Alex Abell of RCP Advisors explains why lower middle market private equity has been more insulated from interest rate spikes than upper-market buyout funds.
Assertion Not checkable as stated
Abell: Data shows almost zero correlation between buying cheap and PE returns
“You might say, well, buying cheap is better, but when you look at the actual data, you do a regression analysis, and so maybe you would expect to see it in the cheaper you bought, the return would be up and to the right. And what we really see is that, one, th…”
Insight
Abell: Vintage year benchmarks fail to match private equity investment timing
“A vintager benchmark has some significant flaws in it. First off, it puts against managers that have started their funds at similar times. These are managers that, of course, are investing over a two to five year period, depending on how quick or how slow they…”
Opinion
Abell: Anyone Claiming to Pick Top-Decile PE Managers Is Lying
“And I say probability because if anybody tells you they can pick the top decile manager of any given vintage year, they're completely wrong, right? And lying.”
Opinion
Alex Abell: Many GP-led continuation vehicles suffer from significant conflict issues
“Now, we see tons of these things, and many of them have significant conflict problems. They have significant issues around structure and alignments.”
Assertion Not checkable as stated
Abell: Larger private equity investments historically yield lower returns with less risk
“We were doing at BlackRock larger investments on the fund side, larger investments on the co-invest side and secondary side, and that part of the market has historically generated less returns, and certainly in a less risky way as well.”
Insight
Abell: Institutional LPs often deploy $10 billion with just three people
“The problem is that for most limited partner organizations, even sometimes a very large institutional platforms, they don't have a huge staff like a private equity fund of funds does. They might have two or three people working on investing ten billion dollars…”