Side Letter: The hottest PE managers (according to the secondaries market), TPG’s secondaries push

HNWIs are a growing part of the investor landscape in private equity, and they have not been discouraged by the pandemic, says Credit Suisse. Plus: the hottest funds on the secondaries market, and how TPG and BC Partners are both "getting into secondaries" in different ways. Here's today's brief, for our valued subscribers only.

She said it

“We moved our legacy systems to the cloud at the end of 2018. People were slow to embrace it until covid and then they totally embraced it.”

Sandra Kim-Suk, CFO at Norwest Equity Partners, explains how the pandemic catalysed operational change, at a roundtable discussion by sister title Private Funds CFO (subscription or registration required).

Just happened

HNWIs not put off by pandemic
This year’s pandemic hasn’t dampened ultra-high-net-worth individuals’ appetite for private equity if Credit Suisse’s latest fundraise is anything to go by. The investment bank’s wealth management unit has held the final close on its latest annual PE programme, which at $400 million is 33 percent larger than its predecessor. The bank has now raised more than $1 billion for PE, according to a statement.

Private Equity Seasons Global IV will invest across buyouts, secondaries and special situations on a roughly 50/20/20-25 split, Fabian Shey, global head of alternative and strategic investments at the bank, told Side Letter. Didn’t the pandemic affect client interest? “You have opportunities as it relates to valuations, whether it’s in the form of credit dislocations, credit restructuring, and also a high degree of client interest in secondaries or thematic investing seen to potentially benefit [from covid],” Shey said.

Getting into alternatives
Here are some insights from the wider world of asset management, courtesy of a survey by Brown Brothers Harriman. Interviewees comprised “more than 50 senior executives” from asset management businesses.

  • Into alts: 22 percent of asset managers are considering adding alternatives products to their offering (41 percent already offer them).
  • Covid cost cuts: In the next 12 months, 49 percent of asset managers are “looking” to cut their real estate expenses. And 30 percent are looking to cut staff costs.
  • Return to office: Most firms (74 percent) believe that at least half their staff will be back in the office by the end of H1 2021. Views are mixed as to how much WHF should become part of the norm: the biggest group of respondents (41 percent) expect less than a quarter to continue to work remotely.

Essentials

Most wanted
Secondaries intermediary Setter Capital has released a list of the most sought-after fund families in the fourth quarter across strategies and asset classes. It is ranked by number of prime buyers: parties that have expressed an interest in buying or have priced a certain fund.

  1. CVC Europe – 94 (prime buyers)
  2. Bain Capital Flagship LBO funds – 86
  3. Blackstone Capital Partners – 82
  4. Apax Europe – 75
  5. Advent International – 73
  6. Apollo Investment Funds – 73
  7. EQT – 72
  8. TPG Partners – 70
  9. Warburg Pincus flagship funds – 70
  10. Hellman & Friedman – 68

Speaking of secondaries…
TPG is understood to be testing the waters for its debut fund. The private markets heavyweight hired Michael Woolhouse from CPPIB in July to spearhead its secondaries platform. The firm is in preliminary LP discussions about raising as much as $2 billion to invest in GP-led secondaries processes, reports sister publication Buyouts (registration or subscription required).

Meanwhile, BC Partners is reportedly working on a GP-led process for its publishing business Springer Nature, writes the Financial Times (paywall). The firm would move the company – acquired in 2013 – into a continuation vehicle in a deal that would value Springer at about €6 billion, reports the FT. Everyone can change their mind: in October last year, BC dealmaker Jean-Baptiste Wautier told sister publication Secondaries Investor (subscription or registration required) that GP-led single asset deals like this were “not worth the headache” given the potential conflicts of interest.

GA promotions
General Atlantic has announced 17 annual promotions, including five to managing director: Melis Kahya Akar, Luis Cervantes, Christian Figge, Anna Golynskaya and Shaw Joseph. Read the release here.

Dig deeper

Institution: City of Philadelphia Board of Pensions & Retirement
Headquarters: Philadelphia, US
AUM: $5.77 billion
Allocation to alternatives: 11.1%

City of Philadelphia Board of Pensions & Retirement has confirmed a $25 million commitment to Estancia Capital Partners Fund II, according to recently released minutes from its October investment committee meeting.

The fund is managed by Estancia Capital Management and will invest in North American companies in the financial and business services sector.

The $5.77 billion US public pension has a 9.3 percent allocation to private equity.

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


Today’s letter was prepared by Toby Mitchenall with Adam Le and Rod James.

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