Side Letter: Future 40, Blackstone’s Brexit bargains, Invest Europe’s top 3

No Bre-grets: Blackstone's Jon Gray is excited about the multiples that UK assets are going for as it extricates itself from the EU, while European PE's chief ambassador wants to keep capital flowing around the continent and into private funds. Here’s today's brief, for our valued subscribers only.

Just happened

Future 40 

First up, a reminder: Our 40 Under 40: Future Leaders of Private Equity will be announced online and published in our Future of Private Equity special on 1 May. Nominations are now open.

Blackstone’s Brexit bargain hunt

Blackstone

The UK is the “most compelling market in the developed market today“, Blackstone president and chief operating officer Jonathan Gray tells Private Equity International. “Pretty dramatic underperformance from a valuation standpoint” has encouraged the firm to keep investing in the country. Blackstone has a lot of money to put to work: 2019 was its best year of fundraising, having raised $134 billion across all strategies and having secured more than $26 billion for its eighth flagship vehicle, the largest private equity fund raised. Want to find out more about the firm’s biggest backers? Check out this story.

Invest Europe’s top three

What does Europe’s industry body representing private capital need to do this year? Three things, says former Gimv France managing partner and current Invest Europe head Eric de Montgolfier:

  1. Protect cross-border investment flows: “More than 50 percent of fundraising in Europe comes from the UK and out of the money they raised, 50 percent is invested in EU businesses, underscoring how interconnected we are.”
  2. “Preserve the Alternative Investment Fund Managers Directive – it is not broken so there’s nothing that needs to be fixed.”
  3. Ensure Solvency II changes do not hamper the flow of insurance and banking capital into PE: “That’s something we are really concerned about because those regulators in general still see PE as a risky business.”

Read the full interview here.

Essentials

Minority stake sale. NYSE-listed investor Affiliated Managers Group has bought a minorty stake in PE and credit manager Comvest Partners. AMG owns stakes in fund of funds Pantheon, Baring Private Equity Asia and a number of asset managers in different segments of the market. Release here.

Students vs fossil fuels. Georgetown University moved last week to divest from fossil fuels, including its exposure through private funds, as the movement to get major LPs out of the business appeared to gather steam, writes Justin Mitchell of sister title Buyouts. “The university needs flexibility in divesting from private investments during this time to avoid incurring substantial losses by withdrawing from these private investments before they reach maturity,” the endowment said.

Align Capital Partners, a spin-out from the Riverside Company, has just wrapped up fundraising for its second lower mid-market vehicle on $450 million, reports Buyouts.

Dig deeper

Institution: Texas Municipal Retirement System
Headquarters: Austin, US
AUM: $29.98bn
Allocation to alternatives: 18.30%
Bitesize: $50m-100m

Texas Municipal Retirement System has confirmed $250 million-worth of private equity commitments to three vehicles, a contact at the pension informed PEI. The commitments comprise $100 million to Insight Venture Partners XI and $75 million apiece to One Rock Capital Partners III and Altaris Health Partners V. The $29.98 billion US public pension has a 5.0 percent target allocation to private equity that currently stands at 2.4 percent. For more information on Texas MRS, as well as more than 5,900 other institutions, check out the PEI database.

He said it

“With climate change in particular, we have seen a significant ramp up of client queries in the last six to nine months.”

Pantheon’s Alex Scott describes how asset owners are looking at their own portfolios to assess to climate risk.


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Today’s letter was prepared by Toby MitchenallAdam LeRod JamesCarmela Mendoza and Alex Lynn.


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