Side Letter: Insight’s extra $8bn; EU’s record half; Family office comp clash

Insight's $20 billion haul suggests fund targets are losing their significance. Plus: growth equity and VC drive European private equity to a record half and why Asian family offices are set to get competitive on compensation. Here's today's brief, for our valued subscribers only.

They said it

“We know we have less of those assets than many of our peers, even some of similar size.”

Dan Bienvenue, deputy CIO at CalPERS, explains the pension’s decision to increase its target PE allocation to 13 percent from 8 percent at Wednesday’s quarterly meeting. More details in Monday’s Side Letter.

Just happened

Aiming high
What’s in a fund target? For Insight Partners, not much it would seem. The firm has already raised about $20 billion for its latest flagship fund, Private Equity International reported yesterday. Though this figure is impressive enough on its own, it’s made even more so by the fact that Insight had set a $12 billion target for the vehicle.

In today’s heady fundraising environment, fund targets – once seen as a measure of a firm’s discipline and ability to operate within the confines of their sweet spot – seem to count for less. Indeed, managers are increasingly opening their data rooms without communicating to prospective investors how much they plan to raise, The Wall Street Journal noted this week.

Make no mistake, Insight is far from the only GP taking advantage of fundraising conditions to facilitate a substantial jump in fund size. What’s unclear though is whether its extra $8 billion will be used to pursue a much larger number of deals, or to harpoon substantially larger assets, than initially intended. In this frenetic, and expensive, deal environment, investors are increasingly appearing less concerned about the consistency of a firm’s strategy, and more with its ability to capture opportunities where it sees them.

How much have EU spent?
Trade body Invest Europe published its H1 activity report yesterday. Here’s what you need to know:

  • Firms deployed €57.3 billion, the highest first-half total to date.
  • That total was buoyed by a record €17.5 billion of growth equity and €10.2 billion of venture capital.
  • Buyouts, however, fell to their lowest six-month total since H2 2017.
  • Exits were up 63 percent from the same period last year at €16 billion, though still the second lowest H1 total in eight years.
  • The France and Benelux region had its best-ever six-month period by deal value at €16.1 billion.
  • The €16.4 billion deployed in the UK and Ireland was its second-best on record, just short of the €16.7 billion high posted in H2 2019.

Family planning
Keen to work for a family office? You might want to head for Asia. Family offices in the region aren’t currently known for paying well. In fact, a survey published this week from Campden Wealth and Raffles Family Office found that CIOs in Asia receive a base salary that is around half of what their counterparts in North America earn. Why then does Side Letter suggest heading East? It turns out that institutions in this region have big external hiring plans and are expected to start paying more than their peers in the West to compensate for a shortage of available talent in the region. More in our coverage of the report here.

Essentials

N-er-J transition
The New Jersey Division of Investment is one of a growing number of institutional investors getting serious about energy transition. Its endeavours so far include an upcoming review of its portfolio’s energy impact, an energy framework for its private portfolio companies to follow and a questionnaire for its PE GPs to complete. Energy transition is a strategic priority for NJ’s PE division, which also proposed in the meeting a $600 million commitment to the Brookfield Transition Fund, including a $300 million separately managed account. The energy issue is only likely to gather steam among PE investors as extreme weather events and COP26 bring the climate crisis to the fore.

BX taps Alibaba
Blackstone has appointed Lixian Wang, a former senior investment manager at Chinese multinational Alibaba Group, in Hong Kong, according to public filings. Wang spent four years at Alibaba and was previously an associate at Bain Capital in Hong Kong. Her role at Blackstone is unclear. Alibaba has an active corporate venture capital arm, having completed at least 133 investments across e-commerce, logistics, consumer and artificial intelligence since 2008, according to research from Morgan Creek Capital Management.


Today’s letter was prepared by Alex Lynn with Michael Baruch.