Side Letter: PE’s 24-hour reporting burden; Abraaj’s reckoning; Thrive’s latest Eaton hire

Private equity firms could face a tight reporting turnaround under the first new disclosure rules for PE and VC since the Dodd-Frank era. Plus: Another former Eaton executive has resurfaced at Thrive Alternatives and Dubai's regulator has slapped Abraaj founder Arif Naqvi with a hefty fine. Here's today's brief, for our valued subscribers only.

They said it

“The next round of funding for late-stage private companies is going to be harder to come by”

David Ben-Ur, CIO of Blackstone Alternative Asset Management’s principal solutions and individual investor solutions businesses, told delegates at Tuesday’s iConnections conference that a rising rate environment will make growth investing a challenge.

Just happened

A PF-ect reporting system?
Gary Gensler’s Securities and Exchange Commission has proposed the first new disclosure rules for private equity, venture capital and hedge funds since the Dodd-Frank era. Under the proposals, PE advisers would have just one business day to tell regulators about events such as the execution of GP-led secondaries transactions, clawbacks, GP removals, termination of a fund’s investment period or termination of a fund, affiliate title Regulatory Compliance Watch reports (registration or subscription required).

Among other things, the proposed rules would:

  • Lower the AUM threshold that requires large PE funds to file a Form PF from $2 billion in AUM to $1.5 billion in AUM
  • Amend a section of Form PF to ask PE advisers questions “regarding fund strategies, use of leverage and portfolio company financings, controlled portfolio companies and CPC borrowings, fund investments in different levels of a single portfolio company’s capital structure, and portfolio company restructurings or recapitalisations”.

This move opens what may well be a year of living dangerously for private funds, with Gensler and his Democratic allies making clear their ambitions to rein in the industry. The Commission is also weighing changes to the definition of accredited investors and a suite of “enhanced disclosures” for advisers, from VC funds to family offices. Watch this space.

Abraaj’s reckoning
Arif Naqvi, founder of the collapsed emerging markets giant Abraaj Group, has been fined $135.6 million for his role in the ordeal, according to a Thursday statement from the Dubai Financial Services Authority. The regulator also imposed a $1.15 million fine on former chief operating officer Waqar Siddique. The pair have disputed the DFSA’s findings and referred the decision notices to the Financial Markets Tribunal. You can read the DFSA’s notice in full here.

Naqvi built Abraaj into one of the most prominent emerging markets firms in the world, and was one of the loudest proponents of impact investing. But it all collapsed when investors complained that their money had gone missing. Affiliate title New Private Markets last year caught up with Simon Clark, a veteran journalist and author of The Key Man, a book that details Abraaj’s downfall, in a special edition of PEI‘s Spotlight Podcast. Listen here.

Meetin’ after Eaton
Thomas Yu, Eaton‘s former Hong Kong head, has rejoined some former colleagues at newly launched Thrive AlternativesPrivate Equity International reports this morning. Yu, whose departure we first noted in November, will provide LP coverage in the region, with a particular focus on Australia. He is one of several high-profile executives that have left Eaton in recent years, at least six of whom have resurfaced at Thrive. The latter was launched in September by co-chief executives Gianluca D’Angelo, Eaton’s former head of EMEA, and Jackson Chan, former co-head of Asia.

They did the math

Strong tech-nique
With a great many firms considering themselves among the industry’s best performers, how do LPs separate the wheat from the chaff? HEC Paris Professor Oliver Gottschalg has a solution, publishing an annual list of PE’s most successful funds. This year’s HEC–Dow Jones Private Equity Performance Ranking, which considers the relative and absolute returns of 517 PE firms and the 991 funds they raised between 2008 and 2017, identified tech enthusiast Accel-KKR as the standout performer.

Tech and software specialists seemed to be a recurring theme in this year’s ranking, with Francisco Partners – the top-ranked firm last year – Thoma Bravo and Hg also among those named in the top 20. Here are the other firms that made the grade.

Essentials

KKR names Todd its top private wealth bod
KKR has named Todd Builione as global head of private wealth, according to a statement. In the newly created position, Builione will be tasked with further expanding KKR’s private wealth distribution platform in its bid to access more individual investors. He joined KKR in 2013 and was most recently president of the firm’s credit and markets business. The promotion is timely – KKR has identified private wealth as an area of strategic growth and expects inflows from the channel to make up between 30 percent  to 50 percent of annual fundraising over time, per its third-quarter earnings call in November. KKR manages approximately $50 billion in private wealth assets and expects its 40-strong team to triple over the near term.

Dig deeper

Institution: Chicago Policemen’s Annuity & Benefits Fund
Headquarters: Chicago, US
AUM: $3.01 billion
Allocation to alternatives: 12.03%

Chicago Policemen’s Annuity & Benefits Fund has approved $50 million in commitments across two private equity funds, according to recently released materials from an October 2021 investment committee meeting.

The public pension has made commitments of $25 million each to Mesirow Private Equity VIII-B and Adams Street Co-Investment Fund V. As has been commonplace for any CPABF investment, these funds were chosen from a four-fund shortlist that derived from an earlier RFP issued by the pension.

CPABF allocates $69.14 million to private equity investments, comprising 2.3 percent of its total investment portfolio. The public pension has a target allocation to private equity of 7 percent.

CPABF’s recent private equity commitments have focused on diversified vehicles that invest in North America and Western Europe.

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


Today’s letter was prepared by Alex Lynn with Bill MyersCarmela Mendoza and Michael Baruch