Opinion
Giannini: Private Equity Chases Shiny Trends Rather Than Building Portfolios
“You're hearing portfolio construction, which is not what this industry talks about. This industry is nothing if not the chaser of the shiniest ball that comes in the room.”
Prediction Not checkable as stated
Giannini: Newer PE managers will struggle over next two to three years
“I don't think being a newer manager in the next two or three years, unless you have some incredibly great area you're in, or have something unique, are going to do very well. It just seems like the more conservative, I'll call them, organizations are Probably …”
Prediction Open · timeframe Apr 2033
Giannini: Private Wealth Will Grow for 10 Years but Favor Scaled GPs
“That will continue to be a growing part of the market. It will have hiccups. We saw the ones at the end of last year on some of the name products, and so I think people need to be careful in terms of how they're selling into that market, the investor base that…”
Prediction Held up
Giannini: Bank retrenchment will drive continued expansion in private credit
“The movement away from traditional sources of credit Is only going to continue. Banks are getting out of that business, and what's happened in the U.S. With Silicon Valley and Signature, I mean, there's just going to be more need for private credit. The amount…”
Assertion Not checkable as stated
Giannini: Active Co-Investor Demand Per Deal Dropped From 50 to 12
“Three years ago, on any deal, there were a 150 people that said they wanted to do a co-invest on that deal. Maybe 50 of them actually ended up answering the phone and doing it, and now it's down to 10, eight, 12. It has very, very significantly shrunk the univ…”
Prediction Not checkable as stated
Giannini: ESG will remain superficial talk or political tools without clear metrics
“Until we get there, I just think ESG will be either a bunch of happy talk on one side, or a bunch of political tools, essentially, on the other side.”
Opinion
Giannini: Private Equity Needs to Learn to Be Socially Acceptable
“It needs to learn how to now be socially acceptable, if you will. It's kind of like an awkward teenager that goes, oh, I didn't know how to behave that way. We'll get there.”
Insight
Giannini: Portfolios without illiquid assets will underperform and lack balance
“The illiquid part of portfolios is now an established part of how you invest. If you're not in it in some way, you're not really having a balanced portfolio that's going to perform.”
Insight
Giannini: Scaling in a growing industry is harder than a corporate turnaround
“What I've learned about a growing company in a growing industry is that it is much harder than a turnaround, oddly enough. A turnaround focuses you on sort of the existential crisis. The problem and the challenges for growing a company is that you have a numbe…”
Opinion
Giannini: Mid-Sized PE Firms Lag on Seamless Succession Planning
“I think it's the middle size firms where Then we're really going to have to see, because many of those firms really are, at the end of the day, dominated by a couple of people, and I'm not sure that a lot of them are setting up the kind of succession planning …”
Insight
Giannini: Sector concentration in software is acceptable due to diverse sub-segment dynamics
“Is the sector, when they say they're in infotech or software, it's so vast that the drivers of return, the drivers of what will make, the industry will not rise or fall. The multiples may in the public markets because they lump them in together, but the indust…”
Insight
Giannini: Private equity dynamics involve mutual abuse between GPs and LPs
“This is a tense subject because GPs abuse LPs and LPs abuse GPs.”
Insight
Giannini: Most GPs fundamentally do not understand LPs
“The thing GPs, and I say this to them all the time, they do not understand LPs. Most of them just don't understand where an LP is coming from.”
Opinion
Giannini: Portfolio construction drives at least 50% of private market returns
“I think portfolio construction is at least 50% of return in the private markets.”
Opinion
Giannini: PE hypocritically resists tech and data internally
“To a private equity person, we're the only industry that does not believe technology and data will change the way we operate. And yet we tell every other industry that we buy or control that, oh my god, technology and data are going to change your industry.”
Opinion
Giannini: Cheaper middle-market private equity pricing is a complete myth
“So I would say the pricing myth is exactly that. It's a myth. There's as much competition in the mid-market as there is in the larger end of the market.”
Insight
Giannini: Proprietary deal flow does not exist in private equity
“The other myth is we have proprietary deal flow. No, you don't. You might have a proprietary deal. You do not have proprietary deal flow because the reality is everybody knows private equity is around, and so there's no way to get a deal without someone going,…”
Assertion Supported
Giannini: Middle-market return dispersion is vast and widened over 10 years
“The larger firms, the largest, have a narrower dispersion of return. In other words, the difference in return is not that great between XYZ big firm. Don't tell them that, because they're also a top quartile. In the mid-market, there's a vast spread of return.…”
Opinion
Giannini: Continuation funds are currently used for GPs' better-quality portfolio companies
“Why I think continuation deals are really interesting is that by and large, today, you are seeing the better companies go out in those deals. I think where you worry is when it starts to be, oh shoot, this is so easy, I'm just going to throw out any deal. I do…”
Insight
Giannini: GPs change deal risk profiles between fund start and fund end
“General partners will do different deals at the beginning of their fund than they will do at the end of their fund, and how does that work for you? If it's at the end of their fund and they want a very low risk, but lower return deal, they're looking for more …”
Opinion
Giannini: Much of the ESG movement is hype and happy talk
“I would say a lot of it is hype. It's a lot of happy talk. It's a lot of feeling better about yourself saying you care about ESG.”
Opinion
Giannini: More capital in private equity does not necessarily lower returns
“I am not Of the view that more money necessarily means lower returns.”
Prediction Not checkable as stated
Giannini predicts private wealth will become huge participants in private markets
“I think the high net worth investor, the wealth channel, will be a huge participant in the private markets, and they should be.”
Insight
Giannini: Investors claim long-term horizons to hide recent investment mistakes
“People that tell me they're long-term investors, they're always telling me they're long-term investors when they don't want to acknowledge a mistake they just made in investing.”
