Jul 22, 2019 · 47m · capital-allocators
André Bourbonnais – Blackrock Long-Term Private Capital (First Meeting, EP.04)
0:00 / 0:00
gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
Ted Seides interviews André Bourbonnais, Global Head of BlackRock Long-Term Private Capital, about his leadership across major Canadian pension funds and the creation of an innovative permanent capital vehicle designed to challenge traditional private equity models.
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 25.7% of the talking time here. How this is scored →
Ted as informed peer 4.5 Guest teaching 3.5 Guest disagreement 1.6 Ted pushing back 1.9
speaking balance: gold is Ted, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 17:05 Indictment of PE Fee Crystallization and Churn
Bourbonnais sharply criticizes traditional private equity firms for selling high-performing businesses prematurely merely to show realizations and crystallize carried interest.
Hardest push from Ted ▶ 36:13 Direct Challenge on Valuation Multiples and Market TimingTed explicitly rejects the notion that market timing can be ignored, pointing out that buying at elevated double-digit EBITDA multiples represents a 50% price handicap.
Biggest teaching moment ▶ 19:15 Exposing Traditional PE Management Fee DistortionsBourbonnais breaks down how traditional managers expanded fund sizes 10 to 40 times without lowering basis-point fees, turning operating budgets into profit centers at LP expense.
Ted holds their own ▶ 36:13 Analytical Pushback on EBITDA Valuation CyclesTed demonstrates deep market command by contrasting historical single-digit EBITDA multiples with modern double-digit pricing to question LTPC's entry discipline.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Ted as informed peer | Guest teaching | Guest disagreement | Ted pushing back | Why |
|---|---|---|---|---|---|---|
| André Bourbonnais’s Career Path to Pension Leadership | 4 | 2 | 1 | 1 | Ted guides Bourbonnais through his career transitions from corporate law and telecom to senior leadership at CDPQ, CPPIB, and PSP Investments. The tone is entirely conversational and biographical with no adversarial friction. | |
| The Canadian Pension Model and the Genesis of LTPC | 5 | 4 | 2 | 1 | Bourbonnais explains the Canadian pension governance model, internalizing direct investing to strip out friction costs, and the genesis of BlackRock LTPC with Larry Fink and Mark Wiseman. | |
| Rethinking the Traditional Private Equity Playbook | 5 | 5 | 3 | 1 | Bourbonnais critiques traditional private equity's reliance on excessive leverage and short-term cost cutting, arguing that flipping companies repeatedly creates massive friction costs for LPs. | |
| Fund Structure, Budget-Based Fees, and Compounding | 5 | 5 | 2 | 1 | Bourbonnais outlines LTPC's structural innovations, particularly replacing percentage-based management fees with an LP-approved fixed operating budget and compounding retained cash flows. | |
| Target Company Profiles and Deal Origination Strategy | 5 | 4 | 2 | 2 | Bourbonnais defines LTPC's target universe, ruling out competitive auctions in favor of founder-led, family-owned, or corporate carve-out businesses seeking patient capital. Ted probes whether this strategy was hypothesis-driven or born from market discovery. | |
| Sponsor Message: Ridgeline Modern Investment Platform | 4 | 4 | 1 | 1 | Following an ad break, Bourbonnais outlines how LTPC leverages the broader BlackRock ecosystem, senior executive access, and dedicated investment banking teams to source proprietary deals. | |
| Ownership Playbook: Leverage, Re-underwriting, and Exit Decisions | 6 | 5 | 2 | 3 | Ted presses on potential friction when management teams face rotating deal teams and periodic re-underwriting. Bourbonnais clarifies that cash flow priority remains with the generating company and founders welcome strategic input. | |
| Navigating High Valuations and Portfolio Construction | 7 | 4 | 2 | 7 | Ted directly challenges Bourbonnais on market timing, arguing that deploying capital in double-digit EBITDA multiple environments forces a valuation choice. Bourbonnais defends LTPC's underwriting by highlighting secular growth and the lack of forced exit windows. | |
| Team Succession and Long-Term Institutional Longevity | 6 | 4 | 2 | 4 | Ted questions how partner motivation and succession work when a fund's life is permanent but human lifespans are finite. Bourbonnais outlines their multi-generational team architecture and planned leadership transition. | |
| Closing Questions: Aviation, Pet Peeves, and Personal Drive | 3 | 1 | 1 | 0 | Standard rapid-fire closing questions covering Bourbonnais's passion for aviation, hatred of meeting inefficiency, reading habits, and entrepreneurial inspiration from his father. | |
| Mandatory BlackRock LTPC Legal and Regulatory Disclosures | 0 | 0 | 0 | 0 | Mandatory legal and regulatory compliance disclosures read by voiceover; host and guest are absent. |
Statements from this episode (10)
Deal teams are transaction experts; IC chairs provide pattern recognition
“When somebody has spent three, four, 500 hours on a transaction, they're the expert. You're not. But you hope that your training, that your experience, that the fact that you've seen so many transactions is really going to help you focus on the right question …”
Pension plans are long cash but short human capital for direct deals
“So I'd been trying to build more long-term strategy within our pension plan, but those plans are long cash and short human capital, so it was difficult to get the origination capabilities that we needed And probably more importantly, the value creation and ass…”
BlackRock Long-Term Private Capital avoids selling companies just to crystallize carry
“What we're trying to do here is really to Be more company focused and look at buying good companies and making them better and making them great. As my partner, Colm Lanigan says, cost reduction is not really a strategy, so we are extremely focused on growth, …”
Since 2000, 500 companies have been owned by three consecutive PE funds
“There's a statistic that says that since 2000, there's 500 companies that have been owned consecutively by three or more private equity fund, which means that those company would continue to do really well in the private domain, have been owned now for 1215, 1…”
Traditional PE fee structures incentivize managers to scale funds for themselves
“The management fee was there to cover the operating costs of the management company, and as the fund grew 10, 20, 40 times, the fees charged were not reduced by the same factor, and that structure is really conducive for the manager to increase the size of the…”
BlackRock LTPC uses an LP-approved fixed budget instead of percentage fees
“We went back to the roots of private equity where management fee was really designed to cover the operating costs, and now we have a fixed budget approach, and that has a significant impact because first, we ask our investor to approve the budget, but second, …”
Rotating PE owners and capital structures every few years disrupts companies
“It's a very disruptive activity for a company to change the partnership, the capital structure.”
BlackRock LTPC rotates internal deal teams to re-underwrite companies without selling
“What we're saying is that we can do the same thing either with a different deal team, with different operating partners, with different consultant on a regular basis. And achieve the same result without all the cost friction of selling the company three or fou…”
BlackRock LTPC eschews dividend recaps and maximum leverage for moderate debt
“We're not going to use leverage to max it out and dividend recap, because that's really doesn't work in our model. We're going to use leverage in a moderate way, but we will be able to use it and increase the leverage on a timely basis, but really in an effort…”
BlackRock LTPC targets $500M to $1.5B equity checks in 10-15 companies
“So equity check of between 500 and a billion and a half. So let's call it 10 to 15 companies at the end. And again, the holy grail is really that once we have this portfolio of seven, eight, nine, 10 companies, that it generates enough cash flow to let us cont…”