“What do you mean the planes are ‘frozen in place’ – are you serious?”
Add in a few expletives to that angry, astonished query and there you have one of the tweets frustrated travellers were posting on Virgin Atlantic’s Twitter page in late December. If you were unlucky enough to be flying through London the week before Christmas, you will recall firsthand that snow brought one of the world’s busiest airports to a grinding halt for several days, causing disruption to thousands of leisure and business travellers – not to mention grim scenes of stranded passengers inside terminals unable to cope with their numbers.
I was one of those unlucky individuals: I was meant to be flying to San Francisco for meetings with private equity contacts. Seventy-two hours after my first failed attempt at the transatlantic trip, I headed back to Heathrow, stepped gingerly over stranded travellers sleeping on the terminal floors, and crossed my fingers my flight would be one of the few permitted to take off that day.
While waiting for the official “go to gate” message to appear, I received an e-mail from a veteran placement agent asking after my whereabouts and if I might be ready for an update on the European fundraising environment. “In the trenches at Heathrow,” I responded.
It was only later the irony hit: for if any participants in the private equity industry are truly “in the trenches” day-in, day-out – and not just because of inevitable travel hiccups they encounter traversing the globe – it is those tasked with raising capital.
Who’s in the market, what they expect to raise and how they’re faring is a constant topic of conversation among London-based private equity insiders these days. It’s not hard to understand why: many well known groups have begun to market or are expected to begin raising their first post-GFC funds, including Cinven, Montagu, BC Partners, Apax Partners and Permira.
Some estimates suggest 1,200-plus funds worldwide are expected to launch offerings this year, which means fund managers are competing for capital from the same institutional investors around the world – many of which still aren’t making the same level of commitments seen between 2005 and 2007 and continue to reduce relationships. The pressure is clearly on to show solid absolute returns that are better than peers’.
BC, for one, is aiming to raise €6 billion and, according to market sources, has changed its approach amid the tougher fundraising climate: the firm is digging harder, and deeper, than ever before. Charlie Bott, former head of European financial sponsors for Goldman Sachs, is leading the charge, which essentially has a lot more people knocking on a lot more doors. Those people include a number of senior executives that had been on the Citi Alternative Investments fund placement team, such as Laurent de Rosière, who had co-headed Citi’s European fundraising unit. And many of those doors are in the Middle East and Asia, regions that accounted for less than 10 percent of the LP base for the prior fund, which was Europe’s largest when it closed on €5.8 billion in 2005. Word has it the heavy lifting is paying off, and that BC is making good progress.
We’ve pointed out before that it’s misleading to hold up any one GP’s fundraising as representative of the entire industry, given each brings its own unique “story” and circumstances along with its PPM. But BC is by no means the only firm strengthening its bench of investor relations talent and casting the buyside net farther and wider to confront a still-frosty fundraising environment.
In fact, one thing that all private equity fundraisers have in common nowadays is that theirs is not an easy or straightforward task. To get the job done, they will need to be on the road – a lot. In other words, they will be finding themselves “in the trenches” more than ever. Here’s to hoping they don’t get stuck at Heathrow.