Side Letter: Silver Lake alum returns, buy-and-build delivers, magazine downloads

Welcome to September: as a back-to-school bonus, you can download three PEI publications today. Also: discover our 2020 ranking of the largest secondaries firms in the world, and much more. Here's today's brief, for our valued subscribers only.

They said it

“We’re convinced that if we want to create real change for a more sustainable future, global capital needs to be directed towards more sustainable investments.”

Plant-based milk company Oatly responds on Twitter to customers angry at it taking investment from Blackstone.

Just happened

Happy download day!

Subscribers to PEI can now download the September edition of the magazine here, as well as two special reports on Africa and the US mid-market. Our main edition contains our annual secondaries special, which, among other things, features our proprietary list of…

Secondaries’ top fundraisers

Ardian again tops our SI 30 ranking. The French giant leads a pack of firms that have raised $256.84 billion between them over the last five years to deploy into a secondaries market that has evolved from simply acquiring LP stakes to much, much more.

That market is in a state of calm before the storm; there’s as much as $183 billion in dry powder for the strategy, and with this year’s crisis pushing out GPs’ exit horizons, secondaries buyers with capital to deploy are anticipating a dealflow deluge.

Some of that secondaries capital will likely also be used to create spin out firms, like Longshore Capital Partners. Longshore comprises a duo from lower mid-market firm Lasalle Capital, who just spun out with capital from secondaries firm Spring Bridge Partners. Adam Le has the details here.

Luminate returns

Scoop: growth buyout firm Luminate Capital Partners is back on the fundraising trail with its third fund, Side Letter has learned. The firm, set up by former Silver Lake managing director Hollie Haynes, is seeking $700 million for its latest offering, 75 percent larger than its predecessor 2018 predecessor. Luminate closed its oversubscribed debut fund in 2017 with more than $265 million of capital commitments. The firm declined to comment on fundraising.


Awaiting an impact

Japanese LPs still have some way to go before fully embracing impact investing, a virtual conference has heard. Speaking in a teaser session for PEI’s inaugural Responsible Investment Forum: Tokyo, Sayaka Takatsuka, senior director at impact manager Shinsei Corporate Investment, highlighted four priorities for domestic investors with an interest in ESG, including the need to establish an internal definition for ESG, deciding how best to measure impact and how to disclose those results publicly. The full video can be accessed here.

Evidence of value created

Buy-and-build strategies are more than just “window dressing”, finds a study by researchers at Netherlands’ Tinbergen Institute. The study, which analysed 818 platform investments and 1,346 follow-on acquisitions completed from 1997-2016 in seven major European PE markets, found “improvements of sales and profitability of these combined entities and argue[s] that these improvements are consistent with the operating synergy interpretation and not the result of inorganic acquisitive growth”.

Tale of two commentaries

Personal finance commentator Merryn Somerset Webb writes in the Financial Times (paywall) about the shift from public to private markets, citing Morgan Stanley’s in-depth study into the topic. Her take: “The best companies everywhere will probably remain in private hands for some time. For the world’s investors, the promise of a debt-fuelled something in private equity is better than the certainty of almost nothing elsewhere.”

Elsewhere in the same publication, columnist Jonathan Ford writes that private equity fees are too high. As one reader comment puts it: “Hard to understand what the point of this article actually is.”

Dig deeper

Institution: SEMA
Headquarters: Seoul, South Korea
AUM: 6.66 trillion Korean won ($5.62 billion; €4.75 billion)
Allocation to alternatives: 63 percent

SEMA has issued a request for proposal for domestic private equity and venture capital fund managers. The Korean pension plans to commit a total of 100 billion Korean won to, at most, four private equity managers and a total of 82 billion Korean won to, at most, seven venture capital managers. Eligible managers should oversee a fund that has already raised more than 70 percent of its target size. The submission deadline is 8 September, and a decision will be put to the investment committee in late October.

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

Today’s letter was prepared by Toby Mitchenall with Isobel Markham, Adam Le, Rod James, Carmela Mendoza and Alex Lynn

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