Side Letter: Attack of the bots, Trump still eyeing carry, Rhode Island joins secondaries buyside

Automation revolutionises operational efficiency, Rhode Island's pension turns secondaries buyer, Trump still wants to end carried interest loophole... sort of. Here’s today's brief, for our valued subscribers only.

Just happened

Operating partners day one: Automation – and ESG risk – everywhere

Delegates at PEI’s Operating Partners Forum: Europe 2019 were treated to a taste of dystopia amid the more familiar discussion of pricing strategies, post-merger integration and procurement. An exec from robotic process automation firm Automation Anywhere (which raised more than $500 million in Series A from SoftBank Vision Fund and others last year) talked through an example of an accounts payable clerk being literally replaced by a software robot, before reassuring the operating partners in the room that their jobs were safe. Automation will revolutionise operational efficiency – PE firms are taking note – but the resulting impact on workforces will be a major ESG issue, as Carlyle operating executive Georgette Kiser noted in her keynote interview. The conference continues this morning.

The secondaries jump

Rhode Island State Investment Commission is the latest pension plan to turn secondaries buyer to help increase its exposure to private equity. Senior investment officer Jonathan Popielarski (pictured) tells us this will add diversification and be a helpful tool in building stronger relationships with GPs. The pension won’t be on a buying spree though. “We can’t necessarily time markets and don’t want to do a whole bunch right now, and then [find] it turns out to be a terrible vintage year,” Popielarski says.

New (healthcare) kid on the block

Buddy Gumina, who founded and led Apax Partners’ US healthcare business until 2017, has launched mid-market-focused Grant Avenue Capital. The firm will pursue companies generating approximately $5 million to $25 million of EBITDA and larger transactions with co-investors. The firm is anchored by a select group of high-net-worth families.

Essentials

Don’t panic – or do? Carried interest both is and is not on US President Donald Trump’s hit list. Speaking to Fox News host Steve Hilton, Trump said in negotiating the tax reform bill, he “traded” changes to carried interest taxation for an extra few percentage points decrease on the corporate tax rate. Axios offers some helpful analysis on whether or not this is likely to have been the case – but the question is, is it still on the agenda? “I would like to do it,” he said, “I will do it, but every time I want to do it they offer me things that are much more valuable than carried interest. It’s not – it’s not that much money.”

Everstone gets technical. India and South-East Asia specialist Everstone has snapped up a tech veteran to bolster its co-investment activity, per a statement. Suresh Vaswani, who has served at Dell, IBM and Indian tech giant Wipro, will provide operational expertise for new and existing portfolio companies in India and the US. His appointment follows the hire of a former University of Texas Investment Management Company director to its New York office last month amid plans to increase its pool of North American co-investment partners.

Doubling down on impact. Al Gore’s Generation Investment Management has gathered $1 billion for its third sustainable investments fund. Generation IM Sustainable Solutions Fund III will be invested in environmental solutions – the firm’s original mandate – as well as healthcare and financial inclusion companies. This comes the same week as Dutch pension manager PGGM said it wants to extend its impact investment exposure to smaller companies, per IPE.

Dig deeper

Insurer bets. Fubon Life Insurance has committed $20 million to New Enterprise Associates 17. The fund is seeking $3.6 billion and will invest in technology and healthcare opportunities in North America and Asia. For more information on the Taiwan-based insurer, as well as 6,700 other institutions, check out the PEI database.

He said it

“At one stage, I spent four days in hospital because one of the kids accidentally, or deliberately, tried to drown me. Which wasn’t very good.”

Terra Firma’s Guy Hands talks to the BBC about being bullied as a child.


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Today’s letter was prepared by Toby Mitchenall, Isobel MarkhamAdam LeAlex LynnCarmela Mendoza and Preeti Singh.


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