Side Letter: Partners Group downgrade, EQT’s second bite, CD&R’s summer read

Global lockdowns are prolonging some firms' fundraising efforts; rollover co-investments amid covid-19; inside a defined contribution PE product. Here's today's brief, for our valued subscribers only. 

He said it

“[Private equity] monitors performance almost every day, needs to cash out within two or three years, show a profit to stakeholders and move on. I wouldn’t say that’s good for building anything, and certainly not the famous game of rugby globally. I’d say you need patient capital; capital which is prepared to invest from the grassroots up.”

Australian billionaire Andrew ‘Twiggy’ Forrest tells Sky Sports that private equity wouldn’t help the growth of rugby union

Just happened

Partners Group updates

Partners Group this morning downgraded its expected investor commitments for the year by $3 billion to between $12 billion and $15 billion due to the coronavirus pandemic, co-chief executive André Frei (pictured) said on the firm’s latest AUM call. Here are some other takeaways:

  • There were $8.3 billion in new commitments from investors in the first half of the year, while investments totalled $4.3 billion. The majority of investments are in direct transactions ($3.1 billion) and the remainder in portfolio assets ($1.2 billion), which include secondaries investments and primary commitments.
  • Distressed sellers: Frei said it’s “too early for distressed sellers to transact on their portfolios” and this isn’t likely to happen until a year or so from now.
  • On US defined contribution efforts: This will translate into demand for such offerings in years, rather than months and quarters, according to Frei. The firm is talking to “hundreds of plan sponsors and DC consultants” but it will take time for investors to become familiar with the asset class and offerings, he added.

EQT’s rollover

If you buy a company and, under your ownership, its revenues double, EBITDA quadruples and employee headcount grows by 50 percent, chances are you’re thinking this is a pretty good asset to hold on to. So is the case for EQT, which this morning said it was selling enterprise software provider IFS out of its 2015-vintage Fund VII to successor funds VIII and IX. TA Associates is also acquiring a minority stake in the company valued at more than €3 billion. Price setting – always a contentious issue – was by TA, which submitted a minority (and overall better) bid that would value the company higher than bids, even those for 100 percent of IFS, according to a source familiar with the deal. In an investment environment where so much is still unknown, taking another bite of the apple via “rollover co-investments” makes increasingly more sense for managers. GPs should handle them with extreme care, as we explored in this piece.

Fintech adapts to the covid age

The July/August issue of our magazine explores the world of fintech investing, with in-depth features and expert commentaries on what’s next for this maturing market. First up, we take a look at how covid-19 and the associated lockdowns have hastened existing fintech trends, such as the use of digital tools for banking and transactions. Fintech M&A has dropped considerably in the year to March 2020, per a Houlihan Lokey report, but there could be opportunities ahead to deploy capital into the sector “at a steep discount to recent prices”.

Talking sub lines with the pros

Sister title Private Funds CFO editor Graham Bippart (above right) appears on Cadwalader, Wickersham & Taft’s most recent “Fund Finance Friday: Industry Conversations” webcast with Michael Mascia (above left). He discusses his recent subscription credit line series, which also features interviews with Fund Finance Partners’ Zachary Barnett and Whitney Namm Pollack of Project Sunshine. You can find the whole sub line series, “Subscription credit: A shifting landscape”, on this page, or by heading to


Inside Pantheon and Partners Group’s US DC products

Pantheon and Partners Group are two firms that have developed products designed for inclusion in 401(k)s, but what’s in their offerings? Side Letter understands the firm’s DC products are offered as collective investment trusts, with evergreen PE funds as their largest component. Pantheon’s CIT invests in PE via secondaries, co-investment and primary investments, and includes a portion allocated to liquid securities. Find out more on where they invest and how here.

Summer reads: CD&R’s David Novak

Side Letter recently caught up with David Novak, co-president and head of Europe of Clayton, Dubilier & Rice, who recommends US bestseller White Fragility by sociologist and academic Robin DiAngelo. Published two years ago, the book digs deep into why institutional racism is America’s deepest problem.

Dig deeper

Institution: Los Angeles County Employees’ Retirement Association
Headquarters: Pasadena, US
AUM: $57.76 billion
Allocation to alternatives: 29.3%

Los Angeles County Employees’ Retirement Association equity committee approved its plan to expand sources of dealflow for co-investments, according to a contact at the public pension.

LACERA plans to take advantage of recent disruptions in the market caused by the covid-19 pandemic and is hoping to make up for the potential fall in demand for private equity investments and co-investments, according to its July 2020 meeting documents.

For more information on LACERA, 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.

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