment is outlined on our website, www.qic.comEach QIC investment team has a documented approach on how it integrates the consideration of ESG factors into its investment process. QIC is committed to reducing its environmental footprint and offsetting environmental impacts it cannot avoid. QIC encourages its employees to be environmentally responsible and we work with our stakeholders to find practical and innovative ways to deliver our joint business and environmental objectives.
18Evolution of our Operating ModelHouse of Boutiques Evolution to integrated model Corporate Strategy Business Strategy Client, Sales & Marketing Infrastructure, Operations & Risk Asset Mgt Asset Mgt Asset Mgt Infrastructure , Operations, Risk & Marketing Asset Mgt Bus StratProductSales Client Asset Mgt Bus StratProduct Sales Client Corporate Strategy Asset Mgt Bus StratProduct Sales Client 19Key MessageThe changes to the operating model look simple on paper but took significantly more effort and energy than initially anticipated.We now need to refine the operating model to an execution model
Supporting CommentsWhile the House of Boutiques model served a purpose in the QIC of the past, it came to a time where the overall business model was no longer scalable to support the growth of the business and a consistent market approachWe needed an operating model that resonated with the market The initial steps in moving towards an integrated operating model took over 12 months to bed in through the new strategy, improved governance structures, increased attention on our KPI measures, and ensuring appropriate accountabilities and structureWe are now seeing benefits from the improvements, with improved collaboration and a building sense of urgency. However, this will remain an area of attention continued efforts need to be made to really embed this model in to the culture and maximise the benefits turning this into an execution model.19
Strategy snapshot20PillarsBuild on our heritage to become the essential partner for clients seeking a global institutional leader in alternative, specialised investments. Going beyond the predictable to deliver outcomes for clients, shareholders and staff Vision Mission Sustain GrowDiversifySustain PillarsStrategic PrioritiesWe have 5 strategic priorities ranging from transitional to transformationalCorporate KPIs
Financial Performance Clients and Market Process and GovernanceTalent and CultureKey MessageMy intention is that the Strategy largely remains the same with increased focus on executionI dont believe strategy should materially change regularly and it was always the intention for this strategy that our transformational priorities would take a number of years to achieve
Supporting CommentsWe have updated the vision and mission in line with the brand refreshOur vision now places crucial emphasis on being chosen by clients this aspect underscores the importance of an actively commercial mindset. It depicts a future for QIC where the organisation is actually recognised by clients as being a global leader versus merely aspiring to be a global leader in the previous version. Our mission now includes beyond predictable which will serve to embed the brand positioning throughout the organisation. We are increasingly using the term outcomes as this is ultimately what clients seek and it is also an important focus that aligns all of our investment teams. The construct of five strategic priorities works well and many of the current priorities represent key areas where we should always focus - i.e. investment performance and operational excellence. These have proved to be good mechanisms to focus the business and align execution effortsThe corporate KPIs and scorecard are deeply embedded in our performance management system and therefore is a key lever for continuing to drive behaviour and outcomes.20