Conversus Capital: "Like a REIT for PE Assets"
There's more than one way to get a piece of the cheaper-than-thou private equity secondary market these days. You can invest in a traditional fund, like the ones I outlined earlier this week. Or, you can buy some shares of a public fund-of-funds that targets PE secondaries. Conversus Capital is the largest such option. The firm underwent a $1.9 billion IPO in 2007, using the proceeds to invest in the secondary interests of 168 funds and has since added 49 for a current tally of 217 funds. The idea is that shares of Conversus give you immediate and permanent exposure to the secondary market, whereas an investment in a traditional fund is spread over five to ten years. Today Conversus' market cap has shrunk to $456.3 million and it's written down the net asset value of its portfolio by 50%. However, the firm hasn't seen its capital calls outweigh its distributions, thanks in part to its mere 5% allocation to mega-funds. I spoke with CEO Bob Long yesterday about market timing, mega-funds, his firm's stock's performance, and what happens if distributions freeze.
