“Manufacturers are often reluctant to commit investment until the foundational infrastructure is in place, but the state or city is also understandably reluctant to put the infrastructure in place until there’s an investment commitment,” says Segal.
“Bringing in a private sector partner with a diverse skillset, developer mentality and access to balance sheet can drive inclusive economic growth at the local level by providing governments with more bespoke funding solutions.”
Involving the private sector early can also make projects more likely to succeed and deliver greater value for money by transferring responsibility for their delivery and ongoing management from a public body to one experienced in bringing together multiple parties and clear accountability.
Realising new ideas and solutions, encouraging risk sharing and driving accountability tie back to Macquarie Group’s principles of Opportunity, Accountability and Integrity.
“Knowing how to find the right partners and to get people to work together, having a solid understanding of risk allocation and accountability is critical in being able to deliver projects of the scale governments increasingly need to undertake,” adds Segal.
Technology and Innovation
Public sector innovation faces a unique set of challenges, including complexity, increasing budget constraints, workforce transitions, mission creep, demanding constituencies, long procurement cycles, and the critical nature of government services. Macquarie Capital Growth and Technology (MCGT) recognises that these factors demand a specialised approach to investment, requiring deep and relevant expertise.
Macquarie has been a partner for the public sector for decades, and it began to invest heavily in technology and service-oriented companies that support federal, state, and local agencies though MCGT ten years ago.
Larry Handen, Global Head of Macquarie Capital Growth and Technology, explains that the public sector differs from business-to-business and business-to-consumer, investing in three important ways.
The first key differentiator is the complexity of government agencies and their procurement processes. “Without specialised sector knowledge and experience,” says Handen, “investors can quickly become a liability.” When governments partner with investors who focus on the public sector, like MCGT, it ensures they understand the unique needs and challenges they face.
Secondly, Handen emphasises the importance of building trust with government agencies. “Agencies place extensive value in long-tenured relationships,” explains Handen. “These trusted relationships need to be built and sustained over time. This requires considerable patience and resources.”
“Lastly, the critical nature of government services cannot be overlooked. “The cost of failure is profound,” Handen says. “Solution failure for government agencies can be catastrophic, so vendors are expected to embrace the mission with the same level of dedication as the agency itself.”
