Canberra-based multimillionaire Mark McConnell has never chased wealth, but admits to taking a proactive private equity-inspired approach to managing his family office in order to keep building up his nest egg.
The nine-time Young Rich Lister, who co-founded ASX-listed IT managed services company Citadel Group, was last on the list in 2012 with a net worth of $28 million, but was ineligible the following year as he turned 41.
Now “between lists”, McConnell, 46, has since amassed a net worth somewhere in the range of $100 million to $200 million and he believes he’ll crack the Rich List in the coming years.
An investor and board member in everything from a fitness empire to an agricultural fund, McConnell has never been one to shy away from a risk, although these days with kids and a mortgage he takes a slightly more measured approach to investing.
“I don’t do anything full-time, but I’m on lots of boards and we’re either a top three shareholder or we’re materially aligned in all of them,” he tells The Australian Financial Review.
“We don’t do small passive investments. In some ways it’s no different to being a chief executive with 10 reports, but my 10 reports are 10 different companies.
“I’ve never been one to chase the money per se, but I could have stopped working 20 years ago and had a modest lifestyle. For me it’s the thrill of the chase and I need to keep that strong nexus between effort, reward and recognition. I couldn’t be on the board of an ASX 50 business because your influence on outcomes is limited.”
McConnell has a range of listed and private investments and most recently bought up almost 9 per cent of listed micro cap company Tech Mpire, of which he also holds about 20 per cent of the options.
Cyber security potential
It’s a business he’s bullish about, despite the share price falling substantially in the past three years to only 7¢, and the company reporting falls in revenue and a slide from a modest profit into a multimillion-dollar loss, as it invested in a new mobile ad fraud detection and mitigation technology.
It’s this new cyber security technology that has McConnell confident the business will be a success story, as the company has scored a deal with US marketing and corporate communications giant Omnicom.
“The message is getting out there that they’ve cracked an algorithm that no one else around the world has managed to crack,” he says.
“It’s such a growing market and Juniper research says the mobile ad fraud market is already worth $US19 billion and will grow to $44 billion in the next few years. The boys at TMP are well positioned at the right time with the right products.”
Despite no longer being involved day-to-day, McConnell and his wife Bryony still own more than 12 per cent of Citadel Group, which has a market capitalisation of more than $400 million and has gone up almost 30 per cent in the past year to trade above $8, and he sits on the board.
McConnell’s other big listed company bet has been on Viva Leisure, which was supposed to float this year but has been postponed until 2019.
The second largest shareholder in the gyms business, McConnell believes holding off until next year will be a “blessing in disguise” for Viva.
“We have no debt, so we weren’t coming to market to pay off a big debt position. We want to make a number of acquisitions and we have a good runway in front of us,” he says. “We’re looking to expand the domestic offering before taking it overseas.”
‘Your network is your net worth’
In the private sphere, McConnell is heavily invested in four ventures. He is raising $200 million for an agricultural fund under New Harvest Investment Management, alongside former AACo managing director Don Mackay, with the aim of buying up stakes in a variety of agricultural businesses.
He is also a significant shareholder in a Hong Kong-based equity derivatives platform called Qantex, which can be used by banks to clear equity derivatives and various forms of cryptocurrencies.
McConnell is also an investor in New York and London tech venture capital fund HOF Capital, which has backed companies such as self-driving car artificial intelligence start-up drive.ai and digital payments infrastructure start-up Flutterwave.
He is also raising capital for an unnamed value fund, backed by some former bankers, that will be on a roadshow in February with an aim to raise $100 million.
“It will be a Buffett-style, boring as watching paint dry business, focused on capital preservation. A niche product for ultra-high-net-worth families … where it’s prudent to sandbag part of your winnings.”
Having started his career in the Royal Australian Air Force, McConnell was recruited to the airline industry where he worked as the national operations manager for Ansett when he was only 26, before joining Bain & Co where he got a taste for investing and built up his networks in Asia.
When he moved to Canberra one of his first moves was also to establish himself in the local community, where he is now on the board of Cricket ACT and a committee member of the Salvation Army’s Red Shield Appeal.
It’s these networks that he’s able to leverage now to help his portfolio of companies expand into new markets.
“Your network is your net worth,” McConnell says.
But for young people just starting out as entrepreneurs, he says the best thing they can do is to read widely, and not get distracted by dollar signs.
“For every unicorn you see there’s a thousand businesses that gradually grow a good business over time. Don’t be distracted that you haven’t made a billion dollars overnight. Money is the beneficial byproduct of value.”