The private equity investors backing the most boring businesses they can find
Flexstone has an odd but effective investment thesis: specialise in the boring companies that no one wants to talk about at a cocktail party. It's not alone in thinking boring is better.
For 25 years Europe and US-focused private equity investor Flexstone Partners has held strong to its odd but effective investment thesis: specialise in all the boring companies that no one wants to talk about at a cocktail party.
It's a thesis that has resonated with Australian institutions before: Australia is Flexstone's third biggest market for institutional investors, with giant super funds Hostplus and AV Super among its clients. And it is one that may thrive in a period of economic uncertainty and potential recessions.
One of the more 'boring' investments made by Flexstone, which is an affiliate of Paris-based wealth manager Natixis, was in residential gutter cleaning services in the US. Traditionally 'mom and pop' businesses operating in regional markets, the plan was to scale up and streamline the business to provide national offerings including window cleaning and other related services.
Nitin Gupta, Flexstone's Managing Partner in New York, says Australian private equity can also generate recession-resilient returns by looking at the boring stuff. The secret is not to zone out and lose focus.
