Page 12 - Spring_2022

Your questions. Our answers
Q How does Albion pick the winners that it has had recently?
A Picking winners is at the core of Albion’s investment strategy. The process includes originating deals, finding the right one, and then backing it through to an exit opportunity. Albion looks for opportunities where it believes markets will be created, and new products can have a big and significant impact on the economy. Team members are assigned specialities and perform deep dives into technology sub-sectors to develop an investment thesis. Albion’s team is constantly thinking about how the world is changing (e.g. Albion were one of the earliest investors to focus on digital health fifteen years ago and were also early to focus on B2B software).
A Attheheartofthisquestionisthebeliefthatmaximising value for investors is delivered by being able to back winning businesses through their growth cycle. An IPO can either be an exit opportunity or a fundraising to deliver further growth. Importantly, an IPO triggers an investment decision, hold if the growth opportunity continues to be compelling or sell if it is not.
A Thereisabroadrangeofviewsoninflationfrom economists at the moment, with differing views on the short and long term outlook. However, even with the overall uncertain outlook, a broader point is that pricing of mission critical software should be relatively resistant to inflation. The contracts with customers are often annual contracts which have inflationary increases built into them to increase along with Retail Price Index. However, we can expect wage inflation, particularly software developers, to increase. Therefore, on balance, we believe our focus on structural growth and mission critical business provides a degree of insulation in an inflationary world.
Q If a company IPOs, will you sell the stake or hold listed equities too?
QHowdoestheuncertain outlook for inflation affect the investment strategy?
12 Albion news | Spring 2022