Side Letter: NYCRS’ Salovaara to depart; BlackRock’s crystal ball; Blue Owl’s Credit Suisse hire

Private equity veteran Katja Salovaara is leaving the $271 billion New York City Retirement System. Plus: What BlackRock is expecting from private markets in 2022, and Blue Owl taps Credit Suisse's private fund group. Here's today's brief, for our valued subscribers only.

They said it

“Partnership is an overused word and an underappreciated opportunity in private markets. I hope 2022 is the year that LPs begin to realise the benefits of joining together to pursue strategies like co-investments and seeding that benefit directly from organised collaboration”

Steve Moseley, head of alternatives at Alaska Permanent Fund Corporation and board member at GP seeding business Capital Constellation, tells Private Equity International there is strength in numbers within the private markets.

Just happened

Katja-later, NYCRS
Katja Salovaara, a senior investment officer who has been helping to deploy the $270.7 billion New York City Retirement System’s private equity co-investment programme since the summer, is leaving the pension system, Side Letter has learned. Salovaara, who joined NYCRS in 2019, will depart at the end of next week and is understood to be joining an as yet undisclosed firm in March. An industry veteran who spent almost two decades at Finnish insurer Ilmarinen before joining NYCRS, Salovaara helped oversee a PE portfolio that has grown almost 60 percent since she joined.

Her departure comes eight months after former PE head David Enriquez left the pension to join Rothschild, and one month after former chief investment officer Alex Doñé also left the institution. NYCRS’ private equity unit is led by Eneasz Kadziela, who was promoted to the position in September. The pension wants to deploy an initial $500 million via its co-investment strategy over two to four years, PEI reported last year.

BlackRock’s crystal ball
In keeping with this week’s predictions theme, BlackRock has made a number of forecasts for the year ahead. Here are some takeaways from the firm’s latest private markets outlook:

  • Blurred lines: Expect more competition from public equity managers that are “building in sleeves to hold private assets” and hedge fund managers that are back to pursuing private deals. The growth equity space is where activity is converging.
  • Fair weather investments: Healthcare, technology and the transition to a sustainable economy will gather even greater momentum in the year ahead. Climate-related investments, in particular, are ones to watch.
  • Coming of Asia: Despite geopolitical and regulatory headwinds, China continues to offer strong long-term opportunities in sectors untouched by recent controversy. South Korea, Australia and Japan are also on the up. 

Here comes the Sun
Blue Owl has tapped a former Credit Suisse director for its new Hong Kong office, Private Equity International reports this morning. Eric Sun joined the GP stakes and direct lending giant in January, having previously spent just under three years in Credit Suisse‘s private fund group covering PE, private credit and infrastructure, according to LinkedIn. Sun is reunited with James Lee, former head of Asia distribution for Credit Suisse, who now serves as head of Blue Owl’s institutional sales team in Asia. Lee departed Credit Suisse in 2019 to launch Ascentium Capital, a Hong Kong-based placement firm that was acquired by Blue Owl in December to bolster its investor relations capability in the region.

Essentials

Bad advice?
Could PE firms be encouraging misconduct at the financial advisory firms they buy? Academic research suggests ‘yes’. Instances of misconduct at advisory firms rose 147 percent after a buyout, with the strongest cases occurring at firms whose assets under advisement grew most quickly after the entry of the sponsor, according to research from the University of Oregon. Misconduct was also stronger among advisers that cater to retail customers.

The advisory firms are not innately shoddy, the paper concluded. In fact, when PE firms look for acquisition targets in the financial advisory space, they prioritise groups that display lower-than-average historic levels of misconduct. “Overall, our results suggest that PE firms target advisory firms with a relatively clean record in terms of misconduct and operate their advisory business more aggressively after the takeover to maximise profits,” the paper said. “As such, they suggest a tension between financial advisory firms’ profit motive and ethical business practices, especially when clients are financially unsophisticated.”

According to investment bank Echelon Partners, there were 223 deals targeting investment advisers in 2021, more than three times the number five years ago. At a time when PE is facing greater scrutiny from politicians and the mainstream media, GPs may do well to ensure such deals are a win for all concerned.


Today’s letter was prepared by Alex Lynn with Adam LeRod James and Carmela Mendoza