Side Letter: LPs worry over fiduciary duty, Permira’s stake sale, Thakran’s Asia plans

What's keeping LPs up at night; Goldman Sachs' latest PE stake acquisition; L Catterton Asia's former chairman plots next move. Here's today's brief, for our valued subscribers only. 

He said it

“We have experienced a lot of discussions but relatively few handshakes due to higher bid-ask spreads compared to prior periods.”

On the firm’s AUM call this week, Partners Group co-chief executive David Layton says the PE market has been largely on pause in recent months.

Just happened

LPs fret fiduciary duty 

Limited partners are worried about what they perceive as an increasing number of GPs limiting or restricting their fiduciary duty to the fund, according to a survey by the Institutional Limited Partners Association. ILPA says fiduciary duties are being “eroded across the industry” – 71 percent of LPs surveyed have seen them contractually modified or eliminated in the past year in at least 50 percent of the funds they backed. Sister title Buyouts’ Chris Witkowsky has the story.

Permira strikes Gol, man

Permira has become the latest firm to monetise itself at the GP level with the sale of a minority stake to Goldman Sachs‘ Petershill unit, Reuters is reporting. The UK buyout firm has sold a less than 10 percent interest in itself, valuing the firm at more than €5 billion, and will use the proceeds to finance expansion in PE. Permira is one of a handful of private equity giants with a relatively narrow focus: PE, growth and credit.

Thakran’s next move

Ravi Thakran, former managing partner and chairman at consumer giant L Catterton Asia, has aspirations to launch a PE platform targeting brands in emerging Asia. Thakran is open to partnering with existing firms boasting complementary strategies and has the support of several former colleagues, he told PEI. Thakran founded L Capital Asia in 2009 before its merger with US consumer firm Catterton in 2016. He left as part of a string of senior departures facilitated by the Singapore-headquartered unit changing the key person clause on its 2017-vintage L Catterton Asia III in 2019, as PEI reported last month.

Essentials

Measuring alpha in dollars

Private equity firms could see a big shift in their fees and compensation structure if a metric developed by Landmark Partners and the Public Employees Retirement Association of New Mexico is anything to go by. The pair’s excess value method – outlined in a yet-to-be published report – aims to help investors calculate the dollar value of excess returns a PE firm creates over a public market alternative. Could this finally be the answer to criticisms over difficulties in measuring the industry’s performance? Stay tuned.

Summer reads: Altamar’s Pilar Junco

Side Letter caught with up Pilar Junco, chief strategy and client officer at Altamar Capital Partners and former Blackstone wealth management veteran, who has just finished Educated by Tara Westover, which she loved. “Her story of personal growth and how she fought for an education is very unique. Plus her writing style is rich and colourful. I could not put it down.”

Dig deeper

Institution: San Francisco Employees’ Retirement System
Headquarters: San Francisco, US
AUM: $25.9 billion
Allocation to alternatives: 26.4%

San Francisco Employees’ Retirement System announced commitments of $50 million each to IVP XVII and K5 Private Investors and $75 million to SSG Secured Lending Opportunities III.

The public pension has an 18 percent target allocation to private equity that currently stands at 21.5 percent. As illustrated below, SFERS tends to favour commitments to North America vehicles and the diversified sector.

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


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


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

To find out how, email peisubs@peimedia.com, or call our team:

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