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Founded in mid-1990s, Partners Group launched its first vehicle accessible to individual investors in the early naughties. Today it is at the frontline of the democratisation of private equity.
In this episode, Ross Butler speaks to Joanna Asfour, the firm's managing director of client solutions, to discuss how private equity can help DC pensioners in the UK access private markets.
We look particularly at LTAFs, the UK equivalent of ELTIFs and the various nuances of providing relatively simple access to the asset class for DC pension trustees, which can often require the involvement of life insurance platforms and master trusts.
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Jim Strang, serial private equity NXD and chairman of Hg Capital Trust, discusses the complexities of the private equity landscape on the Fund Shack podcast.
Fundraising and Market Dynamics:
Market Polarization: Large platforms and top-performing specialists continue to raise significant capital, while mid-sized players face extended fundraising cycles.
Liquidity Challenges: Investors are managing overexposure from the 2021 boom, causing liquidity issues across different regions.
GP Strategy and Growth:
Clear Ambitions: GPs focus on defining clear ambitions and achieving team alignment.
Strategic Growth: Balancing ambition with operational capacity, strategies range from maintaining a single focus to expanding into adjacent areas through M&A.
Wealth Market and Semi-Liquid Structures:
Growing Market: Wealth market growth through semi-liquid structures designed for high-net-worth individuals.
NAV-Based Exposure: These structures offer accessible entry points for private market investments, requiring careful liquidity management.
ESG and Cybersecurity:
Central to Strategy: ESG considerations driven by investor demand and talent acquisition needs.
Top Risk: Cybersecurity remains a top risk, with firms prioritizing mitigation measures to protect portfolios.
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Thank you to our episode partner Quest Fund Placement.
The firm recently launched QuestInvest, the digital hub and gateway to alternative assets that connects accredited investors with leading GPs.
For more information, please visit https://www.questfundplacement.com/
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#privateequity #fundraising #wealthmanagement #esg #cybersecurity #privatemarkets
#capitalmarkets #alternativeassets
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Sunaina Sinha, Global Head of Private Capital Advisory at Raymond James, talks to Ross Butler about the challenges of raising private capital funds in today's market.
This episode is supported by Datasite, the leading M&A platform for dealmakers. https://www.datasite.com/en
Fundraising cycles have extended to 22-23 months on average, reflecting the challenging environment. Firms must offer co-investments, fee discounts, and management fee holidays to attract investors. The tenor of fundraising conversations has shifted, with private equity firms needing to provide various incentives to secure commitments.
We cover dry powder, the rise of co-investments, and the influence of Middle Eastern and private wealth in the market.
2023 was marked by significant challenges due to a liquidity squeeze and reduced exit activities.
This environment has been tough for institutional limited partners, leading to a shift in investment metrics. (i.e. DPI is the new IRR)
Rise of Co-Investments
How investors are leveraging their power to demand fee-free co-investments.
Sector Focus: Private Credit and Infrastructure
Private credit is booming due to bank pullbacks and high-interest rates, while infrastructure investments are attractive due to their tangible nature and inflation resistance.
Thank you to our episode partner Datasite, the leading M&A platform for dealmakers.
For more information, visit: www.datasite.com
#wheredealsaremade
#PrivateEquity #privatecapital #alternativeinvestments #Fundraising #RaymondJames #InvestmentTrends #DPI #CoInvestments #PrivateCredit #Infrastructure
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Ross Butler hosts Patrick Turner, Managing Director at VSS Capital Partners, a US-based lower mid-market private equity firm founded in 1981, originally named Veronis Suhler Stevenson. Patrick joined VSS in 2014, bringing a wealth of experience from his extensive career in leveraged buyouts in the US, and private equity in China. VSS focuses on the US lower mid-market, specifically targeting three verticals: education, healthcare, and outsourced business services with a technology angle. VSS’s approach to structured capital, which includes debt, preferred equity, and equity, tailored to the needs of founders looking to grow their businesses without giving up control. This strategy allows VSS to be competitive and less dilutive compared to traditional growth capital.
KEY HIGHLIGHTS:
VSS focuses on the US lower mid-market, specifically targeting three verticals: education, healthcare, and outsourced business services with a technology angle. VSS’s approach to structured capital, which includes debt, preferred equity, and equity, tailored to the needs of founders looking to grow their businesses without giving up control. This strategy allows VSS to be competitive and less dilutive compared to traditional growth capital.
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#privateequity #venturecapital #MidMarket #StructuredCapital #privatecredit #leveragedbuyouts #growthcapital #BusinessServices #HealthcareInvestment #EducationInvestment #TechInvestment #AlternativeInvestments #podcast
Fund Shack is a private equity podcast and global media channel for alternative investment professionals. Fund Shack is produced by Linear B Group and if you are interested in appearing on the show, wish to propose a client, or are interested in sponsorship, contact:
Katie Mitchell
[email protected]
Linear B Group
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Fatou Diagne is co-founder of Bootstrap Europe, which acquired the German portfolio of Silicon Valley Bank in 2023. She provides a fascinating insight into the elite world of lending to the top tier of venture-backed businesses. Venture debt might not have the brand-pizazz of its equity cousin, but from a risk/return perspective it ticks all the boxes.******This episode also features our supporters, RW Blears, a UK law firm specialising in fund management. If you are a UK venture capital manager or growth investor and need a trusted legal adviser visit RW Blears******Ross Butler interviews Fatou Diagne, co-founder of Bootstrap Europe. Fatou offers a compelling look into the world of venture debt, focusing on its role in funding high-growth technology businesses and its strategic advantages compared to traditional equity financing.Introduction to Venture Debt: Fatou Diagne explains that Bootstrap Europe provides debt funding to technology companies that have already received substantial equity investment. These companies are usually 5 to 7 years old, generating revenues of 5 to 20 million euros, and are backed by top-tier venture capital funds.Target Companies: Bootstrap Europe targets mature technology companies that have a proven growth formula but prefer not to dilute their equity further. The firm focuses on sectors like semiconductors, life sciences, and energy transition, seeking to support technologies that can significantly impact society.Venture Debt is way cooler than you think! Fatou clarifies that venture debt is often misunderstood. It is not a last resort for companies that cannot raise equity; instead, it is a strategic choice for well-capitalized companies looking to accelerate growth without further dilution.Deal Flow and Timing: Bootstrap Europe follows potential investment opportunities for several years, waiting for the right inflection point to provide growth debt. The firm typically invests after one or two rounds of equity funding, although this can vary.Benefits for Companies: The main advantage for companies using venture debt is the avoidance of dilution. Founders and early-stage investors can maintain larger stakes in the company, enhancing their returns upon exit.Terms of Venture Debt: The terms are transparent, with interest rates typically around 8-10% over the base rate. The debt is repaid over 3-4 years, with monthly payments of interest and principal.Bootstrap Europe’s Approach: The firm emphasizes a strong relationship with portfolio companies, focusing on providing support during both good and challenging times. They prefer to work closely with management teams to navigate growth and financing challenges.Acquisition of Silicon Valley Bank's German Portfolio: In 2023, Bootstrap Europe acquired the German portfolio of SVB. Fatou discusses the strategic and operational steps taken to complete this acquisition, emphasizing the importance of speed and expertise.Current Market Conditions: Fatou comments on the impact of global economic challenges on the tech sector, noting that while the market has cooled, there are still many high-quality investment opportunities. She highlights the importance of well-capitalized companies that can navigate difficult conditions to gain market share.Future Growth & Challenges: The discussion touches on the growth potential of venture debt in Europe and the challenges of increasing market penetration. Fatou believes that with more education and understanding, venture debt can become a more prominent part of the funding landscape.****** #venturecapital #privateequity #techfunding #growthcapital #venturedept #debtfinancing #innovationtechnology #techinvesting #podcast #BusinessPodcast #FinancePodcast #Entrepreneurship ******Fund Shack is produced by Linear B Group and if you are interested in appearing on the show, wish to propose a client, or are interested in sponsorship, contact:[email protected] B GroupLearn more about your ad choices. Visit megaphone.fm/adchoices
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Mike Smeed is managing director of InMotion Ventures, the corporate venturing arm of Jaguar Land Rover.
In this episode of the Fund Shack podcast, he speaks to Ross Butler about what the company looks for in start-up candidates and the rapidly evolving nature of corporate venture capital.
Mike the Managing Director of InMotion Ventures, the corporate venture capital (CVC) arm of Jaguar Land Rover (JLR). Mike discusses his career background, including roles at a Shanghai-based joint venture and Walgreen Boots, and delves into the unique aspects of CVC compared to traditional venture capital (VC).
Key Points:
Corporate Venture Capital (CVC) vs. Venture Capital (VC):
Similarities: CVC and VC both perform due diligence, focus on valuation and metrics, and aim for strategic investments.
Differences: Historically, CVCs were viewed skeptically due to fears of corporate overreach. Modern CVCs have adopted VC professionalism and often invest off their parent companies’ balance sheets, with some even taking external capital.
Role of InMotion Ventures:
Strategic Focus: InMotion Ventures aims to accelerate innovation and support JLR’s strategic transformation, especially in areas like climate, industrial, and enterprise technologies.
Investment Approach: Unlike many CVCs, InMotion invests in early-stage startups (seed to Series A) to add significant value to both JLR and the startups.
CVC Evolution:
Professionalization: Many CVCs now operate with the same rigor as traditional VCs, including thorough background checks and strategic valuations.
Integration with Parent Companies: CVC leaders often come from within the parent company, blending corporate insight with investment acumen.
Strategic Mandate:
Innovation and Collaboration: InMotion Ventures aims to help JLR achieve carbon neutrality by 2039 and focuses on technologies critical to this transformation.
Partnerships: The firm prefers co-investing and does not lead funding rounds, maintaining about a 5% equity stake to ensure active involvement without overwhelming influence.
Investment Justifications:
Ecosystem Access: Being an active investor attracts other investors and startups, facilitating ecosystem engagement.
Innovation and Speed: Investing in startups accelerates innovation and market readiness, providing JLR with early access to cutting-edge technologies.
Capital Efficiency: Strategic investments leverage larger rounds by financial VCs, maximizing impact with relatively small contributions.
Success Stories and Examples:
Investments: Mike discusses successful investments, such as in companies developing head-up displays and augmented reality technologies.
Collaboration with Competitors: InMotion Ventures collaborates with other automotive giants like Volvo and BMW to co-invest in promising technologies.
Value to Startups:
Strategic Support: Startups benefit from JLR’s extensive resources, including engineering expertise and testing facilities.
Mutual Benefits: While InMotion seeks financial returns, the primary goal is strategic alignment with JLR’s broader goals.
Conclusion:
The interview highlights the evolving landscape of CVC, emphasizing strategic partnerships, professional investment practices, and the mutual benefits of fostering innovation within large corporate structures. Mike underscores the importance of balancing financial returns with strategic goals to drive both corporate growth and startup success.
#Innovation
#Technology
#DigitalTransformation
#VentureCapital
#Startups
#Entrepreneurship
#CorporateVenture
#AutomotiveIndustry
#Sustainability
#FutureOfMobility
#BusinessGrowth
#EmergingTechnologies
#Industry40
#TechInvestments
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Foresight Group was a pioneer in renewable energy investment back in the 1990s. Today, it's a diversified investment group listed in London. Its founder and chairman, Bernard Fairman, talks about its expansion into global infrastructure, why he favours hydrogen over electric, and his plans to build out the firm's UK venture investment arm into an international-regional growth equity franchise.
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MidEuropa pioneered private equity buyout investing in Central Europe, launching in 1999. Robert Knorr has been a partner since 2007. He was recently awarded Private Equity Mid Market Leader of the Year at the Real Deals private equity awards for his pivotal role in investment in the region. In this podcast he talks to Ross Butler about opportunities from Poland to the Med, and a very big win in Romania with Profi.
Fund Shack: https://fund-shack.com/
Mid Europa: https://mideuropa.com/
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In this episode of the Fund Shack podcast, Ross Butler interviews Robert Knorr, Managing Partner at MidEuropa, to explore the firm’s pioneering role in private equity investment across Central Europe. MidEuropa, established in 1999, has become a key player in the region, transitioning from venture capital to buyout funds. The discussion highlights their strategic focus on sectors such as consumer goods, healthcare, and technology, emphasizing the importance of sustainability and digitalization in their investment strategies.
Highlights:
1) Private Equity and Buyout Funds: MidEuropa has been instrumental in shaping the private equity landscape in Central Europe. Their transition from venture capital to buyout funds has been a strategic move to capitalize on the region’s economic development and emerging markets.
2) Investment and Economic Development: The firm’s investments have significantly contributed to the economic transition and development of Central European countries, integrating them into the broader European Union market.
3) Sector Focus: MidEuropa targets consumer goods, healthcare, and technology sectors, areas that offer high growth potential and align with their strategic investment goals. Sustainability and Digitalization: Emphasizing sustainability, MidEuropa promotes energy transition and sustainable practices. They also leverage digitalization to enhance business services and operations.
4) Corporate Carve-Outs and Cross-Border Investments: The firm has successfully executed corporate carve-outs and cross-border investments, demonstrating their expertise in managing complex mergers and acquisitions (M&A).
5) Nearshoring: Leveraging the talent pool in Central Europe, MidEuropa facilitates nearshoring of services, providing cost-effective and high-quality business services.
6) Financial Returns and Investor Relations: The episode details MidEuropa’s approach to delivering strong financial returns and maintaining robust investor relations.
#privateequity #investment #centraleurope #sustainableinvestment #emergingmarkets #businessgrowth #economicdevelopment #venturecapital #digitaltransformation #infrastructure #telecom #consumergoods #HealthcareInvesting #poland #techinvestments
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Fund Shack Podcast Featuring Etienne Deshormes of Elm Capital
In this engaging episode of the Fund Shack podcast, 🎙️ Ross Butler interviews Etienne Deshormes, CEO of Elm Capital, to delve into the intricacies of the private equity secondary market. Elm Capital, founded in 2004 by Etienne after his career in investment banking at JP Morgan, specializes in providing liquidity to private market investors.
Fund Shack: https://fund-shack.com/
Elm Capital: https://www.elmcapital.com/
Key Points Discussed:
Private Equity Secondaries: Etienne Deshormes explains how the secondary market provides liquidity to an inherently illiquid sector. He outlines the development of the market from its early days in the 2000s when it was discreet and associated with distress sales, to its current, more accepted status.
Global Financial Crisis Impact: The 2008 financial crisis was a turning point for the secondary market. Etienne highlights how the crisis forced many LPs to seek liquidity solutions, leading to a surge in secondary transactions. This period marked the only time in his career when assets were sold at a 100% discount, underscoring the desperation for liquidity.
Liquidity Solutions: The discussion includes how the secondary market has evolved as a strategic tool for managing portfolios, not just in distress situations. Etienne notes the rise in the use of secondary transactions to handle overexposure and liquidity issues exacerbated by recent economic challenges such as inflation and rising interest rates.
Current Market Dynamics: Etienne describes the current market conditions, emphasizing the impact of the denominator effect and rising interest rates on private equity portfolios. He explains how these factors have increased the need for secondary transactions as a liquidity solution.
Denominator Effect: The podcast covers the impact of the denominator effect, where declines in public market values cause private equity allocations to exceed target levels, forcing LPs to sell stakes to rebalance their portfolios.
Continuation Funds: Detailed insights are provided into continuation funds, which allow GPs to manage assets beyond the typical fund life by selling them to new vehicles backed by secondary investors. Etienne discusses the evolution of continuation funds from being a last resort to a strategic option for managing high-quality assets and mature portfolios.
Investor Strategies: The podcast delves into how LPs and GPs navigate the secondary market to optimize their portfolios. Etienne discusses different strategies, such as selling single fund interests or entire portfolios, and the factors influencing these decisions.
Market Pricing and Discounts: Etienne explains how secondary market pricing works, particularly during downturns when discounts can be steep. He provides examples from 2022, where buyout funds were trading at significant discounts due to market conditions.
Role of Elm Capital: Elm Capital’s role in the secondary market is highlighted, including how they assist clients in finding buyers or sellers for secondary transactions. Etienne describes their integrated approach to serving both primary and secondary market needs.
Future Outlook: Etienne shares his outlook for the secondary market in 2024, predicting increased deal flow and a gradual recovery in pricing as public markets stabilize. He also discusses the long-term potential for the secondary market to become more mainstream as more investors recognize its strategic value.
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#PrivateEquity #SecondaryMarket #LiquiditySolutions #PrivateMarkets #InvestmentBanking #DenominatorEffect #ContinuationFunds #InvestmentStrategies #Fundraising #Podcast #BusinessPodcast #FinancePodcast #Entrepreneurship #ThoughtLeadership
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With a deal drought across the global private equity industry, we talk to Chris Field of global law firm Dechert about what's next for M&A and buyout deal flow for 2024. We discuss valuations and defensive deal structures as vendors and buyers find ways to come together.
Top quote: "I have never worked on an earn-out, ever, that has not resulted in some form of dispute.'"
In this Fund Shack podcast with Ross Butler, Chris reveals what it takes to make it as a top private equity lawyer.
In this engaging episode of the Fund Shack podcast, 🎙️ Ross Butler interviews Chris Field, a partner at the global law firm Dechert, to discuss the current state of international private equity markets and the intricacies of private equity lawyering.
Key Points Discussed:
Market Sentiment and Interest Rates: Chris Field highlights the fluctuating sentiment in the private equity market, noting the anticipation of rate cuts and their potential impact on deal-making. He explains how interest rates have become the biggest challenge for private equity firms, affecting deal volume and value.
Deal Volume and Value: Despite a significant drop in deal volume and value over the past year, 2023 outperformed 2019 levels. Chris explains this apparent paradox, attributing it to the short-term memory of market participants and the exceptionally high activity levels in 2021 and early 2022.
Fundraising Trends: Chris discusses the bifurcation in the fundraising market, with capital being concentrated in large multi-strategy managers at the expense of smaller and newer funds. This trend is influencing the strategic decisions of private equity firms.
GP Stake Sales: A significant portion of private equity firms are considering selling stakes in their own businesses. Chris outlines various motivations behind these sales, including succession planning, liquidity injection, and bringing in external expertise to enhance the firm’s capabilities.
Valuation Gap and Deal Structures: The podcast explores the creative deal structures being employed to bridge the valuation gap between buyers and sellers. Chris highlights the increased use of deferred consideration mechanics, such as earnouts and vendor loan notes, to align the interests of both parties.
Regulatory Environment: Chris delves into the evolving regulatory landscape, focusing on antitrust scrutiny and foreign direct investment regulations. He explains how these factors are shaping deal-making strategies and the need for private equity firms to navigate complex regulatory requirements.
Private Equity Innovation: The discussion covers innovative liquidity solutions in the private equity space, including the rise of NAV facilities, collateralized fund obligations, and GP-led secondaries. These innovations are helping firms return liquidity to investors despite challenging market conditions.
Technological Impact: Chris touches on the role of technology in private equity transactions, particularly in the context of regulatory compliance and deal execution. He discusses the potential for AI and other technologies to streamline processes and improve efficiency.
Dechert’s Positioning: Chris outlines Dechert’s strategic positioning in the private equity market, emphasizing their global presence and expertise in complex transactions. He highlights the firm’s commitment to providing high-quality advisory services across various geographies and sectors.
#PrivateEquity #MergersAndAcquisitions #InterestRates #Fundraising #GPStakeSales #ValuationGap #DealStructures #RegulatoryCompliance #LiquiditySolutions #InnovationInFinance #Podcast #BusinessPodcast
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Private equity is a great way of investing in uncertain, high growth environments. Strange then, that the African private equity industry is so small. In fact, Stephane Bacquaert, managing partner of Adenia Capital, argues that the mature Western private capital industry has systematically misunderstood the African opportunity, and its risk profile in particulare.
In this Fund Shack podcast with Ross Butler, he talks about managing one of Africa's largest buyout funds, and the value that so many investors are missing out on.
Key Highlights:
Stephane’s Journey: Transitioned from strategy consulting to private equity in Africa, driven by personal connections and a desire to support African businesses. His initial venture failures led him to focus on supporting management teams through investment.
Investment Strategies: Emphasis on control buyouts and majority deals, which provide more influence over business outcomes. Investment decisions are driven by bottom-up analyses, focusing on companies with strong growth potential, robust management teams, and pricing power. Importance of being embedded locally to source and execute deals effectively, given the lack of structured deal flow and the necessity of relationship-based deal sourcing.
Market Dynamics: Africa’s high growth potential is driven by demographic trends, urbanization, and a burgeoning middle class. The continent’s economic fundamentals include rapid population growth, significant urban migration, and high GDP growth rates in several countries. These trends create opportunities in sectors such as consumer goods, retail, financial services, and infrastructure. Challenges include currency devaluation, regulatory complexities, and the need for infrastructure development.
Challenges and Opportunities: Navigating Africa’s complex regulatory landscape requires deep local knowledge and adaptability. Currency devaluation is a significant risk, necessitating investments in companies with strong local demand and pricing power. Building infrastructure is crucial, from establishing retail chains to upgrading production facilities.
Impact and ESG: Private equity investments in Africa have a profound impact on job creation and economic development. Adenia Partners focuses on improving ESG standards, such as transitioning companies to more sustainable practices and ensuring compliance with international environmental and social standards. Examples include the transformation of a retail chain in Kenya and the shift to water-based paints in East Africa. These efforts not only enhance business value but also attract international buyers and investors.
#PrivateEquity #AfricaInvestment #ImpactInvesting #ESG #VentureCapital #InvestmentStrategies #EmergingMarkets
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Fund Shack is a private equity podcast and global media channel for alternative investment professionals. Fund Shack is produced by Linear B Group.
Contact:
Katie Mitchell
Email: [email protected]
Company: Linear B Group
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Private equity fund managers are racing to find structures that will allow small private investors to invest with them. Meanwhile governments are introducing ELTIF and LTAF structures to encourage "democratization". Henry Freeman has been working at the nexus of public and private equity for two decades. And he has concerns.
Henry is founder of the Fund Society, an insight aggregator for investors, launching imminently.
Fund Shack: https://fund-shack.com/
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Key Highlights:
Henry’s Journey: Henry Freeman has a diverse background in public and private investment markets, fintech entrepreneurship, and investment trust board membership. His career includes roles at Lloyds Private Bank, Foresight Partners, and Liberum, showcasing his extensive experience in managing and structuring investment funds.
Investment Strategies:
Semi-Liquid Structures: Emphasis on creating investment vehicles like LTIFs and ELTs that offer some liquidity while maintaining the benefits of private equity.
Commitment Focus: The critical role of commitment in private equity, arguing that commitment is a feature rather than a bug, essential for achieving the high returns associated with private equity investments.
Public-Private Hybrids: Development of funds that invest in listed private equity firms, providing liquidity and accessibility while capturing private equity's growth potential.
Risk Management: Approaches to managing liquidity risk, including the potential for forced asset sales during market downturns and the implications for fund performance.
Market Dynamics:
Historical Discounts: Analysis of historical opportunities in listed private equity during the 2008 financial crisis and recent market conditions, highlighting significant discounts to net asset value (NAV) and the impact on investor returns.
Current Opportunities: Examination of current market conditions post-COVID, with a focus on identifying value in listed private equity and the potential for significant returns as market conditions stabilize.
Challenges and Opportunities:
Scalability Issues: Discussion on the scalability of closed-end fund structures versus open-ended vehicles, emphasizing the challenges and potential solutions for scaling private equity investments.
Mis-Selling Risks: Concerns about the risks of mis-selling private equity products to retail investors, particularly with open-ended structures that may not align with the traditional private equity investment model.
Technological Integration: The potential for leveraging technology, such as tokenization, to streamline the transfer and management of private equity interests, enhancing liquidity and accessibility.
Fund Society:
Platform Overview: Introduction to the Fund Society, an online hub for investment professionals, providing curated intelligence-based content, news aggregation, and thought leadership.
AI Integration: Use of AI and large language models to curate and prioritize content, ensuring relevance based on market trends and news events.
Community Building: Efforts to build a community of investment professionals, facilitating knowledge sharing and networking opportunities across asset classes.
Conclusion/Takeaway: Key takeaways include the potential for private equity to attract private wealth investment, the importance of commitment in investment strategies, and the launch of the Fund Society as a resource for investment professionals.
Relevant Hashtags #PrivateEquity #InvestmentStrategies #FundSociety #MarketDynamics #Commitment #InvestmentProfessional #LTIF #ELT
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Fund Shack is a private equity podcast and global media channel for alternative investment professionals. Fund Shack is produced by Linear B Group.
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Email: [email protected]
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Moral Hazard in Alternatives - Daniel Zwirn on Fund Shack's Private Equity Podcast
Daniel Zwirn discusses his unique approach to alternative investments through Arena Investors LP, emphasizing a merchant banking style. He explores the advantages of historical financial models, moral hazard in fund management, and strategic flexibility in navigating global markets.
Key Highlights:
Arena Investors' Philosophy:
Historical Best Practices: Arena is inspired by successful financial models dating back to the 1600s, focusing on strategies from the Rothschilds, global grain traders, and Asian merchant houses.
Moral Hazard Prevention: Prioritizing structural advantages where Arena's scarce resources (capital) are needed, reducing the risk of moral hazard.
Investment Strategies:
Cyclical and Opportunistic Investing: Identifying and exploiting cyclical opportunities across various sectors and geographies, avoiding overreliance on a single strategy.
Regulatory and Structural Arbitrage: Taking advantage of inefficiencies and regulatory differences across markets, providing a unique edge in capital deployment.
Market Dynamics and Opportunities:
Global Macroeconomic Trends: Analyzing the impact of QE, fiscal policies, and inflation on asset bubbles and market corrections, and strategically positioning investments accordingly.
Sector-Specific Strategies: Focused on distressed assets, special situations, and high-value sectors like real estate, structured finance, and commercial lending.
Operational Complexity:
Global Multi-Strategy Approach: Operating across North America, Europe, and Asia with a diversified portfolio including corporate, real estate, and structured finance.
Joint Ventures: Leveraging over 50 joint ventures worldwide for deep domain expertise, aligning interests, and maintaining variable cost efficiency.
Ethical and Social Responsibility:
Social Utility Investments: Focusing on investments that provide social benefits, such as healthcare and rehabilitation centers, while maintaining high returns.
Consistent Ethical Framework: Avoiding trends like greenwashing, with a focus on long-term ethical investment practices.
Conclusion/Takeaway: Daniel Zwirn highlights the importance of a disciplined, ethical approach to alternative investments, focusing on long-term value creation and strategic flexibility. His insights provide a comprehensive understanding of navigating private markets amidst evolving economic conditions.
#PrivateEquity #InvestmentStrategies #MoralHazard #MerchantBanking #ArenaInvestors #MarketDynamics
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Contact Information: About Fund Shack: Fund Shack is a private equity podcast and global media channel for alternative investment professionals. Fund Shack is produced by Linear B Group.
Contact:
Katie Mitchell
Email: [email protected]
Company: Linear B Group
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Medieval Foundations of Modern Private Equity - Hans Lovrek on Fund Shack's Private Equity Podcast
Hans Lovrek, Founder of Commenda Private Equityuncovers the historical foundations of modern private equity by analyzing medieval Florentine documents, revealing structures similar to today's limited partnerships. His method of historical institutionalism demonstrates how successful trading nations historically addressed information asymmetry, influencing contemporary private equity practices.
Key Highlights:
Historical Parallels:
Medieval Commenda and Modern LPs: Lovrek discovered that medieval commenda contracts from the 6th to the 14th centuries share striking similarities with today’s limited partnerships (LPs), highlighting features like profit sharing, limited liability, and limited duration.
Structural Analysis:
Profit Sharing: Medieval contracts typically had a 25% profit share for the general partner (GP), akin to the 20% carried interest in modern private equity.
Limited Liability: Essential for allowing families and other investors to participate without risking their entire fortunes.
Duration: Projects were financed for specific ventures (e.g., sea voyages) with fixed terms, similar to the ten-year lifespan of modern funds.
Regulatory Influence:
Role of Regulation: Increased regulation in Venice facilitated the rise of commenda contracts by providing a framework that reduced moral hazard and ensured fairness, leading to a thriving venture investment environment.
Comparison to Modern Regulation: The historical necessity of regulation for venture success parallels modern regulatory practices, suggesting that a codified international structure could simplify private equity investments.
Due Diligence and Moral Hazard:
GP Clawback: Medieval practices included mechanisms to ensure GPs returned excess profits if investments later underperformed, a concept still relevant today.
Challenges of Information Asymmetry: Both medieval investors and modern LPs face similar challenges in monitoring GPs and ensuring aligned interests.
Hans Lovrek's insights reveal that many foundational elements of modern private equity have deep historical roots, suggesting that current practices are built on centuries-old solutions to similar investment challenges.
PrivateE#quity #HistoricalInstitutionalism #LimitedPartnerships #Commenda #VentureFinance #MoralHazard
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Contact Information: About Fund Shack: Fund Shack is a private equity podcast and global media channel for alternative investment professionals. Fund Shack is produced by Linear B Group.
Contact: Katie Mitchell
Email: [email protected]
Company: Linear B Group
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Yaron Valler is a founder of venture capital firm Target Global. He is a successful entrepreneur and investor, and was part of the team at Intel that invented the Pentium Processor. In this episode of the Fund Shack podcast, he talks to Ross Butler about how AI will change ‘everything’, virtual reality, how government’s should direct innovation and risk capital, and much more. [00:00:00] Ross Butler: You’re listening to Fund Shack. I’m Ross Butler, and today I’m speaking with Yaron Valler, a founder at Target Global, a venture capital firm with offices in London, Berlin, Barcelona, Tel Aviv and elsewhere. […]
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Sanjay Panchal is a partner at Livingbridge, a leading international growth capital investor, where he specialises in healthcare. In this episode he speaks to Ross Butler about the opportunities for private equity investors across the healthcare sector. [00:00:00] Ross Butler: You’re listening to Fund Shack. I’m Ross Butler and this week I’m talking with Sanjay Panchal, a partner at Livingbridge, a leading mid market private equity firm. Sanjay focuses on healthcare, and in this discussion he explains the dynamics and the opportunities in this complex sector from an investor’s perspective. Sanjay. Welcome to Fund Shack. You focus on healthcare at […]
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Marcus Maier-Krug is partner and co-head of portfolio management at Arcmont. He has been working in private credit since before the global financial crisis. In this episode, recorded in November 2023, we discuss what constitutes alpha in private credit, what it’s attractions are as an asset class, whether it can retain the market share it has taken from the traditional banking world, the different mindset and culture of private credit lenders vis a vis their borrowers, and much more… [00:00:00] Ross Butler: You’re listening to Fund Shack. I’m Ross Butler, and this week I’m talking with Marcus Maier-Krug, partner and […]
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Alejandro Alcalde Rasch is a senior director in Advent International‘s portfolio support group. He joined Advent in 2010 having been chief transformation officer and head of supply at Gröhe AG and a partner in McKinsey’s chemicals practice. In this Fund Shack podcast, Alejandro talks to Ross Butler about the genesis of Advent’s dedicated portfolio support group, how it has grown over time, what he looks for in value creation professionals, how the team works alongside deal executives and the importance of a value creation plan. [00:00:00] Ross Butler: You’re listening to fund Shack. I’m Ross Butler, and today I’m speaking […]
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Harvard professor Josh Lerner explains the risks and requirements of public intervention in establishing a thriving venture capital and entrepreneurial ecosystem. Professor Lerner tells Ross Butler that seeding a venture capital industry is a difficult and slow process – it’s not just the case of emulating Silicon Valley. With reference to his classic work, ‘Boulevard of Broken Dreams‘, Ross Butler asks for Josh’s key recommendations, and in particular whether increasing the supply of venture capital or the demand for it, is the more sensible route for policymakers. With reference to the US, Japan, Australia, the EU and Great Britain, this […]
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Andros Payne talks to Ross Butler about the holy grail of private equity value creation: a systematic, quantitative approach to cultural and behavioural change. What makes businesses work well? Andros Payne is an engineer and entrepreneur who has spent two decades codifying and benchmarking the behaviours of senior and middle managers that are proven to drive growth and underpin cohesive and healthy cultures. His firm, Humatica, has worked with some of the leading private equity firms in applying the methodology to their portfolio companies. In this Fund Shack podcast, he explains how he has managed to make objective and transparent […]
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