Every chief financial officer (CFO) faces the same fundamental challenge: three distinct voices competing for influence over their capital decisions. Government oversight demands compliance and strategic alignment. Large investors push for growth and returns. Expert advisors advocate for optimal structures and risk management.
The problem isn’t that these voices exist. It’s that they’re often pulling in different directions. Or ignored altogether.
The priorities of government policy frameworks don’t always align with investor expectations. What advisors recommend as structurally sound might not satisfy regulatory requirements. CFOs find themselves caught between competing demands that seem impossible to reconcile.
Today’s Australian businesses must navigate this complexity by understanding how these competing voices shape five critical areas: government policy frameworks, legal precedents, bespoke private debt solutions, strategic equity partnerships, and institutional investment strategies.
Before you can turn those insights into custom structures and lifecycle-proof capital plans, you must first understand how these competing voices influence these areas. Success lies not in choosing one voice over another, but in orchestrating them into a coherent capital strategy.
Balancing Cost, Control and Growth
Every financing decision boils down to three priorities:
- Cost,
- Control and,
- Growth.
Pick two, and the third usually suffers – a bit like trying to get good, fast, and cheap service all at once.
Rising benchmark rates have made funding costs impossible to ignore. Banks are retreating from complex deals, squeezing margins wherever they can.
This creates opportunities for alternative lenders willing to price risk more aggressively.
Equity partnerships unlock growth capital but dilute control. Debt preserves ownership but limits flexibility. The sweet spot? Finding structures that don’t force you to sacrifice one priority completely.
Smart CFOs don’t try to optimise all three simultaneously. They identify which priority matters most for their current business stage, then structure accordingly. Yet even once you’ve chosen your priorities, you still have to clear the hurdles set by policy and precedent.
Navigating Policy and Legal Challenges
Government guidelines have a talent for making simple decisions complicated. Take Australia’s Digital and ICT Investment Oversight Framework (IOF), introduced in 2023. It sounds straightforward until you realise it encompasses six separate functions: strategic planning, prioritisation, contestability, assurance, sourcing, and operations.
The IOF requires CFOs to align major ICT projects with government objectives. Translation: your capital allocation needs sign-off from bureaucrats who’ve never met a payroll. Australia’s above-OECD track record in digital government suggests the system works, even if it adds layers to decision-making.
These frameworks force CFOs to think beyond pure commercial logic. Sometimes the most efficient capital structure isn’t the most politically palatable one. As regulatory red tape tightens, many CFOs are finding fresh alternatives in custom-built debt solutions.
The Rise of Bespoke Private Debt
While government frameworks complicate standard approaches, private debt funds are simplifying them by offering tailored solutions. Banks have become risk-averse about non-standard covenants. Private funds see opportunity where banks shy away.
The Phoenix–Worley transaction demonstrates this shift perfectly. Cecile Retaureau, Head of Private Markets at Phoenix Group, described the deal: “This transaction exemplifies what we look for in a private credit opportunity, securing a bilateral deal and providing long-term financing to Worley with bespoke terms for Phoenix. The company’s pivotal role in energy transition and infrastructure sectors further underscore the attractiveness of this deal, aligning with our global diversification goals. It’s a testament to our ability to structure transactions that offer both strong returns and prudent risk management.”
Private credit fills gaps that traditional lenders won’t touch. Uneven revenue cycles? They’ll structure around seasonal patterns. Complex covenant requirements? They’ll price accordingly rather than walk away.
Critics point to higher margins and reduced transparency. Fair enough.
But for businesses tired of being square pegs trying to fit into banks’ round holes, private debt offers breathing room. Once immediate financing is solved, the focus shifts from survival to strategic expansion – and that’s where equity partners come in.
Strategic Equity Partnerships
Bespoke debt solutions address immediate funding needs, but strategic equity partnerships tackle longer-term growth challenges. Like private credit, they offer customisation – just with different trade-offs.
Equity investors bring more than money. They provide strategic alignment, operational expertise, and network access. The catch? They want board seats and eventual exits.
SUPA Group’s partnership with IFM Investors illustrates these dynamics. Geoff Horth, SUPA’s CEO, highlighted how shared values and networks enabled project delivery and market expansion. The partnership worked because both parties aligned on strategic objectives.
Equity partnerships work best when growth plans require more than capital injection. If you need market expertise, operational support, or credibility in new sectors, equity makes sense. If you just need funding, debt might be simpler. Bringing on equity may sharpen your growth edge, but it also layers on new governance puzzles for large institutions.
Institutional Investment Decisions
Strategic partnerships sound elegant in theory, but managing the reality requires navigating competing interests between debt and equity stakeholders. You’re essentially conducting an orchestra where the strings and brass sections are reading from different scores.
Large institutions face this challenge constantly. They must balance immediate capital needs against long-term objectives while satisfying multiple stakeholders with conflicting priorities.
David Neal at IFM Investors provides one example of how professionals address these challenges. As CEO, Neal works on executing the firm’s strategy by aligning investments with frameworks such as the IOF, while maintaining robust governance policies. He has managed strategic tensions between debt and equity financing, notably engaging the Standing Committee on Economics after the collapse of Tandem – an IFM investee he pointed to as emblematic of private-equity risk. His approach involves implementing conflict-of-interest protocols and governance structures to address class-action lawsuits and reputational concerns.
Neal’s experience at the Future Fund and IFM Investors demonstrates his involvement in managing these strategic tensions. His method involves maintaining commercial confidentiality while navigating legal challenges and reputation management issues.
Effective governance policies help institutions navigate competitive pressures while maintaining regulatory compliance. While significant funds grapple with portfolio trade-offs, individual businesses require tailored structures they can actually deploy.
Creating Custom Structures
While institutional investors juggle broad portfolio tensions, individual businesses face a sharper challenge. They need capital structures that actually work for their specific situation. This requires professionals who can translate complexity into practical solutions.
Custom structures aren’t just about finding the right mix of debt and equity. They’re about timing, covenant design, and understanding how different capital sources interact under stress.
Martin Iglesias at Highfield Private shows how professionals tackle these challenges. He works with corporations, property developers, high-net-worth individuals and self-managed superannuation funds to develop capital structures aligned with strategic objectives. With over two decades of experience in corporate banking and financial advisory, Iglesias applies his expertise in cash-flow management and structured finance to assess debt and equity options. He helps clients evaluate financing sources, including traditional bank debt, private equity, hybrid instruments, and venture capital, by weighing the trade-offs between cost, accessibility, and control.
His work includes structuring a A$10 million construction facility for an educational institution’s expansion and more than A$30 million in facilities for a real estate agency’s portfolio growth. Iglesias’s expertise in cash-flow management and structured finance helps clients evaluate competing financing sources and negotiate terms that reflect market conditions.
The art lies in understanding that no two businesses have identical capital requirements. Custom structures are vital today – but they must evolve as your company moves from startup to maturity.
Adapting Strategies Across Lifecycles
Capital structures aren’t static. Companies evolve from startups to mature enterprises, and the optimal mix shifts dramatically. Yesterday’s venture equity becomes today’s constraint.
Martin Iglesias’s sector experience across manufacturing, retail and wholesale shows how different instruments suit different business stages. He worked on structuring capital for an online retailer expanding from mid-sized operations to A$250 million in revenue. The approach involved cash-flow funding and equity financing to support growth without overwhelming working capital.
Early-stage businesses typically need equity for risk capital and expertise. Mid-market companies often benefit from the flexibility of private debt. Mature enterprises might use hybrid instruments to optimise their cost of capital. The mistake many businesses make? They stick with familiar structures past their useful life. What got you here won’t necessarily get you there. Mapping instruments to life stage sets the stage for one final step – turning these elements into a harmonious capital strategy.
Orchestrating Financial Harmony
Cost, control and growth don’t have to fight each other if you’re willing to conduct rather than just react. Government policy, institutional mandates, and advisory expertise each play crucial parts. The challenge? Making them work together instead of against each other.
The businesses that thrive aren’t the ones that eliminate complexity. They’re the ones that embrace it strategically. They understand that competing voices in capital allocation create opportunities for those skilled enough to coordinate them. In Australia’s evolving financial landscape, the winners will be those who can turn the cacophony of capital voices into something that actually works together.
The conductor’s baton? That’s in your hands.
