Side Letter: BVCA takeaways, how CPPIB co-invests, Platinum’s prison problem

Private equity participants gathered in London last week for the UK's biggest industry conference. Luckily for readers, PEI was there. Here’s today's brief, for our valued subscribers only.

Just happened

BVCA takeaways

BVCA chair and Permira partner Cheryl Potter opens the Summit. Source: BVCA

Missed last week’s British Private Equity & Venture Capital Association Summit in London? Here’s what we learned:

  • Recently appointed BVCA director general Michael Moore drove home that the comprehension gap between business and politics is increasing and the industry must work harder to show its economic as well as social and public value.
  • Biggest industry worries: disintermediation (the rise of direct investments), talent (striking the right work-life balance), diversity, fees, excess capital, the cycle nearing its end, disruption at the portfolio level and PE’s increasingly negative reputation.
  • Beware asset aggregation: while committing more dollars to fewer names is the trend, the next-gen of talent is really in first-time funds, says Barings MD of alternative investments Elizabeth Weindruch.
  • The future of fund terms includes the prevalence of sub lines and financing and a move towards deal-by-deal carry, but be warned: the market has a long memory. “If you are seen to be taking too much when you are in a strong position, good luck when you are in a weak position,” said Rede Partners co-founder Adam Turtle. “It’s about not being too greedy when the wind’s on your back.”
  • Even the BVCA is taking the “E” in ESG seriously. PEI was delighted at the lack of any plastic bottles and an agenda that could only be found online. Here’s to hoping more conferences follow suit.

How CPPIB co-invests

Also from the summit we learned that for Canada Pension Plan Investment Board, when it comes to co-investing the percentage ownership stake is more important than the amount of dollars deployed. CPPIB would rather take a 5-10 percent stake than a 25 percent stake for the same amount of capital, Delaney Brown, head of private equity funds, said on a panel. “We are very hands off,” he added. More on what CPPIB looks for in co-investments here.

Invest Europe’s new CEO

In more industry body news, Invest Europe has appointed Eric de Montgolfier as chief exec. De Montgolfier, who joins from Brussels-listed investment manager Gimv, takes up the role at the end of December and replaces Michael Collins. Read up on the European PE and VC association’s five-year plan here.

Essentials

Platinum’s Securus headache. Platinum Equity Partners’ decision last week to reorganise prison phone service provider Securus Technologies was not driven by public pressure, according to the firm’s chief counsel. “I understand that the inmate telecom stuff has drawn the lion’s share of public attention, particularly from critics. And we are continuing to listen to those critics,” Mark Barnhill wrote in an email to PEI. “But the reorganisation and transformation into a technology business is not related to any of that. Rather, it is connected to our original investment thesis that we can create the most value by transforming this business from a telecom provider to a more expansive technology company with a broader customer base beyond corrections.” Critics including senator Elizabeth Warren have voiced concerns about the cost of Securus’s services to inmates.

LP meetings. It’s Monday, so here are some LP meetings to watch out for this week.

We need your help

We’re putting together a list of funds that charge carried interest of 25 percent or more and need your help – let us know which vehicles we should check out. The finished article will appear on PEI.

Dig deeper

ATRS commits to Clearlake. Arkansas Teacher Retirement System has agreed to commit $30 million to Clearlake Capital Partners VI. Here’s a breakdown of the $17.4 billion US public pension’s total investment portfolio. For more information on Arkansas Teacher Retirement System, as well as more than 5,900 other institutions, check out the PEI database.

He said it

“One is more well-orchestrated, like a New York Philharmonic concert, the other one is like stepping into a jazz improv situation.”

Elias Korosis, a partner at Hermes GPE, tells a panel at the BVCA Summit last week that co-underwriting deals in sub-$100 million EV businesses, and multibillion-dollar co-investments with “major” GPs, are two very different art forms.


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Today’s letter was prepared by Adam LeCarmela MendozaAlex Lynn and Preeti Singh


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