GP Stakes
topic on 3 shows · 15 statements across 8 episodes
Invest Like the Best 
20VC 
Capital Allocators
15 statements about GP Stakes, every show
Jay Hoag: Selling GP stakes is mostly just front-loading long-term economics
“The alternative, too, is sometimes people sell a piece of the GP, but that's mostly my casual analysis of it. Front-loading economics that you would otherwise get.”
Samuels: Concentrated founder equity drives risky outside GP stake sales
“If there's a large lump sum, whether it's a boutique firm or a huge organization, it's probably going to be tricky for that next gen to buy them out, which leads to Increased risk of a GP state coming in or an outside minority or majority investor, which neces…”
Somerville: Emerging VC managers should avoid selling management company GP stakes
“I don't think they should take it unless that's the only option. And if it's that hard to fundraise, and they don't have, like, a natural group of family offices or high net worths to support them maybe they should wait and find a different way to generate a t…”
Rees: Dyal underwrites GP stakes purely on cash flow, not exit sales
“From an underwriting perspective, we still use that original lens of cash on cash returns. We certainly don't get the type of cash on cash returns that we got back then in the hedge fund space with 25% yields, but we really think about it from an underwriting …”
Rees: Traditional LP fund portfolios rarely outperform GP stakes portfolios
“It's hard to model a portfolio of LP interests, investing in funds, that will outperform a portfolio of investing in stakes.”
Hedge fund GP stakes yield binary boom-or-bust outcomes within two years
“If you own a piece of a hedge fund in two years, you're either just doing incredibly well or you're out of business. There's really not a lot in between.”
Private equity GP stakes offer downside protection via locked-up management fees
“The private equity business model and private credit and private real estate fit in the same bucket. But you have locked up capital. That's going to pay a contractually obligated management fee, regardless of what transpires with that business, which provides …”
CAZ Investments deployed over $1.5 billion into GP stakes over five years
“We've invested over a billion and a half dollars in that space in the last five years.”
GP stakes returns are split evenly between yield and appreciation
“You're getting nearly half the return from yield, and the other half is from appreciation.”
GP stakes investors recoup capital if the manager raises one subsequent fund
“But if you're able to at least get that second fund in after buying a stake, you're pretty much guaranteed to get your money back just off management fees and some of the maybe in ground carry.”
Growth equity is the logical asset allocation bucket for GP stakes
“But in general, if you had to place it in one, I think growth equity does make some sense. These are minority stake investments typically going to be used for some sort of growth action.”
Major GP stakes buyers plan for 20-to-30-year holding periods
“When Dial buys in or when any of these large firms buy in, they buy in with the Thought that we're going to hold this thing for 2030 years, even though maybe it's only underwritten out to 12 or 15.”
Fund performance quartiles remain exactly the same after GP stake sales
“Performance of the fund, and when we looked at this, we looked at private equity, credit, and real estate, and effectively, the proportion of top quartile, second quartile, et cetera, funds is the exact same before and after. I mean, there's a marginal shift. …”
Moseley: APFC Pulled Back From GP Stakes, Favors Manager Seeding
“So because of the pricing environment, and because of the time intensity, we haven't invested a lot of time and energy in stakes recently. I view the seeding business as a challenging but more sustainable opportunity.”
Notre Dame halted its GP stake ownership strategy to avoid conflicts
“At one point, it was very fashionable to want to buy a part of the GP. Or want to, you know, have an ownership stake, or buy some of the cash flow of a hedge fund. We did one of those, and it's been fine. It's worked out. There's still a partner. It's been fin…”