Side Letter: Neuberger Berman’s back story, SoftBank’s fund structure, September’s biggest funds

Mention Neuberger Berman and Dyal Capital Partners immediately springs to mind, but what's the back story of the $90 billion alternatives-focused parent? Find out below in today's brief, for our valued subscribers only.

Just happened

Anthony TrutoneInside Neuberger Berman

Last but certainly not least in our Deep Dive on stealth firms shaking up private equity is Neuberger Berman. Known for its GP stakes business Dyal Capital Partners, the firm’s alternatives arm is led by Anthony Tutrone (pictured), a 33-year veteran of the business. The capital amassed by NB Alternatives in the last decade – that’s $90 billion in AUM as of June – has allowed the firm to invest on a scale that’s out of reach for many in the industry. Find out more about the firm’s back story, its ownership structure and its multi-strategy approach here.

Deconstructing the Vision Fund

Axios’s Dan Primack has dug into the complexities of the SoftBank Vision Fund structure, focusing on the 7 percent annual coupon external LPs have been promised on invested capital. A shortage of distributions has meant that thus far the bulk of the coupon payments have come from capital calls – meaning the LPs are essentially paying themselves. Primack takes a look at what could happen if the fund can’t meet its future coupon obligations.

EMPEA sustainable investing takeaways

PEI dropped in on EMPEA’s Sustainable Investing in Emerging Markets Summit in London yesterday. Here’s what we heard:

  • Measurement and disclosure of impact and financial performance are important, but so is benchmarking. GPs need to compare where they are with where they want to be, as well as compare themselves with their peers in impact investing.
  • More capital is needed – and mainly from large pools of institutional capital – to “really move the needle in Africa”. Most institutional LPs don’t have the time, bandwidth or teams available to go into the details of investing in the region.
  • Responsible exits should be top of mind; LPs and GPs need to safeguard impact beyond the investment period.

Essentials

(In)sure thing. Private equity firms can expect to see more insurers on their doorstep. The asset class, along with real assets, will be the top beneficiary of growing appetites for private markets among insurance companies over the next 12 to 24 months, according to research from BlackRock. Almost 40 percent of insurers plan to increase their PE exposure, while just 11 percent expect to reduce their allocations.

Texas TRS’s partnerships are dollars and sense. Teacher Retirement System of Texas‘s private markets strategic partnerships with KKR and Apollo have hit a rough patch, delivering lower returns for the year ended 30 June and missing the pension plan’s target. TRS isn’t fazed though – the two firms are “thought leaders” who offer insight, first calls on co-investments and an opportunity for TRS staff learn their processes, managing director of strategic partnerships and research Michael Pia told the pension’s latest board meeting.

Inside tip

The annual British Private Equity & Venture Capital Association Summit is on in London tomorrow. PEI news editor Adam Le and senior reporter Carmela Mendoza will be there – drop us a line if you fancy catching up.

We did the math

September superlatives. The 10 largest funds in September raised more than $35 billion between them, more than triple the amount gathered by the 10 largest capital raises in August.

A chart showing the 10 largest funds in September 2019Dig deeper

Oregon’s alts breakdown. Oregon State Treasury announced $850 million worth of commitments made on behalf of the Oregon Public Employees Retirement Fund, including $250 million to Veritas Capital Fund VII. Here’s a breakdown of the $74.49 billion US public pension’s current alternatives exposure. For more information on Oregon State Treasury, as well as more than 5,900 other institutions, check out the PEI database.

Chart showing alternative asset breakdown of Oregon State TreasuryHe said it

“Our models for investing and making capital decisions are time based and so we discount our children and grandchildren and prioritise the short-term. We are going to have to relax those time-based assumptions if we want to address these problems.”

Sean Hinton of the Economic Justice Program and chief exec of the Soros Economic Development Fund, speaks at EMPEA’s Sustainable Investing in Emerging Markets Summit in London on Tuesday.


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Today’s letter was prepared by Isobel MarkhamAdam LeCarmela MendozaAlex Lynn and Preeti Singh.


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