GP stakes

Newcomers are flocking to the market, drawn by a growing base of targets and the promise of increased fund sizes.

GP stakes deals can come up against a number of hurdles, including the retention of key people and liquidity rights, write Geoffrey Burgess, Matthew Dickman and Tom Berry of Debevoise & Plimpton.

Blackstone’s move to combine its GP stakes and secondaries businesses raises questions about how players in both markets should address potential conflicts of interests.

Data from Wafra shows the market has more capacity than many would assume.

Blue Owl also held a first close of about $600m for a new mid-cap GP stakes fund, $500m of which was seed capital provided by partner Lunate, sources told affiliate title Buyouts.

A number of factors have accelerated the growth of the GP stakes market over the last 15 years, says Michael Rees, co-president of Blue Owl Capital and head of the GP Strategic Capital platform.

GPs are looking for strategic partners to help them address various challenges – something a GP stakes strategy can help achieve, say Adel Alderbas, CIO of Wafra, and Lauren Rich, managing director.