PRIVCAP MEDIA FEATURES INTERVIEW WITH PCM CO-FOUNDER STEVE FARAONE

TORONTO – April 5, 2021 – PCM Co-Founder and Managing Partner Steve Faraone recently had the opportunity to sit down with Ben Gibbons of RSM Canada in an interview hosted by Privcap Media. The conversation examines Steve’s journey into private equity investing, his time at Ontario Teachers’ Pension Plan and his decision to strike out on his own and co-found Peloton Capital Management. Additionally, the interview offers insight into what investing has looked like throughout the COVID pandemic, the sourcing advantages that come from PCM’s longer investment horizon and the benefits of the firm’s sector focused approach – including Steve’s views on healthcare services as a core focus area.

Selected excerpts from the conversation are highlighted below as well as a link to a recording of the full interview.

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On career accomplishments and private equity investing:

Steve Faraone: “Some of my biggest accomplishments were actually in situations where you had a roadblock or a speed bump, where you had performance issues. A lot of being a good private equity investor is, how do you react to those issues? How do you partner with management and how do you navigate your way through it in a way that is successful?”

On influences from OTPP that ultimately led to the inception of Peloton Capital Management:

“Mike [Murray, Co-Founder and Managing Partner at PCM] and I both were at the stage where we wanted to take some risks, to do something entrepreneurial. . . . I always found working with smaller companies more fulfilling, because they’re not typically as sophisticated. There’s more opportunity to add value and you can move the needle a little more easily. We saw this opportunity in the lower middle-market to take some of what we had been doing at OTPP and bring it to Peloton.”

On Peloton’s long-term capital approach and fund structure:

“Mike and I both found at OTPP that we often saw unique deal flow or proprietary deal flow because of the long-term capital profile that OTPP had: founders, families and CEOs that were looking for that eight- to 10-year partner, not the three- to five- or six-year partner. We thought that was a real, tangible advantage. At Peloton, we have a 15-year fund life, which is five years longer than a typical private equity fund. It doesn’t mean we have to hold things for a very long period of time, but we have flexibility to say, “We’re in year five or year four, and we want to go for another three to four to five years,” which is a nice optionality to have.”

On Peloton’s strategy that targets healthcare, financial services and consumer products:

“We’ve spent the most amount of time in financial services and healthcare services. When we look at our pipeline, it’s actually been pretty equally weighted. We haven’t intentionally been looking to [be overweight] on healthcare services. . . .in times of COVID, it’s a good place to be, because these services are needed and they can’t be deferred. So, there are great macro trends, and these are fragmented industries where we could pursue a buy-and-build strategy, which Mike and I did a lot of at OTPP. . . . for all three of [our healthcare services businesses], we’ve partnered with founders. We’re the first outside capital that’s come in.”

On changes resulting from the impact of COVID on Peloton’s approach to investing:

“We now have the ability to diligence and to interact on multiple deals at the same time with virtual formats. You can actually do more diligence meetings, more manager meetings. You don’t have to fly, spend the night in a hotel, meet that next day, and then fly back. You can literally spend three or four hours with a management team, take a break or not, and then get on with the next one.”

On Peloton’s ability to thrive over the next five years:

“You really need to make sure you have a differentiated strategy and approach. You need to work very closely over the long-term with your management teams to create value.”

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To view the full interview, please see here: https://vimeo.com/511279405/d28a282d72