May 3, 2021 · 1h 19m · capital-allocators
Innovation in Private Markets 1: Steve Moseley – The Space in Between GPs and LPs at Alaska Permanent Fund (Capital Allocators, EP.192)
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this inaugural episode of the 'Innovation in Private Markets' miniseries, host Ted Seides interviews Steve Moseley, Head of Alternative Investments at the Alaska Permanent Fund Corporation (APFC), on managing a multi-billion dollar private markets portfolio from Juneau. Moseley breaks down APFC's sovereign endowment model, its shift toward direct execution, and innovative investment structures across co-investments, GP stakes, and emerging manager seeding.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Ted holds 12.7% of the talking time here. How this is scored →
Ted as informed peer 4.3 Guest teaching 4.3 Guest disagreement 1.9 Ted pushing back 2.4
speaking balance: gold is Ted, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 1:14:23 Moseley rejects the LPA pendulum metaphor
Moseley forcefully criticizes the conventional legal view of GP-LP negotiations as a zero-sum pendulum swing, arguing it ignores positive-sum ecosystem value creation.
Hardest push from Ted ▶ 1:03:01 Ted challenges secondary selling against long-term hold philosophyTed directly highlights the contradiction in Moseley's framework between preaching multi-decade duration tolerance and actively executing secondary market portfolio sales.
Biggest teaching moment ▶ 47:03 Moseley dismantles standard LP co-investment behaviorMoseley educates on allocator market mechanics, explaining why queuing up for hot syndicated deals represents commoditized capital that fails to generate true alpha compared to niche problem-solving capital.
Ted holds their own ▶ 46:36 Ted challenges portfolio complexity versus small-team bandwidthTed leverages his understanding of allocator operations to sharply question why Alaska undertakes hundreds of complex line items when managing tens of billions with a handful of people in Juneau.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Ted as informed peer | Guest teaching | Guest disagreement | Ted pushing back | Why |
|---|---|---|---|---|---|---|
| Steve Moseley's Path from Wall Street to Private Equity | 3 | 2 | 1 | 1 | Ted opens with standard biographical prompts about Steve Moseley's career trajectory. Moseley shares self-deprecating anecdotes about his early Wall Street interviews, Merrill Lynch, Windward Capital, and Pacific Corporate Group in a friendly, conversational tone. | |
| The History, Governance, and Mission of Alaska Permanent Fund | 3 | 5 | 1 | 1 | Ted prompts Moseley to explain the unique history and governance of the Alaska Permanent Fund. Moseley gives an educational monologue covering the 1969 oil boom, early wasteful government spending, and Governor Jay Hammond's constitutional framework designed to protect capital from politicians. | |
| Transitioning from External Consultants to Internal Direct Execution | 4 | 4 | 2 | 1 | Ted asks how Alaska shifted away from external fund-of-funds structures toward direct management. Moseley details how unwinding layers of consultants allowed the fund to capture higher intellectual capital and direct deal flow rather than merely saving fees. | |
| Core Philosophy of Private Equity Strategy and Manager Selection | 5 | 4 | 2 | 2 | Ted probes on how Moseley weighs manager strategy versus individual team quality in private equity underwriting. Moseley explains his analytical preference for evaluating market opportunities first before evaluating the team's competitive differentiation. | |
| Balancing Direct Investments, Co-Investments, and Severe Team Constraints | 5 | 5 | 2 | 4 | Ted presses on the paradox of pursuing labor-intensive direct and co-investments while operating a tiny team in remote Juneau. Moseley re-frames their sourcing model around a shallow, flat funnel designed to reject unpromising deals quickly to protect human bandwidth. | |
| Underwriting Co-Investments, Consultant Clouds, and the US LBM Deal | 4 | 4 | 1 | 2 | Ted asks for a concrete case study, prompting Moseley to detail their co-investment in US LBM alongside Kelso. Moseley explains using specialized external consultants on a deal-by-deal basis and navigating passive versus active governance. | |
| Capturing Value in Between: GP Stakes and Seeding Strategies | 5 | 6 | 3 | 4 | Ted challenges Moseley on why Alaska takes on extreme operational complexity for non-standard strategies given its massive scale. Moseley argues forcefully that participating in commodity syndicated co-investments earns poor returns, whereas providing problem-solving capital in seeding and GP stakes captures excess rents. | |
| Navigating Expensive Valuations, Pacing Discipline, and Secondary Trades | 6 | 5 | 2 | 5 | Ted presses on an apparent contradiction between Moseley's emphasis on long-term duration and his willingness to sell assets in secondary markets during high valuation environments. Moseley clarifies that pacing discipline and selective opportunistic exits allow them to mitigate peak valuation risks. | |
| Overcoming Talent, Compensation, and Geographical Challenges in Juneau | 5 | 5 | 3 | 3 | Ted asks Moseley how sustainable his role is given the legislative compensation caps and geographic constraints of Juneau. Moseley speaks candidly about political roadblocks, state salary comparisons, and the long-term risk of team dissipation. | |
| Personal Reflections, Book Recommendations, and Life Lessons | 3 | 3 | 2 | 1 | In closing rapid-fire questions, Moseley shares his outdoor hobbies, Dawkins's Selfish Gene, and his pet peeve regarding lawyers treating LP negotiations as zero-sum pendulum swings rather than value-creation partnerships. |
Statements from this episode (23)
Moseley: PE consulting has least attractive economics in private markets
“The nature of that business, of the private equity consulting business, is that the economics aren't very interesting. It's sort of the, maybe the least economically interesting part of the whole private markets ecosystem, but a potentially valuable platform f…”
Moseley: Alaska's initial $900M oil lease dwarfed its $219M state budget
“The first lease sale Which I think was in 1969 or 19 70 in Alaska, was nine hundred million dollars. So nine hundred million dollars in those 19 70 dollars went to the state treasury. But the state was tiny and the economy was stalled. The whole budget, the Al…”
Moseley: APFC holds $75B, with $20B in actively managed private markets
“So the overall fund is about seventy five billion dollars today, and 16% of that Today, it's marked at about, ah, 12 and a half billion is private equity. Altogether, we have, excluding real estate and excluding hedge funds, it's about twenty billion in assets…”
Moseley: In-House Direct Investing Matters More for Deal Access Than Fee Savings
“Our view then and our view now was we need to take out some of those layers and the benefit, the reward for that wouldn't be just avoiding some fees. That's actually sort of the smallest component of the incremental value that We identified, but that we would …”
APFC plans to grow private equity allocation from 16% to 19%
“Well, we have, I don't know how private equity today's 16 with a plan to grow to 19 over the next three years is the fastest growing component of this.”
APFC holds about $2.5 billion in internally managed credit and infrastructure
“We've got about two and a half billion in private credit and infrastructure and those neighboring activities, those activities that overlap on the margin with private equity. Are also actively managed internally.”
Moseley: Analyzing market opportunity before the team yields best PE outcomes
“Analytically, I think starting with a market opportunity and then trying to identify the best team to pursue, to execute on that market opportunity, that seems to have led to the best outcomes for me.”
Moseley: Talent and location constraints will ultimately derail APFC's success
“It's been very hard for us to open an office outside of Juneau, and so hiring and retaining the best people is a challenge for us. I think it's a challenge that will ultimately derail our success.”
Moseley: 25% non-fund PE allocation consumes two-thirds of APFC team time
“So while 75% of the capital is deployed through funds, the other 25% takes probably more like two-thirds of our time, and that's a range of activities that include co-investments, structured investments of different kinds in funds.”
Moseley: APFC never makes direct investments without consulting a specialized GP
“So even when we're making direct investments, I haven't made a single investment here without at least talking to a general partner with specialized skills.”
Moseley: Sponsor incentives matter more in co-investments than valuation multiples
“Understanding the context, understanding fully the incentives of the different players, that turns out to be more determinative than I would have guessed. If you go back and look at these deals, turns out some of those factors matter a lot more than the factor…”
APFC hires multiple outside consultants for larger private equity co-investments
“For a larger than average co-investment, we typically have More than one consultant often will have two or three, an industry expert, a banker, and sometimes a private equity sort of fund consultant, like a pathway or a step stone, and they're hugely helpful t…”
Moseley: APFC was largest founding investor in Juno, Denali, American Homes
“We have been involved from the founding and we've been the largest investor in several of these businesses like American Homes for Rent and Juno Therapeutics and Denali Therapeutics.”
Moseley: Commodity Co-Investment Capital Yields Lower Returns Than Underserved Niches
“Those are great managers, and there are lots of great deals out there, but blended, cumulatively, hard to earn, very high returns on what's essentially commodity capital. But if we can deliver co-investment capital to a corner of the market that's not getting …”
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.”
Moseley: Most LPs fail at pacing discipline by accelerating into hot markets
“One of the easiest things to get right for LPs, but still the thing that almost everybody seems to get wrong, is being disciplined about pacing, because there's so many structural mechanisms that push us as limiteds
To increase our pacing in hot markets, to in…”
Moseley: APFC sold secondary assets three times over eight years
“We've sold assets in the secondary market three times in the last eight years because we thought there was a, at least a temporary premium attached to certain assets, and in particular to a collection, to a portfolio of assets that could be aggressively levere…”
Moseley: APFC used secondaries and co-investments to avoid the J-curve
“We bought secondary assets, and that's because we were launching the program, and that's a great way, and it's the only secondary Asset acquisition that we've done because of a view on pricing, but there it made perfect sense because we were able to eliminate …”
Moseley: APFC needs 18 months to get legislative approval for an FTE
“It might be that it takes 18 months to get approval for, because we have to go through a legislative budgeting and approval process, to get approval for an extra FTE”
Moseley: APFC owns 299 Park Avenue but cannot occupy space there
“Say, two 99 Park Avenue, which is a building we own, but I'm not allowed to occupy space there.”
Moseley: Not interested in staying at APFC without competitive resources
“If we're able to deliver those resources, which really just translate into money and focus, a larger team, a well-paid team, if we can't deliver those resources, then we won't win. And I'm not really interested in sticking around if we don't have the tools to …”
Moseley: Alaska Permanent Fund invests in 15 to 20 funds per year
“We're investing in 15 or 20 funds a year”
Moseley: LP and GP contract negotiations should not be viewed as zero-sum pendulums
“The metaphor that comes up endlessly is that it's a pendulum. Every time I work with a different lawyer, they'll say something about how the pendulum has now swung a little bit more to the GPs or a little more to the LPs, And the reason I hate that metaphor is…”