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Alignment of Interest
Sponsors and management teams need to demonstrate their commitment to the next phase of growth.
Three of PEI’s Women of Influence – Morningside's Tori Buffery, KKR's Saleena Goel and LGT's Martha Heitmann – share their outlook on the GP-led secondaries market.
Adviser estimates put secondaries transaction volume at around $110bn, with GP-led processes accounting for roughly 45% of those transactions.
A lack of full exits means it is too soon to say how well this latest generation of GP-led secondaries will fare, but the ingredients for success are all in place, says Jochen Mende at UBS Asset Management.
Identifying a credible lead investor that will deliver on execution can be more important than extracting the last dollar on price, says Glendower Capital (CVC Secondaries) managing partner Chi Cheung.
Amid today’s environment and ongoing growth in GP-led deals, rolling carry and putting additional capital at risk are no longer enough to guarantee alignment, says Morgan Stanley Investment Management’s Nash Waterman.
Some of Flexstone’s clients are expected to raise their Asia-Pacific allocations from 10% to 15-20%, Eric Deram, managing partner at Flexstone Partners, told PEI.
Staying aligned with clients and seeking GPs who focus on real value creation keep private wealth investors hungry for PE.
A disconnect exists between GPs and LPs on the use of financing tools such as NAV loans and continuation funds.
The state-backed investor is doubling down on GP due diligence as fundraising timelines lengthen, its CIO for private and strategic investments tells PEI.