Side Letter: Apax, Warburg club up, Stonehage’s Clarke-Jervoise, NYC-ing returns

Some exclusive people news, PE portfolios flying high and the return of an old favourite: the club deal. Here’s today's brief, for our valued subscribers only.

Just happened

In da club

Who said club deals were dead? Apax Partners, Warburg Pincus, Canada Pension Plan Investment Board and Ontario Teachers’ Pension Plan have teamed up to take British satellite group Inmarsat private in a deal worth around $3.4 billion. The investment shows a) PE houses are still willing to band together on big ticket deals and b) LPs with deep pockets are getting in on some serious co-investment action. Still, we are a way off the pre-crisis club deal euphoria: transactions involving more than one large global GP accounted for 4 percent of megadeals last year; in 2007 the figure was 27 percent, according to McKinsey.

Au revoir, RC-J

Richard Clarke-Jervoise will no longer be heading up private capital investment at Stonehage Fleming, as he makes the move from the London-based multi-family office to Paris, where his family is based. Stonehage is on the hunt for a replacement.

Lobby leaders

UK industry body the BVCA unveiled a new leadership line-up at its annual chair’s dinner last night. Permira’s co-head of consumer Cheryl Potter takes over as chair of the organisation as part of the regular annual rotation. Longstanding director general Tim Hames announced his replacement: former cabinet minister and Scottish Secretary of State (and latterly PwC senior advisor) Michael Moore.

NYC-ing double digit returns

All five of New York City’s retirement funds posted private equity net IRRs in excess of 10 percent in the third quarter of last year, the first time they have crossed this threshold since inception. Top performers? Large buyouts and special situations, depending on which particular fund you look at. The five systems overhauled their private equity portfolios in 2011, consolidating their GP lists and hiring new investment advisors. While cause for celebration, NYC continued to lag its PME benchmark – the Russell 3000 +300bps – but as Alex Doñé, CIO of the Bureau of Asset Management, which manages the five funds, said at the investment meeting last week, it was “a tough PME to beat” given recent public markets performance.

Better prospects

JW Childs has rebranded as Prospect Hill Growth Partners a month after co-founder John Childs stepped down as chairman amid charges of solicitation of prostitution in Florida. The meaning behind the name? “Our office is at the foot of Prospect Hill in Waltham, Massachusetts, and we like the association of the word ‘prospect’ with success,” MD Philippe Schenk tells us.


Will CalPERS’ new private equity business model work? Well, it may, or it may not, according to CIO Ben Meng. “We will not know if we don’t try,” Meng said at a March investment meeting. The $354 billion pension system is banking on private equity to help it achieve annual returns of 7 percent for its total portfolio, but many are convinced the future for the asset class won’t be as lucrative as its past. Meng told The Wall Street Journal CalPERS has a competitive advantage in PE thanks to its scale, brand and liquidity that should help it continue to outperform. With the approval in principal this month to add the two ‘direct’ PE strategies – effectively giant separate accounts – to its strategic business model, CalPERS will potentially add another $20 billion of investments to its $28 billion private equity portfolio.

Fear not the leveraged loan market. If you, like many, are worried that the seeds of the next global financial crisis are to be found in the leveraged loan market, research from Partners Group should go some way to assuage those fears. True, there are causes for concern – not least aggressive documentation features – but broader signals that the credit cycle is coming to an end may not in fact be all that they seem, writes sister title Private Debt Investor’s senior editor Andy Thomson.

6,700+ institutions

Want more data? There are more than 6,700 institutions in our database, including ApaxWarburg PincusCalPERSNew York City Employees’ Retirement SystemNY City Police Pension FundTeachers’ Retirement System of the City of New YorkNYC Board of EducationNew York City Fire Pension Fund from today’s Side Letter.

He said it

“I think that hard Brexit would hit the UK very hard. I think they’d go into recession. I think you’d have a real adjustment of their currency and asset values.”

Blackstone chairman and CEO Stephen Schwarzman tells CNBC the consequences of a hard Brexit could be severe for the UK economy.

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Today’s letter was prepared by Toby Mitchenall, Isobel MarkhamAdam LePreeti Singh and Brian Bonilla.

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