PARTNERS: Ardian BRG Asset Management Debevoise & Plimpton eFront Evercore L Catterton MVision Partners Group SANNE Co-investment stampede Style drift Gender on the agenda What keeps LPs awake And much more... The Debevoise Private Equity Group continues to lead “Dominant the field, in an industry it has helped shape for decades. global private The practice includes focussed groups experienced in equity practice fund formation and investment management, buyouts and other equity and debt investments, finance, with experience securities and capital markets, tax, and management compensation and employee benefits. advising a More than 200 lawyers work within the Group in offices comprehensive around the world, making it one of the few truly global private equity practices. Teams are lean and efficient, range of clients” and are tailored to the culture, strategy and risk profile of individual clients. Chambers Global www.debevoise.com Why the views of LPs matter have been an opportune time. As master of TOBY MITCHENALL their own destiny, this will not be an issue. EDITOR'S These thoughts play on our minds as we ISSN 1474–8800 LETTER DECEMBER 2018/JANUARY 2019 sit down to plan this substantial survey. Is the Senior Editor, Private Equity limited partner universe as relevant as it once Toby Mitchenall, Tel: +44 207 566 5447 [email protected] was, given that some of the most established Special Projects Editor ones are making moves away from limited part- Graeme Kerr, Tel: +44 203 862 7491 [email protected] nerships? Without wishing to beg the question: Editor, Private Equity International yes, it is. Isobel Markham, Tel: +1 646 380 6194 [email protected] We live in a world in which some of the world’s This is now the seventh year that we have Reporters Rod James, Tel: +44 207 566 5453 biggest and most influential limited partners gone out to institutional investors to gather [email protected] have made noise about being less “limited” in views on everything from due diligence to asset Alex Lynn, Tel: +44 207 566 5463 [email protected] their approach to private equity. allocation. The Private Equity International LP Carmela Mendoza, Tel: +852 2153 3148 Some investors reach a point at which they Perspectives Survey is one of the most in-depth [email protected] decide to take a mature private equity pro- and wide-ranging assessments of investor senti- Contributors Claire Coe Smith Muhammad Obaid gramme and start shifting it in-house: making ment in private capital markets today. Sophie Colby Emmanuel Osondu Marine Cole Victoria Robson principal investments rather than outsourcing The survey shows the perception that LPs Sheikh Jahan Craig Savitzky Rob Kotecki Stephen Schultz deal-making to general partners. Others have are paring back the number of relationships in Raymond Lau Matthew Xia Adam Le Chin Yuen decided to concentrate their programmes on their portfolio is just that: perception. Most LPs Vicky Meek a smaller number of external relationships, (53 percent) want to increase their number Managing Editor – Production Mike Simlett, Tel: +44 20 7566 5457 giving them – in theory – greater leverage to of manager relationships, 30 percent want to [email protected] negotiate terms. maintain the same number while 11 percent Head of Design Miriam Vysna, Tel: +44 20 7566 5433 The rationale for both approaches has the want to decrease it. One-in-three LPs plans [email protected] cost of investing at its heart. An institution that to increase its target allocation to PE in the Head of Marketing Solutions Alistair Robinson invests directly off its own back is not subject next 12 months and most investors (92 per- Tel: +44 20 7566 5454 [email protected] to the management fee-carry combination cent) believe their PE allocation will meet or Subscriptions and Reprints that GPs require. It can also hold companies exceed its benchmark in the next 12 months. Andre Anderson, +1 646 545 6296 [email protected] indefinitely, potentially eliminating the transac- The LP community is becoming more relevant Avinash Mair, +44 207 566 5428 tion costs associated with an asset that needs than ever. [email protected] to be bought and sold every few years, as the The following pages are crammed full of Sigi Fung, +852 2153 3140 [email protected] 10-year fund cycle demands. An investor which data; I’d like to thank our research team for For subscription information visit www.privateequityinternational.com. consolidates external manager programmes to their efforts in gathering it. I believe it is a valu- Director, Digital Product Development fewer, deeper relationships, should in theory able benchmarking resource for anyone start- Amanda Janis, Tel: +44 207 566 4270 [email protected] be able to negotiate lower fees and reduce ing or maintaining a private equity programme. Editorial Director the administrative costs of maintaining a vast And for GPs, I hope it gives an insight into Philip Borel, Tel: +44 207 566 5434 [email protected] number of fund holdings. what your investor base is currently thinking. Director of Research & Analytics It is not all about costs. In conversation with Dan Gunner, [email protected] one longstanding (and publicity shy – hence my Head of Investor Research Nicole Douglas, [email protected] not naming them) investor in private equity, Enjoy the supplement, Publishing Director they explained the ongoing process to grow Paul McLean, [email protected] their principal investment capabilities at the Chief Executive Tim McLoughlin, [email protected] expense of their fund investment programme Managing Director — Americas was about control. To paraphrase: in the last Toby Mitchenall Colm Gilmore, [email protected] downturn, they felt some funds were encour- Managing Director — Asia e: [email protected] Chris Petersen, [email protected] aged by certain LPs not to invest at what would december 2018/january 2019 perspectives 2019 1 CONTENTS PERSPECTIVES 2019 SURVEY RESULTS good thing, says Scott Dahnke, global 42 On the minds of top LPs co-chief executive officer at L Catterton From stressed portfolios to ESG, 18 PE in the portfolio investors tell us the issues that keep Private equity is outperforming 17 LP view: Achmea them awake at night investors’ benchmarks, The asset manager is planning to encouraging them to increase their increase its PE exposure to up to 5% 44 Keynote interview: MVision allocations of its more than €130bn portfolio MVision’s CEO Mounir Guen talks huge fundraises, new pools of capital and the 25 GP relationships 22 Keynote interview: Ardian value opportunities from Brexit Investors are looking to expand Investment solutions tailored to their GP portfolios as access to an investor’s needs are gaining in 48 Keynote interview: funds becomes more competitive popularity, say Ardian’s Martin Kessi BRG Asset Management and Krista Oertle The secondaries market is an efficient 32 Secondaries way to restructure maturing funds, Expect another year of healthy 28 LP view: Future Fund but managers and LPs may need to trading in the market for second- High prices for assets is making consider other options, say Finbarr hand fund stakes private equity less appealing, O’Connor and Gavin Farrell of BRG’s according to the SWF’s head of Alternative Investment Advisory group 38 Co-investments private equity Steve Byrom Arrangements between LPs and 50 LP view: Texas Municipal GPs don’t all fit the same mould 30 Keynote interview: eFront Retirement System Investors want more information Identifying the good managers is 46 Fund terms about where their money is going the easy part – the challenge comes Fees remain a bone of contention and that is putting a strain on fund in securing consistent access at for LPs, as fund sizes continue to managers. GPs can gain a competitive scale, says director of private equity grow advantage from managing these Christopher Schelling requests effectively, says eFront CEO 55 ESG Tarek Chouman 52 Keynote interview: Partners Group Only one third of LPs describe ESG Impact investment is on the rise, with as a major consideration, but that 34 Keynote interview: Evercore the increased involvement of more doesn’t tell the full story Armed with the most recent data, Nigel mainstream players in this part of the Dawn, senior managing director at market. Partners Group’s Kevin Lu Evercore, reflects on the growth of the discusses how their entry is changing 4 Seven LP perspectives that matter secondary market, what has surprised the market Here are seven charts that tell us what him the most in its evolution and where investors think of today’s major talking he sees it heading in the next decade 56 Keynote interview: SANNE points Given the wave of takeover activity 36 LP view: Willett Advisors among fund administrators, we sat 10 How we conducted our LP survey The CEO shares his thoughts on the down with Jason Bingham of SANNE US economy to discuss what it means for GPs 12 LP view: South Dakota shopping for service providers and The pension manager is slowing its 40 Keynote interview: the future of his industry deployment to private equity and Debevoise & Plimpton other equity-like assets to cut risk Today almost every GP is obliged to 59 Gender inequality in the crosshairs provide at least some co-investment Under-representation of women can 14 Keynote interview: L Catterton deals to investors. Debevoise & have serious consequences in PE LPs are more focused than ever on Plimpton’s Katherine Ashton outlines operational capabilities — and that’s a the issues at stake 60 From the mouths of LPs NEW YORK Private Equity International is published © PEI 2018 be aware that external contributors 130 West 42nd Street, Suite 450 10 times a year by PEI.