Interview: Rod Kafer, sums up the 2019 Rugby World Cup

Expert Voices | +61 2 9083 1333 | 2019.12.01

Interview: Rod Kafer, World Cup-winning rugby player and prime broker, sums up the 2019 Rugby World Cup

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This interview was conducted by Stefan Nilsson and originally published on the Hedge Funds Club website.

The 2019 Rugby World Cup in Japan is over. Rod Kafer, who won the 1999 Rugby World Cup with Australia and then stayed involved with rugby as a coach and TV commentator, is now working with Hedge Funds Club sponsor Invast Global’s prime brokerage team in Sydney. Having attended the Sydney Hedge Funds Club event in September, Kafer then travelled to Japan to cover the World Cup for Fox Sports. HFC’s Stefan Nilsson met up with Rod Kafer in Tokyo during the World Cup and following the final got Kafer to sum up his thoughts about the tournament.

You spent nearly two months here in Japan as a Rugby World Cup TV commentator for Fox Sports. Apart from seeing a lot of rugby, what did you experience during this extended stint in Japan?

Having been to Japan for rugby previously on a few occasions I had a reasonable idea of what to expect. However, what surprised me most, was the passion and support that the Japanese people had for the game and the traditions of the game. To see Japanese couples in the stands wearing opposing teams’ jerseys as supporters and yet managing to sing the national anthems prior to the match for both sides, was something I have never seen before. The willingness of the local community to embrace a foreign sport as in-depth as the people did, truly shows the level of engagement the game garnered over the seven weeks of the tournament. Any visit to Japan would not be complete without a review of the food and drink consumed, and what a culinary experience it was. On island of Hokkaido I enjoyed the king crab and my favourite beer ever tasted – The Sapporo Classic – It’s so good that it is only available in Sapporo and not exported off the Island.  In the south in Oita on Kyushu there was the heart-warming ramen after onsen. The food was never a disappointment and I enjoyed every meal. Former Japan and Suntory coach Keisuke Sawaki took me for a feast at a favourite sushi restaurant in Gonpachi, and it is hard to put into words how magnificent the food was, washed down with a Suntory Malt Beer, of course, then followed with a Roku gin and tonic, a drink that Eddie Jones was advertising – was some experience on a number of different levels.

Rod Kafer and his fellow Rugby World Cup Winner Tim Horan with HFC's Stefan Nilsson and his family during the Rugby World Cup in Japan.

Rod Kafer and his fellow Rugby World Cup Winner Tim Horan with HFC’s Stefan Nilsson and his family during the Rugby World Cup in Japan.

Host nation Japan, for the very first time, went through the group stages unbeaten – including great victories over Ireland and Scotland – and made it to the quarter-finals where South Africa proved too tough. Was Japan’s Brave Blossoms’ success a surprise to you?

Every Rugby World Cup has produced teams that have surprised – Japan has now done it twice! I recall seeing Japan play in 1987 prior to the Rugby World Cup and losing to New Zealand by over 100 points, to see them play in 2015 as they did and so narrowly miss the quarter-finals was a shame and suspected they had the ability to improve whilst playing at home. However defeating Ireland this time, a team who had only weeks before been the number one team in the world, was breathtaking; then to back it up over Scotland – who they failed to beat in 2015, proved they not only have the courage but the tactics, the skills and the playing depth, to be a team who could be a top 8 team in the world in the near future. Losing in a quarter-final to the eventual winners of the tournament, in a game where the Springboks had to revert to a style of play designed to bludgeon Japan, fearing they did not have the skills to match Japan head-on, reflects how far the team has come and was a sign of respect the Brave Blossoms had amassed in only a matter of weeks. They truly shocked the rugby world.

Japan’s playing style, which includes some stunning running rugby, is rather different from the more rough-and-tough rugby of some teams with taller and bigger players. Do you think that Japan’s relative success with its playing style may influence other emerging national teams?

Underestimating the work and effort that the Japanese team put into their preparation for the Rugby World Cup would be an error and easy to overlook, and therefore easy to think they produced a playing style that others could easily replicate. It might appear easy to duplicate, but it’s difficult to perfect a style of play, in the way that the Brave Blossoms did, without the time and commitment to be exceptional at your craft. Japan was expertly coached, over a four-year period, by Jamie Joseph – the former All Black and Brave Blossom player; and Tony Brown, both who have had extensive coaching experience in Japan, and therefore understand the local culture well enough to design strategy to suit their players. What was exceptional about Japan’s play, was the high level of skill that the players showed under pressure in all aspects of the game. Their play evolved into a complete game with few weaknesses and a belief and understanding of their strengths and weaknesses, that opposition teams found difficult to counter. They managed their playing resources in such a way as to get the absolute maximum out of the team they had. They innovated in areas where they were at a disadvantage and then capitalised in the areas where they were better than their opposition. Catching Ireland on a hot, humid night in Shizuoka certainly helped the supremely fit and lighter weight forward pack where team selection from Jamie Joseph played a role in dealing with the conditions on the day, in a game where Japan excelled, and were worthy winners.

What do you think the success of Japan as a Rugby World Cup host nation will mean for rugby’s future?

The great challenge for Japan rugby and indeed world rugby is to build a legacy that lasts for generations. It was obvious that the Japanese population embraced the game and the tournament. With the success that Japan had, the opportunity exists to promote the game in a way to garner the hearts and minds of the population. Focusing on a grassroots, ground-up approach within schools, with the appropriate level of investment, could deliver a game and a supporter base that will eventually sustain a truly professional competition to augment and capitalise on the existing company-based top league.

HFC's Stefan Nilsson and Invast Global's Rod Kafer at the Sydney Hedge Funds Club in September 2019.

HFC’s Stefan Nilsson and Invast Global’s Rod Kafer at the Sydney Hedge Funds Club in September 2019.

Aussie Eddie Jones, a former coach of both Australia and Japan, did rather well at this World Cup, taking England all the way to the final. Do you reckon he should soon come home to Australia and take charge of the Wallabies to bring them back to glory?

Eddie is a world-class coach and has demonstrated that over many years, in a variety of environments, in a variety of roles. Unfortunately, Eddie is contracted with England and therefore not an option to coach the Wallabies. I am encouraged however by the recent appointment of Dave Rennie to the Wallabies. Dave is an excellent coach with a fantastic pedigree and a proven history of success. I am looking forward to seeing him continue that in Wallaby Gold.

South Africa are the new world champions of rugby. Did you expect them to do this well prior to the Rugby World Cup starting?

Yes, I did. I had predicted the final prior to the tournament, however, had England winning over South Africa, so got that wrong! South Africa had all the elements needed to perform well in a World Cup, and as is often the way, did not have to beat the best team in the world, as England did it for them in the epic semi-final. South Africa was able to preserve the most amount of energy in the group stages adopting a conservative game plan that allowed them to play the final at a pace that England was unable to compete with. They were excellently prepared and peaked for the final to perfection. The return of Cheslin Kolbe was a major boost for the psyche of the team and his try late in the match showed the quality of the world-class finisher. The Springboks were worthy three-time champions.

Your fellow Fox Sports commentator is Tim Horan, a two-time World Cup winner with the Wallabies. Is there a bit of rivalry between the two of you in the studio or are you just good mates supporting each other?

I am fortunate to work with some of the greatest players in Wallaby history – not just Horan, but Gregan, Kearns, Martin, Hoiles, Harrison and Mitchell – they make a pretty formidable line up of talent. Whilst not all of us have played directly with each other, we all cross over in a way that everyone has played with at least two others on the list and therefore we have, what Justin Harrison likes to refer to as a “golden thread” running through us. We are all great mates and enjoy one another’s company.

HFC's Stefan Nilsson with Rod Kafer in Tokyo during the Rugby World Cup.

HFC’s Stefan Nilsson with Rod Kafer in Tokyo during the Rugby World Cup.

You and several other former rugby stars have made the transition into successful business careers. Is it the competitive instincts and winner mentality that help some former rugby players succeed in business?

One of the great challenges as a former player, is you have a career in rugby until sometime in your mid-30s, if you are lucky, and may have had some great highs, and certainly some lows as well, and then often transition into a completely new industry, which may have little applicability to your time in the game. Whilst you have garnered certain skills during your playing career, you have also missed many of the lessons that you would have learnt had you followed a more traditional business or career path through your 20s and 30s. After the game, you can find yourself as a rookie in a new industry at the age of 35, 40, or sometimes 47, as I have, and need to learn and adapt as quickly as you can to be successful. I think one of the greatest challenges for ex-sportspeople, is trying to replicate the enjoyment you had as a player, playing the game you loved, in a new environment that is not as fulfilling as playing a sport for a living. I think the competitive instincts that sportspeople have are often specific to the sport they play, and at times do not translate outside of that world. Certainly, in business I have met incredibly focused and competitive people equal to any of the great rugby players’ competitive instincts, however, sportspeople are typically able to bring a work ethic and sense of teamwork that most businesses value. For many sportspeople, the measure of success in business probably has more to do with their ability to find joy in their new career. I have been involved in several businesses since finishing as a player. I have founded and sold a couple of businesses and had success and failure in business as in life. However, my time at Invast Global has been immensely enjoyable and incredibly rewarding. I consider that to be an outstanding success and look forward to it continuing.

(Dec 2019)

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Landmark appointment of Goldman Sachs and Citi veteran

Expert Voices | +61 2 9083 1333 | 2018.02.06

Boutique multi-asset Prime Broker, Invast Global, has announced the appointment of ex-Citigroup, Goldman Sachs Treasurer and KPMG Partner Michael Cunningham as a Non-Executive Director to the Board, representing a landmark chapter in the company’s impressive global expansion.

Invast Global, the subsidiary of Jasdaq-listed Invast Securities Co (8709.JP), has cemented an enviable reputation as a world leader in non-bank Prime Services. With a client base of brokerages and hedge funds spanning the globe, the company has experienced impressive growth in its prime services offering, which gives institutional clients collateralised access to premium liquidity in OTC FX, Metals and Energy products, as well as direct connectivity to over 30 global exchanges and OTC venues.

In a notable development which underscores the top-tier positioning of the firm, Invast Global has attracted ex-Goldman Sachs and Citigroup Treasurer, Michael Cunningham, to join the Board of the company in Sydney. Mr Cunningham’s career in Financial Markets, Risk Management and Advisory roles spans three decades. In addition to his financial markets roles at Goldman Sachs and Citibank in Australia and Asia, Mr Cunningham also served as the Chief Risk Officer: Oceania Region for Bank of Tokyo-Mitsubishi UFJ. Most recently, Mr Cunningham served as a Partner in KPMG’s Financial Risk Management Practise.

CEO of Invast Global, Gavin White has warmly welcomed Mr Cunningham to the Board; “I am honoured to welcome Michael to the Board of Invast Global. It is a huge endorsement of our business and our future plans that we have been joined by a person of such high calibre, personally and professionally. Michael’s expertise is second to none. His intellect and industry experience will provide immeasurable value to the discussions and decisions at Board level”.

“Invast is the clear leader in its class and I’m excited to be involved in the next phase of its evolution and development” Mr Cunningham said.

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Inside the mind of a Prime of Prime

Expert Voices | +61 2 9083 1333 | 2018.01.19

Interview with James Alexander, Commercial Officer at Invast Global

How is bank regulation helping Invast Global win market share from traditional prime brokerages?

There is no doubt that the suite of bank focused regulations has been a tailwind for Invast. Of the regulations currently curtailing banking activities in Prime Broking, Basel II has been the greatest catalyst for the shift in appetite to onboard various client types, especially smaller or emerging managers and brokerages looking to distribute products to a broad retail audience.

MiFID / MiFIR are also having an impact, generally favouring the boutique organisations who can respond rapidly and are able to focus on market niches.

Importantly though, our successes have not been to the detriment of the tier 1 banks. As we utilise the services of three bank prime brokers, we are essentially acting as an aggregator of clients for our PB’s who often refer clients to Invast, so the relationship is symbiotic.

What are the benefits to emerging hedge funds using a non-bank prime broker and why do you feel Invast Global is well positioned to meet their needs?

The single most important benefit is access. One significant challenge facing many emerging managers is the ability to access global markets on commercial and risk terms that allow them to focus on generating alpha and growing their funds. By utilising Invast Global, fund managers have access to over 30 equity and futures exchanges as well as liquidity in FX, metals and commodities globally. Our clients are able to consolidate their trading capital into a single cross-collateralised account for improved capital efficiency.

The second benefit is costs. Unlike most traditional prime brokers, Invast Global does not charge a minimum monthly fee. We understand that these charges can hinder the growth of an emerging fund manager. Furthermore, our prime services team works closely with our clients to ensure that their commercial agreements facilitate long-lasting relationships. We want our clients to develop and thrive.

Service is another area that sets Invast Global apart. The professionalism across the entire team gives customers a consistently positive experience. Our service levels befit the ‘high-touch’ style manager, who requires far more than execution and a trading statement. We are nimble and innovative, which ensures that our client’s needs are swiftly met with a bespoke solution.

Invast Global has quite a diverse client base, including managers that are just establishing their fund after leaving a much larger one, funds that have a bank prime facility as well as one with us and funds that have simply not been able to justify the commercial requirements of a PB facility.

What enhancements/changes have you made to your bank and non-bank Liquidity Provider (LP) mix over the last 12 months?

2017 saw two key themes come into sharp focus for our liquidity management team. The first of these was the continued rise in prominence (and volume capture) of the non-bank liquidity providers, a trend we saw emerging over 2015 and 2016. The ability of the non-bank LPs to make material impacts on pricing and liquidity, especially in the crosses and exotic currency pairs has been clear. Metals and other commodities are another area where the non-banks have begun to capture significant market share through aggressive pricing and high quality, low market impact execution. It is important to note that in the G7 currencies, the major bank LPs still form the liquidity bedrock, with aggressive skewing from the non-bank LPs providing additional spread compression.

The second driver of change in the liquidity space has been the FX Global Code of Conduct (FXGCC), of which Invast has been a strong supporter and advocate. There is within Invast, a preference towards using LPs that have clearly stated their adherence to the FXGCC and we believe that there are distinct and practical benefits for our clients from this position. This has already proven to be true as many of those clients are now in a position where they are required to demonstrate best execution capabilities to their own customers.

Keeping on top of trading costs is important for any manager, and under MiFID II they will have to demonstrate that best execution is being delivered on behalf of their investors. How is Invast Global able to optimise the way that its clients execute their strategies using the best liquidity, at the best price?

As a non-bank prime broker, Invast provides clients credit intermediation and liquidity provision to a degree of transparency and level of control unprecedented in the market.

Invast Global clients are given transparent access to our many liquidity providers across a range of asset classes and can – in conjunction with our expert liquidity team – customise their liquidity mix to best suit their trading and execution style. Our clients also have access to a suite of execution algorithms covering a variety of orders types to allow them to achieve the best price with minimal value leakage. With the right liquidity and execution methodology backed up with pre and post trade transparency, managers are clearly able to demonstrate best execution for their clients.

In what ways is the firm leveraging new technologies to improve transparency, both pre- and post-trade, to strengthen client relationships?

Invast is already leveraging numerous technical resources to not only deliver greater transparency, but to optimise the execution strategies of our clients. Various forms of Transaction Cost Analysis (TCA) programs are at the heart of this conversation. Being able to clearly demonstrate the dollar cost value of market impact is hugely beneficial for our clients in maximising value capture.

How would you sum up 2017, from a business growth perspective? Any key milestones achieved?

2017 has been a year of exceptional growth for Invast Global. We have continued to expand our client base in scope and scale and are looking forward to executing our growth and expansion plans in 2018.

There were a quite a few key internal milestones reached in terms of turnover, client numbers and overall profitability, but the truth is, given the scope of the opportunity and the regulatory tailwinds we foresee, our greatest successes still lie ahead.

What will you be focusing on in 2018 to continue to grow Invast Global’s revenue stream?

The continued growth trajectory of the business will encompass significant geographic expansion. London and Hong Kong offices are planned for launch in 2018, with further expansion in Europe and Asia likely in 2019.

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