Side Letter: VC’s 50 largest GPs; Nordic’s 19x home run; ESG exec enthusiasm

Our colleagues at Venture Capital Journal have published their annual ranking of the world's 50 largest managers. Plus: Nordic Capital has enjoyed its best-ever private equity exit and why ESG executives must stay enthusiastic. Here's today's brief, for our valued subscribers only.

Just happened

Venture capital: an asset class in good health (Source: Getty)

Venturing big
Our colleagues at Venture Capital Journal have been busy putting together their latest ranking of the top 50 managers by capital raised, and the results show an asset class in health… at least from a fundraising perspective. This year’s VCJ 50 (registration required) shows the largest names keep getting bigger, with more than $309 billion raised by these firms over the preceding five years – a 46 percent increase on last year’s ranking. A few key takeaways:

  • Insight Partners topped the list for the third year in a row with $38.7 billion raised over the period, followed by Tiger Global Management and Sequoia Capital.
  • Bain Capital Ventures was the biggest riser, jumping to 21 from 29. General CatalystFounders FundQiming Venture Partners and Menlo Ventures all jumped up four places.
  • Abu Dhabi-headquartered Chimera Capital is the highest-ranked non-US-headquartered firm, at sixth place. It raised $10.1 billion over the period and did not appear in last year’s list.
  • The average amount of capital raised is up, at $6.2 billion from $4.2 billion year-on-year.
  • The denominator effect means LPs are cooling or pausing new commitments to VC managers as the public markets continue to churn and upset their overall portfolio allocations, VCJ notes.
  • VCJ’s ranking comes as opportunity and growth strategies experience a boom: more than a quarter of VC assets in the first half of this year were raised via funds focusing on these strategies, compared with just 10 percent or less in prior years.

An agreement that is Binding
This year probably won’t set records when it comes to private equity exits. However, Nordic Capital appears to be the exception to that rule. The Northern European private equity giant on Monday celebrated its best-ever exit. The firm sold UK-headquartered diagnostics business Binding Site to Thermo Fisher Scientific for a 19x multiple of invested capital, per a statement. The deal, which had a £2.25 billion ($2.6 billion; €2.6 billion) enterprise value, also delivered an almost 35 percent gross IRR and €1.6 billion capital gain, a spokesperson told Side Letter.

Raj Shah, Nordic’s head of healthcare, attributed its stellar result in part to the resilience of pharmaceuticals and diagnostic businesses against a challenging macroeconomic backdrop. “Healthcare comparables haven’t softened as much as some other sectors, such as tech,” he told us.

Nordic acquired Binding Site alongside minority shareholder Five Arrows in 2011. In 2018, the business was one of nine assets moved from the 2008-vintage Nordic Fund VII into a continuation fund backed by Coller Capital and Goldman Sachs Asset Management in what was then the world’s largest GP-led. The firm began discussions with LPs in late 2017 to restructure the fund due to a difference in motivations in the vehicle’s LP base, some of whom were keen to exit at the end of its fund life, with others seeking more time to realise the portfolio’s remaining value. Those in the latter camp may well feel vindicated after Monday’s home run.

Essentials

Raising a fund? Give Williams a coal
Vicky Williams, head of PE and credit at the UK’s Coal Pension Trustees Services an institution that oversees the £9.8 billion British Coal Staff Superannuation Scheme, has been promoted to head of private markets, per a LinkedIn post. Williams joined in 2018 from Cambridge Associates, where she had advised UK and European corporate and public pension funds on their private investment portfolios as a managing director. She was previously head of PE for BP Investment Management, the in-house fund manager for the BP Pension Fund.

Everyone’s favourite phone call
From the race to net zero to onerous LP data requests, ESG professionals have a lot on their plate these days. One of the most challenging tasks, however, can prove as simple as trying not to annoy their colleagues. Speaking at the BVCA Summit 2022 last month, Katharina Neureiter, Carlyle Group‘s head of ESG and impact for EMEA and APAC, told delegates that the role of an in-house PE ESG team is often seen as inherently “boring” or “bothersome” by colleagues, and that ESG professionals must be social and boundlessly enthusiastic to offset these annoyances.

As a result, Megan Starr, Neureiter’s boss and Carlyle’s head of impact, wants the firm’s sustainability team to be “everyone’s favourite phone call” as a result, Neureiter told our colleagues at New Private Markets (registration required).

Key sources of irritation can include the sudden introduction of compliance rules or the blocking of deals on sustainability grounds. Neureiter’s top tip for maintaining friendly relations internally? Show “an insane amount of enthusiasm”.


Today’s letter was prepared by Alex Lynn with Adam LeHelen de Beer and Madeleine Farman.