He said it

“Over the past few years, the board has been selling down a number of illiquid exposures due to high pricing and to increase portfolio flexibility. Our dynamic approach has been extremely valuable in helping us prepare for and navigate a historic dislocation brought about by covid-19.”

Peter Costello, chairman of Future Fund’s board of guardians, said in a portfolio update secondaries sales have helped position the Australian SWF to weather the global health crisis.

Just happened

Stop or go? LPs divided

There is no unified “pull-back” or “push-forward” as the investor community deals with the coronavirus crisis, says a survey by the private fund group at investment bank Houlihan Lokey. Some 16 percent of investors have put their PE programmes on hold, adopting a wait-and-see approach until the pandemic abates, while at the other end of the spectrum 22 percent are open for business, “unfazed” by the current market conditions or “looking to capitalise” on a market opportunity. The rest remain cautious, either still assessing the impact or limiting their investment activity. Endowments and foundations are more likely to be “go”, while family offices are more likely to have stopped.

Where is dealflow booming?

In the latest episode of PEI’s Spotlight podcast, we take listeners on a mini tour of the world to find out which private markets strategies are experiencing a boom in dealflow (spoiler alert: healthcare investing, VC, agri, special sits and Chinese PE are all front-runners). Plus, we look into GPs amending fund documentation. Says Chris Witkowsky, editor of sister title Buyouts: “GPs are looking for more flexibility in their existing funds to do things like buy the debt out of existing portfolio companies [and] expand the scope of their investment mandate to seize on opportunities created by the downturn.”

He said it

“Much like the rest of the way we’re all working, everybody was pretty adjusted and cool about that.”

On Blackstone’s Q1 earnings call, co-founder and chairman Stephen Schwarzman recounted a planned due diligence meeting for a fund that was expecting up to 150 LP attendees, which was switched to a Zoom meeting.

Essentials

Making lemonade. “Business as usual” is a phrase that’s unlikely to be heard for quite some time. But as coronavirus wreaks havoc on business activity worldwide, some PE-backed companies have adapted their core focus to make the most of a bad situation; we’ve curated a list of five.

Legal special. In PEI’s annual Legal Special – out now – we take a deep dive into why a downturn could come with a big legal bill. Law firms tell us they’re gearing up for an increase in disputes on both sides of the Atlantic when managers or assets come under pressure. Private equity firms don’t often end up in court, but many of the situations where they do involve them undertaking some form of restructuring transaction in a portfolio company that results in disgruntled lenders or investors – and as restructurings will likely increase in a downturn, so too could these disputes. Also be sure to check out the four need-to-know legal issues for 2020, including data considerations during due diligence.

Tike-hire. Tikehau Capital has hired the former Asia general manager for National Australia Bank, Neil Parekh, to lead the business in Australasia. Press release here.

Constitution closes. Boston-based Constitution Capital Partners has raised $1 billion for its fifth fund (including separate account mandates), the firm said this morning. Per the press release: “As with its predecessor fund, Ironsides V will focus on investments in primary funds with $400 million to $2 billion in commitments and direct investments in companies with enterprise values between $100 million and $1 billion.”

Infra a treat. Subscribers to Infrastructure Investor can now get a weekly dose of extra insight in its snappy new email The Pipeline.

Dig deeper

Pensionskasse reduces PE target. Pensionskasse Bühler AG Uzwil plans to reduce its target allocation to private equity from 5.57 percent to 4.0 percent, a contact at the institution informed Private Equity International.

For more information on Pensionskasse Bühler AG Uzwil, as well as more than 5,900 other institutions, check out the PEI database.

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Today’s letter was prepared by Toby Mitchenall, Isobel Markham, Adam Le, Rod James, Carmela Mendoza and Alex Lynn.

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