Other side of the table

In March, Christine Pastore, former co-head of alternative investments at New Jersey’ state pension system, joined Vista Equity Partners as a senior vice president and head of investor relations.

Pastore’s switch from limited partner to general partner coincided with the launch of Vista’s two latest funds, Vista Foundation Fund II, a buyout fund targeting $500 million, and the firm’s debut debt vehicle, which has a $600 million target. It also came just two months after Vista hired Jyoti Gupta, a former investment manager with the Teacher Retirement System of Texas, into the firm’s investor relations team.  

While it is rare for LPs to transition into roles at private equity firms, Pastore and Gupta are not the first to switch to the other side of the table. In 2010, Sheryl Schwartz, the founder and former head of alternatives at Teachers Insurance and Annuity Association – College Retirement Equities Fund (TIAA-CREF) and a 22-year LP, joined mid-market specialist Perseus as a senior managing director. Co-president of Boston-based Thomas H Lee Partners Scott Sperling also made his name as an LP, running the private capital division of The Harvard Management Company for a decade before joining THL in 1994.

“An LP joining a GP brings a different perspective when they’re negotiating terms and presenting to the LP,” says Schwartz. “For fundraising, it’s an advantage because they have existing relationships and credibility with their fellow LPs.”

For Vista, the additions of Pastore and Gupta provide a much-needed service.

“We’ve never had an IR role outside of me burning up a lot of airline miles and shoe leather,” says Robert Smith, chairman and chief executive officer of Vista. “The group headed by Christine will ensure [LPs] are in tune with our strategies and the opportunities.”

And it’s not just about better communication, according to Pastore. “I definitely think there is a kind of camaraderie [between LPs],” she says. “The fact that I sat in their shoes and I know what they feel and live every day probably helps in the conversation.”

Given the nature of investor-fund manager relationships today, this ‘camaraderie’ is an advantage every GP would love to have. Indeed, more than 40 percent of respondents to PEI’s recent LP survey, Perspectives 2013, expressed concern over the performance, management fees and team stability/retention of the GPs to whom they’d committed capital.

Not all LPs believe the somewhat combative LP-GP relationship of the past two years will endure, however.

“I think we’re moving to a different place,” says Erik Hirsch, chief investment officer of Hamilton Lane. “The fee negotiation continues to a small degree, but that battle has largely been fought. Changes have flowed through the industry, and now it’s about the two groups coming together to try and make better strategic decisions to get returns going forward.”

This is an area Pastore knows well, having crafted an innovative partnership between New Jersey and The Blackstone Group that gave the pension system flexibility to invest with Blackstone across asset classes.

And for Vista of course, Pastore’s presence amounts to an implicit validation of the firm’s offering. As she says: “As a fiduciary for all those years, I wouldn’t want to come to an LP and talk to them about something that isn’t the best product out there.” ?