Assertion Supported
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. …”
Assertion Supported
Fund sizes and AUM do not accelerate after selling a GP stake
“On the AUM side, I was actually surprised to see that step ups and AUM growth didn't expand at the same rate that I thought it would. So step ups actually were the same, if not slightly lower after selling a stake.”
Insight
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.”
Insight
LPs bought GP stakes to share in economics they helped create
“I think in general it was that strategic element of there were a lot of large We'll say institutions that were looking to have a closer relationship. And so whether it was a large pension looking to get a better allocation and just economic relationship with, …”
Opinion
Mid-market GP stakes hit a sweet spot at 20% to 25% gross IRR
“When you look more at the mid-market, you're looking at 20 to 25% gross IRRs, and again, I think that's kind of the sweet spot, because you're getting paid a decent amount more, especially on the cash flow yield side with the lower pricing, but there's also mo…”
Insight
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.”
Insight
Private equity GP stake sales often avoid the highest bidder
“And in a lot of cases, one thing that's really interesting is that these deals don't always go to the highest bidder just because of the value add that some of these teams are able to bring.”
Assertion Not checkable as stated
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.”
Assertion Supported
Sixth Street and Golub sued Dyal over the Owl Rock tie-up
“This can become a sticky point, and one recent case we saw this highlighted was Dial, where it had some lawsuits filed by two portfolio companies, Sixth Street and Golub, to prevent Dial from potentially sharing important and Critical information with Alrock, …”
Insight
Public PE firms face intense pressure to prioritize fee-related earnings
“I think there's certainly more pressure to change the business model once you go public. And I think we've seen that with Carlisle, we've seen that with Blackstone, a greater focus on fee-related earnings, on growing the number of strategies.”
Assertion Supported
Dyal and Petershill refinance 15-20% IRR GP stakes at 5-7% cost
“Because, you know, you can go out and refinance some of these at a five to seven percent cost of capital, and you're putting that against something that's delivering 15, 20% plus IRRs.
And so Dial and Peter Sill have both done this, and I think we may see more…”
Prediction Open · timeframe Aug 2031
Mid-market GP stakes will roll into perpetual vehicles within a decade
“I think we're going to get to some .810 years down the road where these mid-market
Funds are still holding quite a few high quality assets, and they might be rolled into some sort of special purpose or perpetual life vehicle where LPs then get the option to ei…”
Prediction Held up
Sports leagues barring PE stakes will quickly pivot to allow them
“And I think the other leagues that have not yet allowed it will change pretty quickly once you see what happens with some of these firms that do sell a stake.”
Prediction Not checkable as stated
Many large private asset managers will sell stakes within five years
“I think a lot of the large private asset managers are going to sell a stake between here and the next five years.”
Prediction Not checkable as stated
A significant number of private asset managers will IPO by 2026
“And I also think we're going to see a good chunk go public. I truly believe that after EQT, if Bridgepoint does, Blue Owl, I think the landscape is truly changing. And I think that's going to be reflected in about five years.”
Assertion Supported
Blackstone sold a 20% stake to Nikko in 1988 for $500M
“So to really look at the history of stakes, you have to go back a good 30 plus years to when Blackstone sold a minority stake to Nico Securities in 1988. And this was Just after their first fund was launched, and they sold a 20% stake at about a five hundred m…”
Assertion Supported
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.”
Assertion Not checkable as stated
GP preferred equity deals target a 1.5x return over five years
“On the PREF deal, it's typically going to be a five-year deal where the lender's trying to make One and a half times their capital back.”
