Side Letter: LPs spot inflation opps; Blue Owl’s next steps; CPP’s vindication

LPs discuss the opportunities that can arise from inflation. Plus: What next for the newly formed Blue Owl Capital and who's left at the helm of Apollo Global Management? Here's today's brief, for our valued subscribers only.

They said it

“Every person – including potential asset managers – you meet, ask yourself if you would enjoy having two beers with this person, and if you would be willing to have them watch your puppy over a weekend.”

Christopher Schelling, long-time LP and director of alternative investments at Venturi Private Wealth, shares a novel approach to manager selection on LinkedIn.

Just happened

LPs on inflation risk
Investors seem unperturbed by the spectre of inflation. On the contrary, LPs at PEI’s Women in Private Markets Networking Day last week pointed to the possibilities that can arise from volatility in areas such as private debt, distressed assets and cyclical industries like industrials. As Denise Le Gal, chair of the UK’s Brunel Pension Partnership, noted: “We shouldn’t be afraid of inflation or volatility because it does create opportunities.” More here.

Not everyone in the industry is as optimistic about rising inflation, with Blackstone’s chief operating officer, Jon Gray, last month calling it the “major risk that’s out there today“.

Not so Blue Owl
With the protracted Dyal/Owl Rock saga finally having reached a conclusion, our colleagues at Buyouts caught up with the new entity’s co-president Michael Rees to discuss Blue Owl Capital’s next steps (registration required). Here are some key takeaways:

  • “Conversations at the top of the house” are likely to result in new funds and platforms, which may include co-investments, growth capital and secondaries.
  • Legal proceedings had no impact on Dyal’s LPs, with the deal creating Blue Owl receiving “more than 99 percent positive votes”.
  • The firm will tap into a smaller community of LPs, such as high-net-worth investors.
  • Market anxiety about Democratic tax plans, which might include hikes in capital-gains rates and taxation of carried interest, is expected to bolster GP stakes dealflow.

PEI has put together this handy profile of the individuals left at the helm of Apollo Global Management in the wake of co-founder Josh Harris’s decision last week to step away from day-to-day activities at the firm. His exit is likely to happen in the first quarter of next year.


India’s covid crisis
The US VC community is banding together to help fight India’s covid crisis, our colleagues at Venture Capital Journal report (registration required). Ashu Garg, general partner of Palo Alto firm Foundation Capital, for example, has co-launched OneMoreBreath, a non-profit organisation seeking $3 million to provide 2,000 hospital beds in India, each of which could save 20 lives over the next three months. Click here to donate.

CPP’s windfall
CPP Investments just had a bumper year for PE. The C$497.2 billion ($412 billion; €340 billion) pension reported a 34.4 percent return for the asset class in FY 2021, up from 6.2 percent in the prior fiscal year, according to its latest annual report. The windfall vindicates its 2018 decision to integrate the once-divided areas of direct investing, funds, secondaries and Asian investing into one amped-up PE platform (registration required).

Dig deeper

LP meetings. It’s Monday, so here are some LP meetings to watch out for this week.

25 May

26 May

27 May

28 May

Today’s letter was prepared by Alex Lynn with Carmela Mendoza.