The PIE: I’ll cast your mind back to 2017 when you announced that you were stepping down as Navitas chief executive. At the time, the first question I asked was why, so let’s start with the same question. Why come back?
Rod Jones: From my perspective, yes I did step down and decide it was time to step back, but even at that time, I was really concerned about the direction the company was taking. Not so much in terms of what it was doing, but the space it was operating in, in the public space.
“I’d like to think I’m leaving a legacy”
What I was seeing was that working in the public space as a public company, more and more you were being constrained from actually getting on and doing what you needed to do by the short-term imperatives being driven by the market. This is particularly around the financial outcomes of what you are trying to achieve.
I always felt that if the opportunity arose to take it private again that’s what I would have loved to have done. I never expected it would come about but it actually did.
Lastly, it’s about the capacity to make decisions that are for the long-term sustainable growth of the company.
The PIE: Considering that you were stepping away, however, why was it important for you to ensure there was long term sustainability within the company?
RJ: I’ve spent 25 years building this business from basically two guys with just an idea to what we’ve built, which is an over $2billion company. I put my heart and soul into the business, I continue to be really passionate about it, and I was frustrated about the space we were in and I was also frustrated about the direction the company was heading.
This was an opportunity to come back in, to help set it up for the future. The big difference is, I am not coming back as the CEO. I’ve made that very clear. I’m coming back as the chair of the company. There’s a new CEO and it’s going to be his role to drive the operational side of the company. But I can continue to add value as the chair.
The PIE: Equally, you know the new chief executive, Scott Jones, quite well. You’ve known him his entire life.
RJ: Scott has got 18 years in that business, he understands it, he has a passion for education. The fact that he is my son had nothing to do with the decision. You have a major private equity firm, the largest in Australia, backed by all the superannuation funds. They employed him because after doing all the research and searching around, understanding his background within the company, they made the decision to take the company forward. He was the right person.
The PIE: But I imagine you’d be quite proud to see that Navitas has continued under a Jones’ stewardship.
RJ: Of course. For me, if you want to look at it this way, it’s a legacy. I’d like to think I’m leaving a legacy. And I’d like to think the company will drive forward in a direction that will surpass the past 25 years of growth we’ve had, and we keep it going and growing for the next 25.
The PIE: What was the background of the consortium with BGH. Did you approach them, or did they approach you?
RJ: I honestly can’t remember how we actually got together. There were people around me who understood my concerns about the public market, the short-term decision making and the issues that were being created and who were worried about what the market might think about all the decisions you make.
“I put my heart and soul into the business, I continue to be really passionate about it”
BGH is a private equity firm, and I was a real critic of PE firms, how they operate and what they did. How they took companies, just dressed them up and sold them off. The difference was the structure that was being put to me, the investors into the fund.
I’ve been able to find a partner that is very much committed to the long-term, sustainable growth of the company. All the people who are the investors in that fund are basically the major superannuation and pension funds from around the world, and some sovereign wealth funds.
If you look at the value of the assets of these pension funds and these sovereign wealth funds, it’s over $2 trillion. The fact that they wanted to be involved in this particular enterprise, and the fact that they were looking at long-term sustainable growth, that’s what sold me.
The PIE: Speaking with you, it seems you weren’t particularly happy being beholden to shareholders.
RJ: The first priority for public companies is, supposedly, to maximize the returns for their shareholders. I’ve always taken a different approach. I’ve always believed that as a company we have four key stakeholders.
Our four key stakeholders are our students. If we deliver to our students exactly what they are looking for, to achieve the outcomes and success they want in an environment where they get the help and support and you provide a good student experience, they will become an advocate for you.
If you’re able to then move them forward into the university sector, who are our second group of stakeholders, they are satisfied, because they’re getting high-quality students. The third set of stakeholders for me is our staff, who are all educationalists, who are passionate about education, who want to be able to deliver the outcomes for their students.
If you get all that right, the shareholders are beneficiaries at the back end. But the first priority for me is not the shareholders. It’s those other groups of stakeholders. We deliver to them, then we deliver to the shareholders.
The PIE: In that case, what were the motivations of taking Navitas public in the first place?
RJ: If you look back to when we listed, which was in 2004, there was a different environment operating. At the time, we were a loose group of colleges, with the majority of each of them being owned out of Perth. The way we built this business was going into a new market like Sydney, finding someone that we believed was the right person to drive the institution forward, providing a shareholding for them, with the majority being held out of Perth.
“I’ve been able to find a partner that is very much committed to the long-term, sustainable growth”
We did this in a number of ways and that was really based around two things. Getting the right people to come and join us, and then if one of them didn’t work, you could always cut that off without impacting on the whole company. But we reached the point where we were seen as a group, we were called the IBT group.
We looked at trade sale, we looked at amalgamation, but we also had a college director who wanted to retire, and another who had a motor neurone disease and his long-term prognosis wasn’t that long. They wanted to have the capacity to cash in, and a public company gives you the easiest exit strategy. It puts a price around your shares which is determined by the market and you can sell it. It also gave us access to capital.
The other side, at that time there weren’t the same regulatory issues that exist today for public companies. For the first 10 years, it was not a bad environment. But the last four years, for me, it’s been holding us back.
The PIE: What specifically about the current regulatory environment did you feel was holding Navitas back?
RJ: A lot of it’s to do with the sorts of constraints that are being placed on public companies that have developed over the last four or five years. Then alongside that, it’s the issues that directors now have to face around their vulnerability of being sued or whatever. What that leads to are directors who in many senses are reluctant to make decisions, particularly if there’s any risk involved.
Then you overlay that with the short-termism of the markets these days, which wasn’t there to the same extent as it is now. You’ve got this almost lack of decision making because people are worried about what the repercussions of that might be. We’ve taken ourselves right out of that space. Now what we have is people and a board who’re just focused on two things. How we’re going to grow and what’s our strategy.
The PIE: What do you hope to see for Navitas another 25 years on?
RJ: Continuing to be relevant, to be well-placed in terms of what it is able to offer to its students. I think we will probably evolve from just being mainly pathway to offering educational programs in own right, which we already do. I think there are more opportunities for us in that space. But I think international students will always be a core of what we’re doing and the transnational education, whether in country, or out of country, will be a very large part of what we continue to deliver.