5-Bullet Friday – January 29th

Here are some of the news that have caught my attention recently:

  1. Private equity continues to evolve rapidly.
  2. Bombardier is now a penny stock. Is it the next Nortel for Canada?
  3. Cognitive bias – Why do we make bad decisions?
  4. A guy like me – John Scott NHL All-Star.
  5. B.C. to add computer coding to school curriculum.

 

1- Private equity continues to evolve rapidly. With AUM expected double over the next five years, the industry is flush with cash. In 2015, “shadow capital” or investments outside of traditional fund structures (co-investment, direct investment and separate accounts), amounted to a record $161 billion, 26% the total raised. Investors and managers are fundamentally revisiting their operating models to deploy capital. A growing numbers of investors seek long-term solutions to investing high levels of distributions without lowering overall returns by launching emerging manager programs. In an relatively pricey environment investors are turning to less crowded niches where pricing is better and teams are frequently just emerging. Capital is also abundant in venture. Using “increased funding to eliminate competition and dominate their sectors long before an IPO”, the best startups are expected to continue to stay private for longer.

2- Bombardier is now a penny stock. Is it the next Nortel for Canada? I hope not, but it’s facing one bad news after another. One thing is certain, multiple case studies will be written about its mismanagement. As Montreal’s biggest private employer and as an anchor to the aerospace cluster, the downfall of the company is hurting the city’s economy. Let’s hope that Bombardier’s fate will be different from Nortel’s as it is one of the few manufacturing companies with advanced and significant R&D operations headquartered in the province of Quebec.

3- Cognitive bias – Why do we make bad decisions? One chart summarizes well 20 frequent bias impacting our daily life.

4-A guy like me. Much respect for tough guy John Scott. Well deserved spot on the NHL all-star weekend roster…for his big heart. Bring back old school hockey!

5-B.C. to add computer coding to school curriculum. Education needs to evolve faster to keep pace with changes in society and in the economy. B.C. announced it will introduce coding to the curriculum this fall. Coding was also recently added to school curriculum in Britain and is coming in Australia. The way students are taught will change starting in kindergarten “to stimulate an aptitude for applied design, skills and technologies, to improve students abilities to solve problems and think creatively”. By the end of Grade 9, “students will also be able to experience basic coding.” I agree with the comments of Tobi Lutke, the founder of Spotify, who believes “every company in the world is either turning into a software company or is in the process of dying because of a software company”. “In this great reshuffling of the business world, we need Canada to end up with a good share of the newly created and scaled companies. There is tremendous upside for Canada in making computer literacy part of the core curriculum. … Whoever figures out how to teach computer literacy first will have by far the most prepared work force. It’s hard to overestimate the potential of that.”

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About Ludovic Dumas

Ludovic transforms innovative companies into world-class organizations. He is an investment professional at an investment firm representing the interests of one of the most successful families in Canadian business. Before joining the private equity world, Ludovic was an investment banker at CIBC and with ING Group’s investment banking team in Frankfurt, Germany. Mr. Dumas was also a management consultant with Deloitte where he worked on corporate strategy, restructuring, market analysis, due diligence, and economic development mandates. Specialties Mergers & acquisitions, capital raise, corporate strategy, entrepreneurship.
This entry was posted in 5-Bullet Friday, Finance, Innovation, Montreal, Private Equity, Technology and tagged , , . Bookmark the permalink.

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