The term “general partner” may become a misnomer as more GPs move away from being generalists and become specialists.
“They’re either focusing on certain sectors or certain strategies or certain geographies. That’s one way they’re differentiating themselves,” says Pablo de la Infiesta, managing director and head of the private funds advisory group for EMEA at Moelis & Company.
In this two-minute video, the fundraising rainmaker tells Private Equity International how difficult it is for first-time funds to raise capital, how GPs can stand out and how Brexit is affecting fundraising for UK-focused vehicles.
I would generally say that despite the fact that there are more first-time funds now than in prior years, it’s never an easy exercise. That has always been the case and it’s no different now. But what is helping the emergence of more first-time funds is on the one hand liquidity, that you’re alluding to [in the secondaries market], but also the fact that there is a lot of talent in many places willing to come together and work around certain strategies.
I would generally say that general partners are moving away from being generalists. They’re either focusing on certain sectors or certain strategies or certain geographies. That’s one way they’re differentiating themselves. What they’re also doing is have a very close dialogue with their investors. Very transparent, view investors as partners, and a good case is point is all the co-investment activity that you see.
Thirdly, you also see investors spending a lot more time on pre-marketing. So even though you might see from the outset that there are certain fundraisings that went extremely well, and they reached their targets and their caps and everything looked easy, the reality is that a lot of work occurred before the actual fundraising in the form of pre-marketing.
What we also see is that investors take as much a top-down approach as a bottoms-up approach. And as such, because they take the bottoms-up approach, they are opportunistic. I think in many instances what they’re seeing is that if they are to commit to a general partner that has a substantial part of their investment activity in the UK, that there is some assets that the general partner might be able to acquire that are fairly priced, or even undervalued.
So you’ve seen great fundraising successes in recent months of a UK-only-focused funds, and I think that’s a reflection of LPs being opportunistic and for the right strategies are willing to, a little bit, bypass the concern they have around Brexit.