Brendan O'Connor – Alpha Opportunities in Australia at Regal Partners (EP.485)

What It Covers

Brendan O'Connor, CEO of Regal Partners, explains how his firm grew from 1 billion to 21 billion AUD by building Australia's premier alternatives platform across hedge funds, credit, royalties, and natural assets, leveraging unique structural advantages in Australian markets including the 4 trillion dollar superannuation system and resource-heavy economy.

Key Questions Answered

• •Australian Market Structure: Australia's equity market allocates 55% to financials and materials versus global markets, with resources representing 25% currently but reaching 65% in the 1970s. The fifteenth largest economy has half South Korea's population but double the GDP per capita, creating diversifying return streams for offshore investors in a AAA-rated, low-corruption environment with strong legal protections.
• •Superannuation System Opportunity: Australia's mandatory pension system grew from 3% of salaries in 1992 to 12% today, accumulating 4 trillion dollars in thirty-six years, making it the fourth largest pension system globally despite being the fiftieth largest population. This capital pool increasingly moves toward passive investing and internalizing management, creating alpha opportunities in underfunded alternative strategies.
• •Original Equipment Manufacturer Model: Regal operates as first-call originator across equity, debt, and royalty solutions rather than syndicating deals, employing 25 dedicated resources professionals including five mining engineers and five geologists. This origination capability allows pricing influence on transactions and provides edge through technical expertise that passive domestic investors and unfamiliar offshore investors cannot replicate.
• •Four-Step Investment Process: Regal's fundamental stock selection requires valuation as cornerstone, macro environment assessment for sector-specific headwinds or tailwinds, catalyst identification to time entry and exit points, and edge articulation to force clarity on what the efficient market is missing. This discipline applies across all strategies to ensure conviction before deploying capital.
• •Natural Assets Dominance: Regal owns the largest water rights portfolio outside Australia's Commonwealth Government, operating under a cap-and-trade system where water scarcity on the driest continent creates pricing power. As farms transition from low-margin dairy to high-value crops like almonds and table grapes requiring more water, lease returns and capital appreciation accelerate on this increasingly scarce asset.