Rees: Dyal underwrites GP stakes purely on cash flow, not exit sales
Michael Rees · Michael Rees – Inside GP Stakes at Dyal Capital (Capital Allocators, EP.278) · Oct 31, 2022 · at 14:28
Michael Rees, founder of Dyal Capital and co-president of Blue Owl, details Dyal's investment modeling and underwriting philosophy for minority GP stakes.
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“From an underwriting perspective, we still use that original lens of cash on cash returns. We certainly don't get the type of cash on cash returns that we got back then in the hedge fund space with 25% yields, but we really think about it from an underwriting perspective as how long till we can get our money back How long until we can make a private equity like return? And those are cash based. We do believe that there is enterprise value at the end of the rainbow here, but we don't want to underwrite a sale. We don't want to underwrite that we can achieve that, that value.”
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