Side Letter: Rainmakers’ carry crunch; GP stakes talent tussle; Apollo’s aisle-crosser

Senior fundraisers have seen a sharp drop in bonuses and carry in what is proving a tough year for many. Plus: The global tussle for GP stakes talent has begun with a coup for Eaton Partners; and Apollo nabs a top public exec. Here’s today's brief, for our valued subscribers only.

Just happened

IR carry: Down 25% in 2022 (Source: Getty)

How much are EU being paid?
It’s no secret that fundraising this year has been a major challenge. While that dynamic will leave some firms with less capital to deploy, it’s also hitting senior fundraising talent where it hurts most: their pocket. That’s according to the latest Europe and Africa Private Capital Compensation Survey from Heidrick & Struggles, which found a meaningful decrease in bonus size and carry for investor relations and fundraising executives at the managing partner or partner level in 2022. Their mean carry across all funds fell from about €13.3 million in 2021 to €9.93 million this year; the mean bonus also dropped from €697,020 to €277,800 over the same period.

“It is possible that some firms have not hit fundraising targets, leading to reduced bonuses, and some LPs have indicated there may be some big fundraising failures in 2023,” the report noted. “We have seen that the demand for general fundraising talent has fallen off in parallel with an increase in demand for specialists who can expand or create new distribution channels in the wealth or insurance company spaces.”

A decline in compensation is probably unlikely to spark a raft of moves at the senior level, where jumping ship could mean surrendering a still-substantial chunk of carry. Still, those in junior positions could consider this changing landscape an opportunity to pursue specialised roles, such as the burgeoning private wealth arena, that could prove more financially rewarding in the long term.

GP stakes talent tussle
As the universe of GP stakes firms grows, it stands to reason that so too will demand for executives with experience in this niche corner of the private markets. Case in point: Eaton Partners on Wednesday said it had tapped a former co-founder of abdrn‘s GP stakes unit, Bonaccord Capital Partners, to lead its GP stakes advisory business. Charles Korchinski joins as a director in New York after five years at Bonaccord where he led investment research and sponsor origination efforts. Korchinski committed approximately $1.5 billion of capital to nine portfolio companies at Bonaccord, Eaton said. His primary focus at Eaton will be advising GPs on minority and majority stake sales.

For someone as senior as Korchinski to move to another GP stakes-related position suggests competition for GP stakes talent could be starting to heat up. With more firms launching funds to acquire positions in other GPs each year, we could likely see more lateral moves in the months ahead.

Apollo’s aisle-crosser
Seeing an investment professional at a public institution crossing the aisle to join the private investment management industry is nothing new. The latest person to join this club is Shawn Wooden, State Treasurer of Connecticut, who is joining Apollo Global Management as chief public pension strategist for the firm’s institutional client and product solutions group. Wooden will retire from his public role in January, according to a statement.

PEI data shows that Connecticut Retirement Plans and Trust Funds is an LP in Apollo’s most recent flagship, Apollo Investment Fund IX, having committed $125 million. In Wooden’s case, both he and Apollo are going to “comply with all relevant restrictions”, according to an Apollo spokesperson.

When it emerged earlier this year that Alex Doñé, who oversaw $265 billion of assets for the five pensions that comprise the New York City Retirement Systems, was joining Platinum Equity, we noted that it was right to scrutinise the relationship between public pensions and investment mangers in the interest of the long-term health of the private markets industry. Our thoughts on this haven’t changed.

Essentials

Asante abroad
Global placement agent Asante has set up shop in Munich, per a statement. The office will be led by director George Lyons, who was previously based in London. He will be tasked with hiring additional individuals with knowledge of the German and European markets. “With GPs facing a tougher fundraising environment than ever before amid fundraising compression and market uncertainty, ensuring we’re able to continue generating successful outcomes by remaining very close to our stakeholders is vital,” said Asante co-founder Warren Hibbert.


Today’s letter was prepared by Alex Lynn and Adam Le.