In an effort to take advantage of new pools of capital and address a demand from LPs for greater transparency, a number of large private investment firms have recently bolstered their investor relations departments.
Highland Capital Management and TA Associates are two such firms that have created new positions on their investor relations teams in recent months. In July, Highland appointed Steven Delarosa as managing director of investor relations, while in June TA hired Pamela Bliss Harris as vice president of IR.
Harris’ position was not created for the fundraising side of the investor relations business, but to better address LP questions, says Brian Conway, managing partner at TA Associates.
“We found that not just when you’re fundraising, but year-round, LPs are looking for increased transparency,” he says. “We brought Pam on to have someone dedicated to that effort.”
One of the reasons for the expansion among IR teams has been a desire on the part of GPs to diversify and grow their LP rosters. When working with new LPs, however, the process can be more time consuming, as new investors don’t have the experience and background that existing LPs do.
“They’re new so they’re looking for people willing to take the time to educate them, share information and help them network,” says Kevin Albert, a veteran of the private equity fund placement business who recently left Elevation Partners to join Pantheon.
Sources of capital have changed continuously since Albert started working in the business, he said, from an almost absolute concentration in the US, to LPs in Europe, and then Japan in the 1990s, to today with new investors emerging in Asia and Latin America. Albert leads a team of at least 25 people in what the firm calls client services, which includes fundraising and investor relations-type activities.
Another firm that has been expanding its investor relations function significantly is Kohlberg Kravis Roberts. The firm’s fundraising team has also grown from “five to eight people three years ago”, to about 30 people today, according to Suzanne Donohoe, the global head of KKR’s client and partner group.
“Capital is in shorter supply today than it was just a few years ago,” Donohoe says. “There are some new pools of capital that have been formed. We’re interested in making sure we have deep relationships with our existing partners as well as other providers of capital.”
Those pools include sovereign wealth funds, which have been making big strides into alternative investments, as well as insurance companies and pensions in Europe and South America.