FUTURE OF PRIVATE EQUITY 2019 THE SPONSORS: Alter Domus Baker McKenzie eFront Goldman Sachs L Catterton Pomona Capital PwC RSM The rising stars who will shape private equity over the next decade The shape of things to come A similar story emerges from conversa- GRAEME KERR EDITOR'S tions with our Future 40. The lines are blur- LETTER ISSN 1474–8800 ring between LPs and GPs, amid a “merging” MAY 2019 of the relationship, according to The Carlyle Senior Editor, Private Equity Group’s Louise Dumican, who says LPs have “a Toby Mitchenall, Tel: +44 207 566 5447 [email protected] much deeper level of involvement, scrutiny and Senior Special Projects Editor governance oversight than we’ve had histori- Graeme Kerr, Tel: +44 203 862 7491 [email protected] cally”. The advent of co-investing and direct Senior Editor, Private Equity, Americas investing was a game-changer, says Marcus Isobel Markham, Tel: +1 646 380 6194 [email protected] Just who will shape the private equity industry Frampton, CIO of Alaska Permanent Fund Special Projects Editor over the next decade? That’s what we set out to Corporation, making the LP/GP relationship James Linacre, Tel: +44 207 566 5465 [email protected] discover when we opened up nominations for less “bifurcated” (p. 5). Senior Reporters our inaugural Future 40 list in January. The PEI Elsewhere, there are some stellar keynote Rod James, Tel: +44 207 566 5453 [email protected] 40 Under 40: Future Leaders of Private Equity, interviews, including Chris Kojima, the head of Carmela Mendoza, Tel: +44 203 640 7512 as it is formally known, forms the centrepiece alternative investments at Goldman Sachs (p. [email protected] of this supplement, and it has caused some 11), Michael Granoff, the CEO of secondaries Reporter Alex Lynn, Tel: +852 2153 3148 spirited debate in the PEI offices. firm Pomona Capital (p. 18), and Aidan Con- [email protected] Contributors There were more than 130 formal nomina- nolly, the CEO of fund services provider Alter Claire Coe-Smith, Marine Cole, Rob Kotecki, Victoria Robson, Simon Meads tions, and dozens more suggestions from our Domus (p. 24). Scott Dahnke, the co-CEO of Managing Editor – Production sounding board of senior private equity figures L Catterton, give his thoughts on the future of Mike Simlett, Tel: +44 20 7566 5457 [email protected] and industry sources. value creation (p. 30), Thibaut de Laval, chief Head of Design To be eligible, nominees had to include the strategy officer at eFront (p. 36), looks at how Miriam Vysna, Tel: +44 20 7566 5433 [email protected] name of someone at another firm they felt today’s tech revolution will reshape private Senior Designer worthy of inclusion, resulting in a pleasingly equity and RSM partner Anthony DeCandido Lee Southey diverse list. Nearly one-third are women, and explains the role that data can play in validat- Head of Marketing Solutions Alistair Robinson there are representatives from across the globe ing ESG. Other contributions include PwC’s Tel: +44 20 7566 5454 [email protected] including Bain Capital Japan’s Masa Suekane, Oliver Schulte Ladbeck on whether GPs can Subscriptions and Reprints described by peers as one of private equity’s sustain the current level of returns (p. 46) and Andre Anderson, +1 646 545 6296 [email protected] “top athletes”, and the impressively youthful Baker McKenzie partners David Allen and Jane Daniele Lorusso, +44 207 566 5432 Louis Choy, 32, a principal at CPP Investment Hobson on the opportunities in the healthcare [email protected] Board who is tipped by industry sources to sector (p. 52). Sigi Fung, +852 2153 3140 [email protected] have the potential to one day rank among the A big thanks to everyone who nominated For subscription information visit likes of industry pioneers Henry Kravis and someone for the Future 40. Whittling down www.privateequityinternational.com. Jeremy Coller. the final 40 required some tough decisions but Director, Digital Product Development Amanda Janis, Tel: +44 207 566 4270 The list hails the new generation, which the resulting list is a truly impressive rollcall. [email protected] is apt in a Future of Private Equity supplement Editorial Director Philip Borel, Tel: +44 207 566 5434 that asks where we are heading over the next [email protected] 10 years. There’s a strong sense of evolution, Enjoy the supplement Director of Research & Analytics Dan Gunner, [email protected] most crucially in the LP/GP nexus. Phrases like Publishing Director ‘limited partner’ and ‘general partner’ “will not Paul McLean, [email protected] be fit for purpose in the future”, says Eamon Chief Executive Tim McLoughlin, [email protected] Develin, managing partner at alternative asset Graeme Kerr Managing Director — Americas management consultancy MJ Hudson (p. 14), Colm Gilmore, [email protected] who predicts there will be more shadow capital Managing Director — Asia e: [email protected] Chris Petersen, [email protected] in the future. may 2019 the future of private equity 2019 1 CONTENTS THE FUTURE OF PRIVATE EQUITY 2019 18 Keynote interview: Pomona Capital 40 Keynote Interview: RSM Secondaries firm Pomona Capital’s Validated data and reporting chief executive and founder Michael excellence are the future of corporate Granoff discusses how the secondaries responsibility, says RSM partner environment has evolved over the and financial services senior analyst years and what he sees for the future Anthony DeCandido 21 Keeping dealmaking personal 43 Faster, smarter and still very human Technology will be important, with AI and other automation technologies blockchain set to transform due will offer plenty to the operational diligence, but human input will be side of private equity firms, but these crucial too cutting-edge solutions will still need The 40 Under 40 Future Leaders in-house expertise 6 The Future 40 list in full 24 Keynote Interview: Alter Domus 8 Investors The private equity industry is not 46 Keynote Interview: PwC 17 Operators immune from public scrutiny, as With high prices and fierce well as demanding investors. Aidan competition for assets, PwC Germany 27 Dealmakers Connolly, CEO of Alter Domus, partner Dr Oliver Schulte Ladbeck, 33 Fundraisers considers what buyout firms need to head of business development for 50 Lawyers learn from other industries PwC Europe Deals, considers whether GPs can sustain returns 3 Future vision: The challenges ahead 30 Keynote Interview: L Catterton What changes can we expect in Building a bespoke operating model 52 Keynote Interview: Baker McKenzie private equity over the next decade? and reinforcing a distinctive culture in Technological advances are creating We asked a panel of our 40 Under 40 which people can perform their best is opportunities in the medical sector Future Leaders of Private Equity for the path to maximising value, explains for private equity firms prepared their views L Catterton’s Scott Dahnke to embrace innovation, say Baker McKenzie partners David Allen and 11 Keynote interview: Goldman Sachs 36 Keynote Interview: eFront Jane Hobson Private equity firms should direct Today’s tech revolution will reshape as much energy in maximising the private equity in major ways, leading 54 The changing face of the LPA potential of their teams, cultures and to greater specialisation, transparency Calls are growing for the business-of-the-business as they do in and rigour, according to eFront’s standardisation of the limited generating investment alpha, suggests Thibaut de Laval. That will make it partnership agreement, but moves Goldman Sachs’ Chris Kojima easier than ever to discern the best towards uniformity are fraught with from the rest difficulties, lawyers say 14 The future of investing LPs will push for more transparency 38 How technology could shape the 56 The best advice I ever received and customisation of their future of fundraising Whether it is the need to embrace investments, liquidity will play a Online fundraising platforms could change or the importance of curiosity, greater role but robo-advisors won’t become more common over the our Future 40 have relied on a diverse negate the need for trust between next decade, but obstacles to their set of guiding principles to spur them LPs, GPs and service providers growth remain to greater things NEW YORK Private Equity International is published © PEI 2019 be aware that external contributors 130 West 42nd Street, Suite 450 10 times a year by PEI. may represent firms that may have New York, NY 10036 No statement in this magazine is to an interest in companies and/or +1 212 633 1919 To find out more about PEI please visit: be construed as a recommendation their securities mentioned in their Fax: +1 212 633 2904 www.thisisPEI.com to buy or sell securities. Neither this contributions herein. publication nor any part of it may LONDON PRINTED BY: Stephens & George Ltd. be reproduced or transmitted in any Cancellation policy: you can 100 Wood Street www.stephensandgeorge.co.uk form or by any means, electronic or cancel your subscription at any London EC2V 7AN mechanical, including photocopying, time during the first three months +44 20 7566 5444 recording, or by any information of subscribing and you will receive Fax: +44 20 7566 5455 storage or retrieval system, without a refund of 70 percent of the total HONG KONG the prior permission of the publisher. annual subscription fee. Thereafter, no 19F On Hing Building Whilst every effort has been made to refund is available. Any cancellation 1 On Hing Terrace ensure its accuracy, the publisher and request needs to be sent in writing Central, Hong Kong contributors accept no responsibility [fax, mail or email] to the subscriptions +852 2153 3240 for the accuracy of the content in departments in either our London or Fax: +852 2110 0372 this magazine.