00:00Brian Reuter co-CEO and co-managing partner at Premier. Brian thanks so much for stopping by. Thanks for having
00:05me. And look you have a better view than maybe anyone. Nearly 100 billion assets under management. You're headquartered in
00:10London but you operate truly globally. It's all these existential risks. I mean you and I were just talking about
00:15some of them between AI supply chains war. What has this environment so far this year been like to invest
00:20in. Yeah it's energizing but incredibly volatile. Volatility tends to create like really interesting environments to invest in.
00:28Looking back over the last couple of years it was actually really tricky because we saw the markets being pretty
00:33highly valued relative to underlying risk potential. So volatility you could see in the world but not volatility you could
00:40see in asset pricing. Today it's kind of reversed and you see risk being priced everywhere especially around the AI
00:45trade. So it's a really interesting time now. So we were saying before it was a good time to be
00:49selling beta buying alpha as in like the market we were kind of generally not excited to invest in but
00:54you could have to pick really interesting selective assets where you could drive
00:57you know differential returns over several years. Now we actually see much more interesting opportunities with the way the market's
01:04being priced. The AI I guess evolution has created kind of a reckoning for software especially.
01:11And it turns out that private asset owners are much more exposed to software than public markets. How does it
01:20look at Premira? Yeah we have a significant part of our NAV that's in B2B software especially but it's a
01:27minority of where we've been investing.
01:28We actually have been investing. We actually have been a significant net seller of software for the last several years
01:32and in fact since the release of chat GPT not because we think software is in a bad place but
01:36because we did not see this risk price in the software. So we saw better opportunities to sell software than
01:41to acquire. Recently really towards the end of 2025 software moved into a really interesting price range and we think
01:48actually now it's been oversold.
01:49Not necessarily in total but there's really interesting single names in software that we think are significantly oversold. You can
01:55go ahead and share some of those with us. I tell everybody when they come to bring something to the
01:59investment committee today it better look good compared to Workday at nine times EBITDA.
02:03So it doesn't mean we're not going to buy Workday at nine times EBITDA if we're not a public investor
02:07but anything in the private market has to see that. The private markets have not yet reset to reflect those
02:13levels.
02:13It usually takes six or nine months as crazy as that is for the private market to kind of see
02:17their way to what the public market reality is. But anyway we think there's some really interesting names out there
02:23and it will kind of work its way into the private markets.
02:25I was just thinking that your company Zendesk must be so happy that they're not a publicly traded company when
02:30all the wildness was happening.
02:32So when you look in the market if private hasn't caught up are you actively having conversations with publicly traded
02:39companies that you're looking at taking private then?
02:42The take private market has been a very consistent source of deal flow for us. It's a really good one.
02:48I don't know any public company that's happy they're public at the moment.
02:51And so we've been we've taken companies public we've taken more companies private than we've taken public Zendesk being one
02:56of them. We've sold some of our public companies.
02:58We sold Informatica last year to Salesforce which was a great it's a great trade for Salesforce but we're very
03:04happy that that company is not public right now.
03:06So yeah it's a really interesting time to be having dialogues with all of these companies about maybe it would
03:10be better off to be private in this kind of a world.
03:13What's your take on the moat that's necessary or what do you want to see in a software company?
03:17I mean you mentioned Workday. I thought it was so fascinating that the CEO pointed out Anthropic and OpenAI still
03:25pay Workday on a monthly basis right?
03:27Yeah. We think there's a lot of overused kind of comfort terms that we see around software today. System of
03:32record overused comfort term.
03:34Every application has a database and you'll see people say like well we're a system of record because we have
03:38a database.
03:38I mean that doesn't really fit. You need to be feeding lots of other enterprise applications in the organization to
03:44have that kind of level of stickiness.
03:46So there's a lot of like moats have changed and a lot of moats that we find really underwritable today
03:51are back to basics.
03:52It's regulatory protection. It's deep relative market share advantages relative to your competitors.
03:57And actually a lot of what we've been doing with our existing portfolio companies going back to you know 2022
04:02-23 on the release of ChatGPT was aggressive investment around AI innovation.
04:06We're now 600 million plus of real AI ARR in our portfolio and that's growing more than 100% per
04:12year.
04:13So your best protection is actually to invest in and around the new technologies.
04:16That's growing more than 100% per year. That's more than doubling every year.
04:19Yes.
04:19Wow.
04:20And by the way like you realize there's tremendous advantages in the AI era to being the incumbent because you
04:26have access to all of the context and workflows.
04:28That's actually the rate limiting step for enterprises to get real value out of all their investment.
04:33So we're thrilled. Zendesk being one of them. 200 million plus of that 600 million is coming from Zendesk alone
04:39who made that pivot very successfully over the past several years and really embracing being now an AI native AI
04:45forward company.
04:46Some of some of your peers who maybe hold software companies that don't have that incumbent advantage. It's been sort
04:51of stacked on top of what people are saying is the bifurcation of private capital players right now.
04:57The haves and the have nots. Davidson Kemper has some status that are hedge funds saying that roughly a quarter
05:02P.E. funds that have raised since 2015 have failed to earn the rate of return at which firms can
05:06earn performance fees.
05:08There's been a lot of talk about the 21 and 22 vintages being really poor because of how much was
05:13paid. Again that sort of shakeout that bifurcation have those troubles fully made
05:18their way through the system. It never fully works its way entirely through the system but there's been a very
05:24consistent trend of where especially institutional investors would
05:27like to put their capital and it tends to be with firms that have some scale. So that's been a
05:31very consistent trend across this. There is a cycle to the industry.
05:35Some of that's driven by performance and vintage years and the like and the vintage year you're talking about to
05:39be a very tricky vintage year kind of 21 22 era for the
05:42industry. But the industry always survives. Is that making its way out that vintage right now where exits finally coming.
05:48So I know there was some kind of
05:49indigestion of could the sellers and the buyers could that gap come together. Is it coming together at all. Yeah
05:54it's you know it's still a low liquidity
05:57vintage across the class. We have been monetizing in our vintage for that like that underlying portfolio is actually growing
06:03really nicely.
06:03So the more you grow you work out some of the prices that were paid during zero interest rate environment
06:09and the like. So what we think actually the assets
06:13you want going forward. We love our position in this because we're digitally native investor across everything we do. Our
06:19second biggest office
06:19is Silicon Valley deep kind of roots in in the valley. But applying that technology expertise to all of the
06:26areas we invest whether it's services
06:27health care consumer. We think that's actually the setup you want as a firm heading into the next decade of
06:33you know risk and
06:34opportunity around AI.
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