Side Letter: ‘Good fund, bad fund’, JPI’s new alts head, BVCA’s reminder to members

First up: the scoop on who's taking over the alternatives team at the ¥71.9 trillion Japan Post Insurance. Plus: a "good fund, bad fund" proposal, and much more. Here’s today's brief, for our valued subscribers only.

He said it

“While the current environment is clearly a difficult one for the hospitality industry, the desire to travel and have authentic experiences is fundamental and enduring”

Silver Lake‘s Egon Durban comments on its recent investment in Airbnb. His firm has invested $1 billion in debt and equity alongside Sixth Street Partnersaccording to a press release.

Just happened

Scoop: JPI’s new alts head

Japan Post Insurance has chosen a successor for its recently departed head of alternative investments, Tadasu Matsuo. The ¥71.9 trillion ($661 billion; €610 billion) insurance giant promoted Keiichi Abe from within its global credit investment team on 1 April.

Good fund, bad fund?

The coronavirus is having an outsized effect on certain sectors, with some essentially being shut down. Could we see GPs ring-fencing the hardest-hit assets?

The technology is there due to innovations in the secondaries market, writes Rod James of Secondaries Investor. GP-led fund restructurings have more commonly been used to lift promising assets that need more time and capital out of one fund and into a new vehicle. The playbook could be applied to groups of assets hit hard by the current crisis.

“Let’s say a fund has 10 investments, three of which are in a sector disproportionately affected by the covid-19 crisis,” writes James. “These assets could be spun out into a separate vehicle backed by new, probably distressed investors, allowing LPs to quickly cut their exposure to failing assets and the GP to focus its remaining capital on what is salvageable.”

There are complications, of course. As one source notes, the economic damage is so pervasive it may not be possible to easily distinguish between the good and the bad. The other unanswered question is about the buyers: the obvious candidates would be specialists in distressed, rather than conventional secondaries buyers. But in GP-led situations, the incumbent manager remains in the driving seat. “I would expect most distressed investors to struggle with having the old GP in place, as they are used to calling the shots for their own investments,” says Ted Cardos, a partner with law firm Kirkland & Ellis.

Call to arms

The BVCA, the UK’s private equity industry association, has issued a statement of intent regarding PE’s role in working through the covid-19 crisis. It isn’t quite the rallying cry that came from France Invest a couple of weeks ago; more a gentle reminder that BVCA members’ “primary business is to serve investors by building the strength of their investee companies and ensure their active involvement shall be applied constructively to the benefit of the company concerned.” Read our previous Side Letter entry on the need for a concerted, industry-wide call to arms.

Covid-19 fightback continues

Blackstone is donating $15 million to help New York State fight the coronavirus. The firm is contributing $10 million to the New York State COVID-19 First Responders Fund and $5 million to organisations arranging food deliveries to healthcare workers and first responders, and those supporting vulnerable populations in New York City.

Inflexion, meanwhile, has donated £2.5 million to fight the pandemic through the Inflexion Foundation. The bulk of the money will go to the National Emergencies Trust, which raises funds for local charities and grassroots organisations that can provide vital support to people in the quickest way possible.


Sub lines. Subscription credit facilities are once again the topic du jour in light of covid-19. “Capital call financing is still flowing,” write lawyers from Debevoise & Plimpton, but lenders, borrowers and LPs are all now operating with a little less certainty. A note from Debevoise gives some interesting considerations, including the following:

  • “For funds at the start of their life, consider calling capital from LPs if investments to date have only been funded from the capital call facility. LP interests are more closely aligned to the interests of the fund if they have ‘skin in the game’.”
  • “Similarly, sponsors should anticipate required repayment of outstanding loans under the facility, and consider the appropriate time to call capital from LPs to repay the same. If there is any concern around LP’s funding, it would be prudent to allow more time to call capital.”

More on this: Reading the runes of investor liquidity

Rise up. TPG Growth has named Michael Stone as co-managing partner. He has been a senior advisor and partner with the investment arm since 2009 and is chief investment officer of the firm’s impact investing platform The Rise Fund. He will work alongside Matthew Hobart, who was named co-managing partner last June. Jim Coulter has been interim head of the platform since the ousting of Bill McGlashan last year following his involvement in a US college admissions scandal.

Dig deeper

Sweden steady. AP7 will continue with its private equity investment plan and activity in light of covid-19, a source at the Swedish pension informed Private Equity International. Over the next 12 months, the pension expects its allocation to alternative investments to stay the same, and the institution does not plan to slow commitments to funds.

For more information on AP7, as well as more than 5,900 other institutions, check out the PEI database.

We would love your feedback to help us make this newsletter more useful; click here to give us your opinion.

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

Subscribe now and get Side Letter delivered to your inbox each day

To find out how, email, or call our team:

London: +44 207 566 5432
New York: +1 646 545 6296
Hong Kong: +852 2153 3140