Following are excerpts from the unofficial transcript of a CNBC EXCLUSIVE interview with Orlando Bravo, Thoma Bravo Co-Founder and Managing Partner, from the CNBC Delivering Alpha Conference, which took place on Wednesday, September 29th.
Q2 2021 hedge fund letters, conferences and more
Gates Capital Management's ECF Value Funds have a fantastic track record. The funds (full-name Excess Cash Flow Value Funds), which invest in an event-driven equity and credit strategy Read More
Bravo On Being The Best Time To Buy
We're getting to buy the market leaders at scale and at high growth as well. The three of them combined. And we're fortunate that we can do that because our team can execute. The reason for that is people like to work with us. We have great people on our team, we have a great culture, and really importantly, a reputation over 20 years of making big improvements in the companies that we buy and doing that with existing management.
Bravo On The Quality Of Companies
More important than where valuations are is the quality of the companies now in the South Korean industry. It is totally different and totally superior than where it was 10 years ago. You're getting companies now that are 100% recurring revenues, that have a 90% gross margins, and they have growth rates that are four to five times the growth rate that existed before 2010
Bravo On Cybersecurity
We're seeing huge opportunities in cybersecurity. Workflows right now in the software industry are about 50% on premise and 50% cloud. And that is creating a big cybersecurity challenge for companies. They call it, what is your cybersecurity posture now. As a result of that, we are the largest – if you combine all of our portfolio companies – by far the largest cybersecurity company in the world, with about 5.6 billion in revenue. And that's a sector that we've been so active in since 2009 and our activity has accelerated.
Bravo On Software Being A Productivity Enhancing Tool
You take the current inflationary fears, which have been going on for a while now, and software is a productivity enhancing tool. So these tools have a lot more value if there's labor inflation, because they allow you to do more with less labor. And there's certainly a labor shortage right now all over the economy, whether it's restaurant workers or knowledge workers or what have you, and software's a great productivity tool to be able to deal with that.
Bravo On Labor Issues
Labor is a big issue. Retaining knowledge workers, motivating knowledge workers, hiring people, building culture is even more challenging today than it's ever been. And it's a board discussion in every company and we have our ways of dealing with it.
Bravo On The SPAC Market
Another trend that you're seeing, right, is the worlds colliding between private equity, venture capital and hedge funds. Once again, it’s how do you finance more of these great companies and innovations? And the SPAC market boomed because of that.
Bravo On Improvements To The SPAC Market
There could be major improvements in the SPAC market, like, accountability. We believe that a SPAC sponsor, together with a company, should put up all their numbers in the past and continue to report on every quarter on how they've done versus projections. That will improve in that market.
Bravo On Retail Investors
I really like the retail investor. I think the retail investor is smart. I think it's adding capital to these companies, and it's providing some competition to the establishment.
Bravo On Crypto
How could you not love crypto? You know, look at the movement. Aren’t we all tired of paying all those transaction fees and exchange rates, and seeing currencies in different countries being completely devalued, and watching our friends in Argentina carry calculators around to try to purchase based on inflation rates? I mean, crypto is just a great system. It's frictionless. It's decentralized. And young people want their own financial system. So it is here to stay.
Bravo On Getting The Latin Community Into Private Equity
That's what allowed us to think as a team, a bit differently about software in the year 2000, and think about it as both a cash flow and growth business. Not just as a venture business before. Maybe our backgrounds and our different backgrounds allowed us to think a bit differently about that. Now, what we do is very meaningful, because just looking to get more Latin Americans into private equity, into tech. What we do in the Bravo Family Foundation in Puerto Rico with our rising entrepreneurs program, and providing a role model of, go ahead and take risk, do it in North America where the opportunity and the money is.