Industry color from across the globe – Private Equity Legal, ODD, Investor Relations and Small & Emerging Manager Conferences
ESG: Every single conference touched on ESG / DEI as a topic.
- What is working for GPs and asset managers?
- Metrics, metrics and consistent metrics
- Building diversity across the organization – gender, color, age, ethnicity, including diversity in thought (outspoken vs introvert)
- Proactively creating a program is a baseline requirement,then focus on continuous improvement. Investors are rewarding efforts over perfect answers.
- Building a responsive investor relations strategy to address diligence and ongoing reporting needs
- What’s not working?
- Putting diverse colleagues in senior roles to attract investors, with limited firmwide commitment to diversity in other positions
- Focus on diversity only during recruitment, and be unable to retain diverse employees
- Not being able to demonstrate compliance with broad ESG statements
- Trying to implement a program without technology – it’s hard to create goals and consistent measurements without technology
- Too many and too long DDQs from investors and LPs taking up resources. What used to be 10 questions a few years ago has grown to 40 pages.
Technology: Most conferences talking about the power of data – from data extraction to seamless data collection
- The power of data – super effective when managed properly but the proliferation of it can create more noise than good
- There may not be a perfect solution to match all your needs on day 1, but it’s important to act now and make progress
- Too many technology options create ambiguity in selection – focus on excellence, firms that demonstrate continuous success, and firms that demonstrate focus and sound business models which is critical in current market environment
- From asset manager’s perspective, there is a need for human engagement with technology because the next generation of investor and LP decision makers are engaged with tech tools
Operational and Legal Due Diligence: Focus on outsourcing, disclosures, technology, and fees
- As outsourcing trend continues, vendor due diligence and controls are in focus
- Regulation and disclaiming information will be key areas of focus and scrutiny, especially with new side letter restrictions and net/gross performance disclosures
- Overall, fees remain under pressure, although pass-through fee structures are being introduced, with one recent development expected at Brevan Howard
- Focus on background check and transparency is also extending to portfolio companies
Fundraising: it’s never easy and it requires a strategy!
- Managers are leveraging social media to extend their brands, improving their investor responsiveness, as managers believe brand experience is becoming as important as a performance in current market conditions
- Style drift is out of fashion and managers are focusing on raising funds that match their core strengths
- Managers need to be proactive and strategic – finding investor fit early is key to success. Proactively creating quality due diligence materials, highlighting risk flags help build trust and show commitment. ESG responses cannot be N/A
Private Markets GPs
- Private markets GPs are seeing the denominator effect stall new allocations, especially for multi-asset investors
- Private Markets FoFs and fee earning LPs are more likely to still be allocating as per their mandate in current environment
Emerging and Diverse Managers
- First time find finding it very difficult as flows are going to established managers
- Emerging manager fundraising is up from 305 funds raised in 2011 to 639 funds raised un 2021, increase largely driven by Private Equity funds
- There are over 6000 funds in the emerging manager universe, and over 800 funds in the diverse manager universe
- Build LP trust with co-invest, prefund structures as an alternative to a comingled fund. To successfully co-invest, be in LP’s database early!
Do bookmark this blog… more updates coming from three more conferences in APAC, EMEA and NA.
Would like to share your views, please get in touch!