Side Letter: ILPA arms LPs, AlpInvest’s pref hire, Q1 growth

ILPA arms LPs with questions they should ask when their GP wants to restructure a fund. Here’s today's brief, for our valued subscribers only.

Just Happened

ILPA guides on GP-leds

Everyone’s favourite institutional limited partner body has issued its first-ever guidance on GP-led fund restructurings, a market that grew by over 70 percent last year to a $24 billion industry. The growth of these deals – which allow GPs continue managing assets they own by moving them into “continuation vehicles” – has been phenomenal, but growing pains abound.

You can read what’s contained in the guidance here, including suggested timelines (LPs should have at least 20 days to decide), deal expenses (they should be capped and shared by the GP in some cases) and what GP should disclose to LPs (everything, pretty much).Better education and more transparency can only be a good thing for all parties in these deals. One LP we spoke to this morning said he would “definitely” refer to the ILPA guidance when faced with a decision, and found its guidance on subscription credit lines last year “really useful”. We’d be keen to hear what you think of the guidance.

AlpInvest’s preferred equity hire

If you’re still not familiar with preferred equity, you should be. The Carlyle Group’s fund of funds unit has re-hired Vjerana Spajic from 17Capital to focus on the strategy in London, sister title Secondaries Investor reports (paywall).

Read more about preferred equity here, including how, why and when it’s used.

We did the math

Big growth. Growth equity funds (see chart below) collected almost $25 billion in the first quarter this year, the best such period for the strategy since PEI records began in 2008. Summit’s $4.9 billion haul for Growth Equity Fund X was the largest fund in this category and the fourth-biggest of any strategy that quarter.


How to predict the future. Wired editor-at-large and futurist Ben Hammersley (pictured) addressed sister title Infrastructure Investor’s recent Global Summit in Berlin to talk dealing with exponential growth and the needs created by new technology. His take? With the pace of change today, for anything other than climate it’s only possible to make projections three to five years into the future. Listen to Hammersley’s tips in this podcast on how to make sensible long-term decisions that allow for adaptivity with such a short forecast horizon.

Mubadala in the Big Apple. The Abu Dhabi wealth fund has planted a flag in New York, according to Bloomberg (paywall). Kevin Kokko, a former employee of Tony Blair Associates, the former UK prime minister’s consultancy firm, is leading the office. It’s unclear what the office means for Mubadala’s strategy, but an exec at the firm said it will look to The Carlyle Group as a model for “working with new partners and co-investments”.

Public vs. private. Public companies need hands-on, directional boards working toward long-term sustainable growth, much like the boards found at private companies, Partners Group executive chairman Steffen Meister argues in a Financial Times op-ed (paywall). As it is, an “obsession” with board independence, process and controls, coupled with short-termism, is resulting in an inability to lead and execute strategy. At the end of last year, Meister told us private equity will continue to outperform public markets simply because of its superior corporate governance.

Dig deeper

Want more data? There are more than 6,700 institutions in our database, including AlpInvestMubadala and Partners Group from today’s Side Letter.

He said it

“Alpha doesn’t pay pensions. Sustainable return on investments in actual dollars is what is ultimately required.”

In his annual letter to shareholders, BlackRock chief exec Larry Fink says asset managers continue to be focused on beating benchmarks.


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