Allocators heeding the siren song of co-investing are hiring experienced staff to help with a long list of challenges. Julie Segal August 30, 2018 engaging in co-investments, even if there are a number of different approaches, including hiring an external firm to oversee these transactions and buying direct stakes in companies. “U.S. plans searching for new professionals frequently include co-investing or direct investing as a preference or requirement, and that trend is even more prevalent globally,” writes Koenig, author of a report called “What’s Top of Mind for Today’s LP.” [IIDeep Dive:Want To Access the Best Private Equity Managers? Be Elite] Institutional investors are also after more detailed data on portfolio companies from their private equity managers, according to Hamilton Lane. Although investors have been demanding transparency on fees, expenses, and valuations for years, they now want data on underlying companies such as revenue, earnings, and leverage, so they can better understand the entirety of their private markets portfolios. What’s changed is the availability of third-party systems that investors can use to store and manage those data. PGIM Fixed Income: How to Pinpoint an Asset Manager to Help Shape and Execute Your Active Fixed Income Strategies[/paste:font] “LPs want to look across their entire portfolio on one platform. You need technology vendors to do that,” said Koenig in the interview. He cautioned that “GPs’ willingness to provide information is a work in progress. However, GPs see technology as a way to do this efficiently and in a timely manner, Koenig added. Investors’ push for more data is also being driven by changes in the private equity markets. As fund raising, and the number of fund managers, investors, and strategies has grown,gains in private equityare largely coming from operational improvements at portfolio companies, according to the report. “This means that LPs are spending more time focused on GP return attribution, operating partner profiles, and turnover statistics. They are diving deeply into value creation and understanding what specific capabilities a GP has in-house to best position their companies for success,” Koenig wrote. Hamilton Lane also noted that almost every institutional investor seems to be doing searches fortop small- and mid-market funds. Funds with less than $3 billion in assets have historically outperformed large-cap funds. In fact, the alternative investment manager reports that 70 percent of all buyout funds raised in the next 12 months will be on the small side. The firm says these so-called SMID funds often outperform because general partners have more control than they do with larger companies; smaller deals are also less levered and potentially safer for investors. Hamilton Lane cautioned, however, that these factors —control and leverage— are important, but a deal’s risk or chances for success can’t be predicted by one or two data points. Hamilton Lane’s data show that small and mid-market funds have beaten the composite of all other private equity strategies in 12 of the last 15 vintage years, but the firm is still advising investors to build diversified portfolios that includeventure capital, large-cap and other funds. That’s because, “SMID funds are not uniquely the top performer across vintages — other sectors also offer strong performance,” wrote Koenig. https://www.institutionalinvestor.com/article/b19r2m5j65f5b8/Help-Wanted-Professionals-With-Direct-Investing-Expertise?utm_medium=email&utm_campaign=The Essential II 083018&utm_content=The Essential II 083018 CID_9a10670cd8f8599aafbde7f9dbc2be6d&utm_source=CampaignMonitorEmail&utm_term=Help Wanted Professionals With Direct Investing Expertise
The record has been spinning too long; the music is going to stop. Agility favors those more light on their feet. Time to harvest; time to shop. (Time to check the spectacles and make sure the focus is right!) "Hey! Let's go hire that new Wonderboy over at blah-blah-blah....!"