CalSTRS Cuts Blackstone Back -- Is a Power Shift Underway?
The LP-GP power dynamic has always been a tricky thing. It stands to reason that LPs should have superior leverage, because it’s their lucre that feeds the GP beast. But the reality is that GPs – at least the mildly/wildly successful ones – have traditionally run roughshod over their investors. Part of it is because LPs are poorly-networked with one another (therefore reducing the chance for collective action), while another part is that the LP community is ever-growing (making it easier for GPs to say goodbye to a disgruntled LP, because three newbies are waiting in the wings). This power dynamic did briefly shift earlier this decade – when overcapitalized VC firms were compelled to “hand back” uncalled LP commitments – but that was the only time I’d seen it. Well, until now.
