Side Letter: Welcoming scrutiny, Apollo hires, PE’s new gameplan for sports

The Women in Private Markets Forum is up and running and early talk is focusing on greater public scrutiny of private asset classes. Plus: buyout numbers in Europe, how PE fell in love with sports, and more.

They said it

“Where’s the data? Bring it in”

StepStone’s Erin Sarret calls for ‘collective intelligence’ in private markets (see below)

Just happened

Women in Private Markets Forum 2020
Left to right: Ludovic Phalippou, Rune Jepsen, Rhonda Ryan, Erin Sarret and Beverley Kilbride

Fresh from the forum: Bring the transparency

The idea that more transparency in private equity is bad for business is largely outdated. That was the overwhelming view from panellists on this morning’s opening session for Private Equity International’s Women in Private Markets Forum. As private markets grow, the industry – and especially managers whose portfolio companies receive state aid as a result of the crisis – should expect more public scrutiny, experts from QIC, StepStone, Mercer and LaSalle Investment Management said in a discussion moderated by Oxford University Saïd Business School’s Ludovic Phalippou. “Increased transparency is something we should be striving for,” said QIC’s Rune Jepsen, who is based in Denmark. Private companies in Denmark have an “incredible” amount of transparency, he said, and yet the country also has a “vibrant” private markets industry that has delivered good returns.

More transparency on returns would be a good place to start, said StepStone’s Erin Sarret. “Where’s the data? Bring it in,” she said. “I think that kind of collective work does give us a collective intelligence that helps us look at things a bit differently and we need to keep pushing.” The forum continues until tomorrow.

Apollo hires

Apollo Global Management has a new head of investor relations, according to a post on LinkedIn. Peter Mintzberg is a corporate strategy veteran who has worked at BlackRock and, more recently, OppenheimerFunds. He joins Apollo as it tries to address investor concerns about its co-founder’s relationship with convicted sex offender Jeffrey Epstein.

PEI on sports

Chalk board showing a sport diagram
Net returns: PE firms become sports fans

In case you haven’t read it yet, we have spent the last few weeks diving deep into PE’s blossoming enthusiasm for the business of sport. What’s behind it?

Besides bringing in tens of billions in revenue, some owners of sports assets can be victims of their own success. Rising valuations – the aggregate enterprise value of the 32 most prominent European football clubs, for example, has grown by 51 percent, or €13.4 billion, over the past four years, according to KPMG – have led to an unusual set of circumstances. A high-net-worth individual who invested a few million for a trophy asset a decade ago but now wants an exit will need to find a buyer with deep pockets who is willing to invest in an entity over which he or she has almost no control. It is a complicated proposition. Enter private equity…

We did the math

Buyout blow. Buyout investments in Europe were down 16 percent to €24.6 billion in the first half of 2020 compared with the same period last year, according to Invest Europe’s H1 2020 report. But mega buyouts – deals greater than €300 million – remained almost in line with those of H1 2019 at €12.5 billion and were 21 percent above the average over the past three years (2017-19).


Welcoming more long-termers

Luxembourg-based Castik Capital – one of the early movers in the long-hold PE space – would like to see more firms buying and holding. “The more people that are selling long-term capital as a premise is generally a good thing that shines on us,” investment partner Michael Phillips tells Side Letter. Blackstone last month raised the largest-ever long-hold private equity vehicle with its $8 billion Blackstone Core Equity Partners II. EQT’s chief executive Christian Sinding said a long-term strategy, either in the form of a closed-end  or evergreen fund structure, would be a “natural extension” for the firm. Castik recently closed its second long-term vehicle on its €1.25 billion hard-cap. The vehicle is targeting European-headquartered companies with EVs of between €300 million and €1 billion, in which it will invest €100 million to €300 million of equity and hold for up to 10 years.

Dig deeper

Institution: New Hampshire Retirement System
Headquarters: Concord, US
AUM: $9.4 billion
Allocation to alternatives: 29%

New Hampshire Retirement System has approved $100 million-worth of private equity commitments, as mentioned during the institution’s October investment committee meeting.

The commitments comprise $50 million each to CVI Credit Value Fund V and Industry Ventures Secondary IX. The commitments are re-ups with two of the pension’s existing managers.

NHRS’s recent private equity commitments have been to funds that focus primarily on North American investments. The pension has a 10 percent target allocation to private equity that currently stands at 11.9 percent.

For more information on NHRS and more than 5,900 other institutions, check out the PEI database.

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