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Toomey: Venture and Asia require more diversification than North American buyout
“You probably should have more diversification in venture in Asia than you do in the North American buyout market because the dispersion of returns that our QIS team has shown over the 40 years of data that we have says you do want to grab some of that right ha…”
Toomey: HarbourVest data shows positive correlation between strong ESG programs and returns
“Our data suggests that's not the case. There's actually a positive correlation between managers with great ESG programs and the returns that they generate because they think about this, and it is good for the business, it is good for The underlying company's l…”
In secondaries, high-quality assets at par generate higher returns than deep discounts
“Yes, there's a benefit that comes with buying an asset at a discount, but you get that discount once. And if you buy the right asset managed by the right manager, that manager and those assets can create gains year after year after year until they get realized…”
Generalist relationship managers inherently overvalue their own GPs' deals and secondaries
“The person who was on that point on the manager relationship, everything that that manager, this is the best set co-investment opportunity. We've got to buy this secondary at one Oh five because they're such a great manager. And so really from the beginning, W…”
Toomey: Private equity is the only asset class driving excess pension returns
“And if anything, it's the only place over the last decade where That has contributed the excess return when they're trying to meet their eight percent or seven and a half or seven percent total asset return. They're not getting returns in a lot of places, and …”
Private equity capitalization could eventually reach 20% to 30% of public markets
“Tell me why it can't be 20% relative to the size of the Publix, or 30%. Because I think what has happened in the last couple of decades is almost a complete development, and you're seeing this on the credit side, of a completely independent private capital mar…”
Pitching an investment as 'good risk-reward' is a euphemism for below-bar returns
“It is shrouded in what I described as this is a great risk-reward opportunity, because you, of course, have to evaluate the risk as well. But when I hear that, I actually believe that's a euphemism for this is a below the bar return.”
Toomey: Private markets cannot easily be timed, but markets easily time allocators
“We have a saying here that it's very difficult to time private markets, but it's very easy for the markets to time you.”
Private equity managers entering at 12x EBITDA underwrite exits at 10x
“What we see is managers who, when they're underwriting a company and going in at 12 times, they're not underwriting to exit at 15. Actually, they're underwriting to exit at 10, because the market does go through cycles, and all that does is to get to your unde…”
Toomey: Co-investing in club deals reveals which PE sponsor truly leads
“In the club deals, you have the advantage point of, well, whoo, Who's actually doing the work? Who's actually just a financial investor? And who does management call when they have issues? Who does management defer to in the board meetings? And so that is inva…”
Co-investments where the lead sponsor holds only 20% lack sufficient alignment
“And the lead sponsor, this again, back to alignment, if the lead sponsor is 20% of the capital and co-investors are 80% of the capital, that's not very good alignment.”
Toomey: HarbourVest's Largest Historical Exits Came From China Venture Portfolio
“We've had some of the largest exits. That we've ever had across the history of our firm come out of our China venture portfolio because the numbers are just so unbelievable.”
Numerical investment committee ratings filter out lukewarm deals better than binary voting
“What we heard from TA was they adopted a numerical rating, one through five, and you had to have a collective number across The total voting members. And the reason why is, what they were trying to do was control for what I'd call the, I'm willing to go along …”
Toomey: International PE markets develop faster and differently than the US
“I think it would be a misconception to think that a market outside of the U.S. Is just X years behind the U.S. Or Y years. I mean, these are developing in their own ways. They're developing in a much faster pace than the U.S. Private equity markets have.”
Toomey: HarbourVest walked away from impaired co-investments in 2001 and 2009
“We certainly have had investments where we've had to make the tough call to walk away from, right? We had a different view than the lead sponsor. We generally follow the sponsor and those situations, but we are fiduciaries. And so if we think that the risk rew…”
Toomey: HarbourVest commits to giving GPs a 24-hour co-investment response
“On the co-investment side, what we found they value the most is, frankly, a quick no is always better than an elongated no. And so we just have this commitment, you know, 24 hour period, we will get back to the manager with a quick read.”
Toomey: Careers follow a J-curve where mid-career contribution outpaces returns
“Oftentimes, there is a J-curve to it. And you get to a point in the middle of your career where you say, wait a minute, I'm contributing a lot. But I'm not actually receiving a lot in return, right? I mean, that's a common, you know, people get impatient, and …”
Toomey: Private equity co-investing only became an asset class in the past 5–10 years
“That market has really become a bonafide sub-asset class unto itself. That's really only a five or 10 year development. In the nineties, it wasn't even a cottage industry. It was nascent.”
HarbourVest invested $50M to $60M into Wayfair's predecessor before its IPO
“We invested 50 or sixty million dollars out of that 200 into CSN stores, which became a rebranded as Wayfair, and a couple years later went public.”
Toomey: Private equity access expanded beyond standard 10-year fund commitments
“So for the beginning of the industry until the last 10 years, if you really wanted to invest in private equity, your choices were generally a ten-year limited partnership. You would make an investment up front, and then the manager would invest and create liqu…”
HarbourVest Partners has committed $30 billion to secondary transactions historically
“We've committed thirty billion dollars to secondaries in our history”
Toomey: HarbourVest first backed Insight Partners via secondaries in 2003
“We've actually sourced primary relationships first through the secondary business, because we got to know somebody and said, wow, this person said X, they delivered X plus 10%, and as a result, Insight Ventures is a perfect example. 2003, our first investment …”