Hollie Moore Haynes, former Silver Lake MD and founder of Luminate Capital Partners, tells Private Equity International how she aligned her interests with her first investors.

Just happened

How to spin out
If you’ve been thinking about what your life will look like after lockdown, don’t rule out becoming your own boss. While LPs may have a harder time backing new managers and new relationships as a result of the pandemic, there are reasons why recessions and unstable periods present the best opportunities to start anew.

• The economic fallout of the covid-19 crisis will undoubtedly have an impact on portfolios. The result: the prospect of carry gets pushed further into the future – and in some instances may not materialise at all – leaving partners and junior staff to rethink their posts and jump ship to get better economics.
• LP appetite for private equity remains rampant. In our LP Perspectives study, 25 percent of investors expect to put more capital to work in 2021 than this year, with 39 percent keeping the same pace. Fundraising numbers this year have remained – despite everything – steady so far.
• Building new relationships online rather than face-to-face is difficult, but not impossible. And it seems to be getting easier. Of investors, 52 percent told us they are willing to make a commitment to a firm without ever meeting in person.

In our latest cover story, we spoke with 21 market sources involved in successful spin-outs to find out what it takes to go it alone and create a new firm.

Does covid-19 change fund terms? Not yet
The cost of keeping GPs’ lights on is coming down for LPs in some parts of the market, according to data from MJ Hudson. Just 15 percent of funds this year are charging management fees in excess of 2 percent – a drop from 21 percent compared with last year, the asset management consultancy found in its latest fee trends survey, seen exclusively by Side Letter. “We may find that funds launched after the emergence of covid are dramatically incomparable to their forerunners, and that this year’s report marks an end-point for an old market model and next year, the beginning of the next,” the report noted. Some other findings:

• A higher proportion of US managers are using European whole-fund distribution models.
• There’s evidence the 8 percent hurdle is under challenge, with almost one-third of funds having no preferred return at all (a 6 percentage point increase on last year’s findings).
• Almost all funds have GP clawback provisions (97 percent)

Stay tuned to privateequityinternational.com for more on the fund terms study today.

IR Silver, away
Sun Capital Partners has a new IR head: Kelly Griffin (previously partner and global head of IR at hedge fund business Caxton Associates) replaces Joe Silver, who has been in the role for just nine months. No comment from the firm as to why Silver, who previously founded his own placement firm EdgeLine Capital Partners, left so soon. Sun has also hired Angela Geffre as chief human resources officer.

Essentials

Tackling racism with capital
Milwaukee-based financial services firm Northwestern Mutual has allocated $20 million to invest in startup companies founded by black entrepreneurs, through its venture capital unit Northwestern Mutual Fund Ventures, the firm said in a press release.

LACERS’ pace
Los Angeles City Employees’ Retirement System plans to gradually increase its private equity commitment pace over the next few years as it seeks to get its allocation up to target while diversifying its strategies in the asset class. Full report here.

Wind picks up
True Wind Capital, an emerging manager formed by two ex-KKR executives, is targeting $800 million for its sophomore fund after a pause in fundraising in the depths of the pandemic, sources told sister publication Buyouts (subscription or registration required). During the fundraising pause, the firm raised its debut SPAC.

Waterland raises
Netherlands-based Waterland Private Equity Investments is targeting €2.5 billion for its eighth flagship fund, according to documents posted by a US public pension. Buyouts has more.

Seeder with benefits
Here is some more detail on the new GP seeding platform founded by Three Hills Capital Partners boss Mauro Moretti. Atypical Partner will be a cornerstone LP to new funds, as well as providing investment committee members and IR and other infrastructure support. It is hunting for mid-market managers of private funds with a specialist edge. “I don’t think that the market needs another plain vanilla GP,” Moretti said.

Dig deeper

Institution: Cathay Life Insurance
Headquarters: Taipei, Taiwan
AUM: NT$6.63 trillion

Cathay Life Insurance has approved a $50 million commitment to New Mountain Partners VI, which is managed by New Mountain Capital.

As illustrated below, most of the Taiwanese insurer’s recent private equity commitments are through various investment vehicles across different sectors in the North American region.

For more information on Cathay Life Insurance, as well as more than 5,900 other institutions, check out the PEI database.