Side Letter: Fundraising smash, Oaktree dismissal, buying listed stocks

Investors continued to flock to PE in 2019, say our data. Also: a dismissal at Oaktree; news from the Asian conference circuit and listed strategies. Here’s today's brief, for our valued subscribers only.

Just happened

PE on a high

Chart showing fundraising dataThe data are in and the fundraising juggernaut rolls on: 2019 was the best year for PE fundraising since the 2008 global financial crisis. Funds raised a whopping $537.2 billion last year, beating the 2017 previous high and a 16 percent gain on the prior year. Three things to note:

  • Average fund size steadily increased to around $661 million –  a 55 percent jump on five years ago.
  • Asia gave Europe a run for its money last year with $51 billion versus $62.6 billion in aggregate final closes. Investors such as APG Asset Management and CalSTRS plan to add more fuel to this fire, as we’ve previously reported.
  • Blackstone’s Capital Partners VIII megafund was the largest vehicle to close last year. Including $1.7 billion in management fees, the firm says it raised $26.2 billion – which would make it the largest fund ever raised.

Love is in the air

Oaktree Capital Management MD and global co-portfolio manager Rajath Shourie has been dismissed from the firm after failing to properly disclose  a relationship with another employee, violating company policy. Such relationships within the firm must be properly disclosed, per company rules. Bloomberg Law first reported the news; Oaktree declined to comment. Workplace behaviour is increasingly under the microscope: last month, senior BlackRock executive Mark Wiseman, who oversaw the BlackRock’s Long Term Private Capital private equity fund that is seeking up to $12 billion, was terminated after failing to disclose a workplace relationship.

Climate of fear

PEI’s Alex Lynn was at Hong Kong’s Asian Financial Forum on Monday, and the climate crisis – rather than politics – was centre-stage. Amid Australia’s fires and Indonesia’s floods, Julia Leung, deputy chief executive of its Securities and Futures Commission, said asset managers did not have sufficient awareness of the financial risks posed by the changing climate. She cited an SFC survey – published in December – which found that only a minority of asset managers licensed in the city have processes in place against these physical threats.

Essentials

On the subject of Asian PE events, Bloomberg has noted that our real estate-focused colleagues have relocated the market-leading PERE Asia Week 2020 from Hong Kong to Singapore this year. The event – which is set to be bigger than ever – kicks off on 3 March. The venue move is to ensure ease of travel and safety for delegates amid any continuing pro-democracy protests

Trend for 2020: Stakes in listed companies. TPG is raising a fund to invest in public companies, according to a report on Bloomberg citing “people familiar with the matter”. TPG would not be the first firm to believe it can bring PE nous to a listed companies. EQT has invested €225 milllion into listed stocks through its realtively new “public value” team and other firms are looking at the space.

PE, Swiss wealth manager style. Mirabaud is not a household name in PE, but is hoping to carve out a niche. Having raised €155 million to invest in what it describes as “Living Heritage Companies” in the luxury and lifestyle sector, it is now raising a separate growth capital/VC fund to invest in emerging lifedtyle brands.

Inside tip

Alex will be at the HKVCA Private Equity Forum on Wednesday. Going too? Let him know: alex.l@peimedia.com

Dig deeper

Specialist vehicles get San Fran funding. San Francisco Employees’ Retirement System has announced $280 million-worth of commitments to five vehicles, including to funds managed by communications infrastructure specialist Peppertree Capital and an aviation-focused fund managed by Castlelake.

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

Chart showing San Francisco Employees' Retirement System's asset allocationHe said it

“Superior investors may be superior because they can figure out which companies are likely to be winners. But the best investors I know also have a sense – perhaps innate and instinctive – for situations where the proposition is too favourable relative to the underlying fundamentals.”

In his latest memo, Oaktree founder Howard Marks discusses how investing is like gambling.


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Today’s letter was prepared by Toby MitchenallIsobel MarkhamAdam LeAndrew HedlundCarmela Mendoza and Alex Lynn.


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