Throwing open the doors to PE
It wasn’t a pretty journey – that’s how Verdun Perry, global head of Blackstone’s Strategic Partners unit, describes his entry to the world of finance and, eventually, private equity. Speaking at the opening keynote of IPEM in Cannes on Tuesday, Perry reflected on his upbringing in West Philadelphia. “I wanted to do business. I’d heard of Wall Street, didn’t know what it was about… Good news, I was invited to an [internship] interview. Bad news, I didn’t have a suit… I didn’t look great, but I was hungry, and I was humble.”
Perry’s message to delegates? Give people a chance. “As you go through your life and meet people in ill-fitting suits… give them a shot. It doesn’t matter what they look like, where they are from, gender, ethnicity. If they are hungry, humble, they can do the work.”
His experiences may well resonate with the next wave of employees in Blackstone’s portfolio. The firm yesterday committed to hiring 2,000 refugees by 2025 across its global portfolio companies and real estate properties, 1,500 of whom will be in the US.
Perry’s other message for delegates? “All of us in this room have to do a better job telling our stories. We have to. We [owe] it to ourselves, and people around us, to tell our stories. If we don’t, someone else will, and they will set the narrative.”
California Public Employees’ Retirement System has a plan to make up for what its CIO believes was a “lost decade” of PE investing, our colleagues at Buyouts report (registration required). At a 19 September investment committee meeting, CIO Nicole Musicco presented a plan that, among other things, would raise commitment limits placed on investment staff, enhance flexibility for staff to participate in co-investment opportunities, and allow for partnerships with new institutional investors. The plan would also change the mix of strategies within its PE portfolio, cutting its buyouts target from 70 percent to 65 percent and opportunistic investments from 10 percent to 4 percent, while raising growth equity and expansion strategies from 15 percent to 25 percent, and venture capital from 1 percent to 6 percent.
According to Musicco, the years between 2009 and 2018 were a “lost decade”, where the system averaged $2.7 billion in annual commitments to PE – a low amount that cost it between an estimated $11 billion and $18 billion in returns. CalPERS allocates 12 percent to PE, below its 13 percent target and, since 2018, has averaged $12.3 billion in annual commitments. Per its calculations, CalPERS must commit at least $15 billion each year to reach its desired allocation.
“Our real opportunity is to now take all of those lessons we learned and the great partnerships we have been building on the last few years,” Musicco said. “We’re one of the few plans on the grow and can show up in a thoughtful way with large equity checks to get some needle-moving opportunities in the market done.”
IFM’s collaboration call
At last week’s National Conference of the Governance Institute of Australia, IFM Investors CEO David Neal talked about the capacity of superannuation funds and pension capital to work together with fund managers to tackle some of the long-term systemic risks facing the global economy. He said collaboration would be needed to achieve climate goals in particular, before sounding a note of caution around what he called “commercial investment managers”. He said they are “for-profit, competitive market animals – they are not naturally inclined then to want to share IP and work with a collection of their competitors”.
Neal drew a distinction between these types of GPs and IFM itself, with his organisation wholly owned by a collection of not-for-profit industry superfunds. IFM has form in this area, calling out other managers over high fees while highlighting its own distinct business model, as our colleagues at Infrastructure Investor have previously reported (registration required). The firm has worked closely with other GPs recently, such as with Global Infrastructure Partners on a mega-deal to acquire Sydney Airport. Neal’s words are a sign it may be seeking to do more of the same.
Raising an ESG fund?
Get in touch with SWEN Capital Partners. The French GP has more than €100 million to invest in ESG-themed and domestic funds after closing its Territoires Innovants 3 on €150 million, our colleagues at New Private Markets report (registration required). The firm intends to invest 75 percent of this into third-party funds, including a portion for secondaries transactions. TI3 is an Article 8 fund and pursues four themes: respect for the environment; regional access to essential goods and services (in France); diversity; and fair sharing of value. At least one-fifth of the fund’s investments will have a climate or energy transition focus.