Just happened
The bearish side of the Beaver State
Oregon’s public pensions, which together have about $22 billion in private equity, are planning up to $3.5 billion of new commitments in 2019, writing up to 15 cheques of between $100 million to $500 million.
GPs should anticipate some tricky questions in order win a piece of that capital: the Treasury’s annual PE review outlines its concerns about the current state of the private equity market and they include: a “wholesale focus on executing add-on acquisitions as a way to create value”; “GPs’ perverse incentive to deploy the current fund quickly and raise the next before the cycle turns”; and “proposals to recap more nascent partnerships in ways that start to break down GP-LP alignment.” Full story to come onPEI.
The rise of private wealth
Further evidence in Brookfield‘s results that individual investors are a rich source of private equity capital for those who can access them: 10 percent of the $26 billion the firm raised last year came from individuals (most of it going to its latest real estate fund). It is geared up for more – it has 10 relationship managers who work with HNWIs.
Another firm going big on private wealth is Blackstone. When we caught up with Joan Solotar (pictured), who runs the firm’s private wealth unit, late last year it had more than $60 billion in individuals’ money and was contributing around 15 percent of each flagship fund raised. You can read about how they and other big firms are doing this here.
By the way, Brookfield has made a massive $3 billion GP commitment to its latest flagship private equity fund.
Playing defence
S&P Global Market Intelligence asked more than 1,000 “PE professionals” at the end of last year where they are focusing their investment efforts. In a sign that private equity pros are tilting their activities towards more recession-proof businesses, consumer discretionary is down while consumer staples and healthcare are up (chart below).
Essentials
Hollyport rising. The secondaries fundraising bonanza is not just for the largest players. Hollyport Capital, which specialises in acquiring mature fund assets, is back in market seeking $750 million for its seventh fund,Secondaries Investor reports. Predecessor Fund VI hit its $500 million hard-cap in October 2017 after eight months on the road. Not bad for a firm whose first fund, of 2007-vintage, was just £6 million ($7.74 million; €6.9 million) in size.
Happy Gilmore. European PE shop Investindustrial has tapped industry veteran Billy Gilmore as a non-executive director. Gilmore joined Swiss advisory firm AXON in January to bolster its placement agent capabilities and originate new secondaries transactions. He knows Investindustrial well having committed to several of its funds during his 18-year spell at Aberdeen Standard Investments, where he was primary funds head for Europe.
Data day
Want more data? There are 6,700 institutions in our database including Brookfield, Blackstone and Oregon State Treasury
They said it
“While all of this has a place in a maturing private equity industry, the aggressive pace of innovation may suggest that secondary buyers have more appetite for deals than the current market can satisfy.”
The Oregon State Treasury lists the growing number of fund restructurings as one of its “signals of late cycle behaviour”.
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