By Inshira Shainaz
Stax, a global strategy consulting firm, discussed the investment outlook for Sri Lanka and Asia as a whole and the importance of positioning one’s business for emerging investment opportunities, at an event celebrating their 10th year of operations in Sri Lanka yesterday.
Stax CEO Rafi Musher stated that Asia currently accounts for 30% of global GDP and this share is expected to grow to 52% by 2050.
Musher said: “Our Sri Lanka office can provide great content and insights to the US teams about a variety of industries and regions by using sophisticated research and analytic techniques. And the US teams can similarly provide our Sri Lanka office and Southeast Asian clients with expertise on industry trends, best practices and ways of identifying profit opportunities. I personally work with colleagues in Colombo as I would in Boston or Chicago.”
“Global companies hire us to help drive growth because we provide actionable insights. Stax brings best practices on growth and profit improvement and we are in your backyard,” he added.
The multi-generation family businesses and increased private equity investment in the region will contribute to growth. Family businesses with additional generations in the office are expanding their areas of interest.
Private equity firms around the world are looking to capitalise on economic growth and investment opportunities in the region, with the average Asia-focused funds size growing steadily over the last few years to reach $ 422 million in 2014 compared to a low of $ 197 million in 2009. Additionally, dry powder, which refers to private equity funds available for investment, currently stands at $ 129 billion, indicating opportunities for corporations and growing family-run businesses to take advantage of this significant investment pool to leverage growth.
Long and proven track record
Stax provides data-driven and actionable insights to help global companies drive growth. With a 20-year track record of providing clients with strategic advice on profit improvement and M&A, Stax has become a formidable force in the strategy consulting space, competing directly with the big three global consulting firms - Boston Consulting Group, Bain and McKinsey - and boasting an impressive list of clients which includes 14 of the top 20 private equity firms and 27 Fortune 500 companies.
Stax Director Kumudu Gunasekara stated that many companies perceive a lack of funds as an impediment to growth and often look to raise funds through either debt financing or an IPO.
However, this might not be the best option for a firm at a given time. It is important for a business to evaluate where its current opportunities lie and to then assess which funding options can best grow the business.
He also highlighted the importance of exploring other avenues of funding, such as private equity investment, rather than immediately listing a firm on the CSE. The influx of smart capital will allow a well-established company listing that will garner a higher valuation. Having a mature, well positioned listing in the CSE is important for the company as well as the CSE, he said.
Stax specialises in assisting companies develop strategies to achieve desired growth objectives, with higher margins in shorter time periods. Contrary to traditional methods, Stax’s approach is to not to seek funding immediately but rather evaluate all options available, so that management teams can make the most informed decision.
Businesses looking to attract smart capital need to think about how best to position the firm for growth, and set themselves up as an attractive source of investment for the investor community. This includes preparing the management team with a clear vision and path to growth and developing a strategic roadmap that showcases double-digit growth prospects.
Stax Director Kumudu Gunasekara explained: “Investors want to put money into companies that have a strong strategic roadmap and vision. Stax can help position your firm as an attractive investment opportunity for future investors by helping you understand and prioritise a strategic vision.”
Many companies with strong growth potential often fail to capitalise on opportunities as they are reluctant to trade equity. Trading equity for smart capital can position a firm for higher growth and a higher valuation in the longer term. Identifying and attracting smart capital is vital, given the large amounts of dry powder in the market.
Describing specific areas of opportunities in each of these high growth industries, Stax Managing Director Ruwindhu Peiris said that Millennials are entering their peak earning years and currently account for around one-third of all business travel expenses. In the next 5-10 years they will provide the majority of spending for travel and leisure. Being tech-savvy, they rely heavily on online information sources and are sophisticated travellers who carefully plan their trips.
With ‘High-Yield Segment Targeting’, companies in the leisure sector can engage with potential guests online at different stages of their travel with winning messages reaching the right audience at the right time.
He also listed growing opportunities for businesses in healthcare, as demand is increasing fast due to an aging population and high prevalence of chronic diseases such as diabetes. In any field, Stax can help a business identify the most attractive adjacent and new market opportunities, help clients create solutions and provide services that align with current and emerging customer needs and market trends and use analytics to optimise operations and improve incremental profit.