British Business Bank North of England’s Post

The Institutional Limited Partners Association (ILPA) plays a significant role in advocacy and engagement for global allocators in private markets, and spending the past few days at the Institutional Limited Partners Association (ILPA) Summit Europe in London has no doubt been memorable. We are thankful for the ability to participate and maintain an engaging role across the limited partner community. Even more interesting, I find these events to have a concentrated base of established, high-quality fund managers who are focused on being market leaders in their respective investment strategies as opposed to pure asset gathering and strategy accumulation. I appreciate spending time and learning from fund managers such as Alpine Investors, Montagu, Levine Leichtman Capital Partners, LLC, Clipway, TJC (The Jordan Company), Stirling Square Capital Partners, Forbion and others. A few key takeaways: - Cashflows: lack of distributions remain high on the minds of limited partners, but not to the stress levels felt in 2022/23, as LPs are seeing signs of life and visibility in distributions, particularly in private equity, and of course, higher yields from private credit - NAV financings remain a topic of LP concern. Yet, the market continues to scale - Continued flight to quality and track record of managers. No school like the old school - LP and GP share the word "Partnership": LPs should be seeking GPs who have LP empathy and understanding of fiduciary duty, therefore resulting in the trust to commit capital to GPs who consistently meet/exceed expectations. Fundraises for the best GPs are still swift processes - Middle market private equity both in the US & European markets remain of the highest interest and priority, with the continued interest for private credit in what appears to be a prolonged higher-rate landscape - LPs as "allocators" versus "investors": interesting to see the disparity in LP mindsets - those who are portfolio and risk managers maintaining allocation targets and assessing re-ups, while awaiting distributions; and on the other hand, there are the investors, who are proactively seeking the multitude of market dislocations and opportunities (ie secondaries, esoteric strategies, direct deals, energy/commodities, GP seeding) to invest for maximum returns - Not all LPs are aligned or thinking equally - as an LP, the question arises in LP-alignment, ie the importance of the types of fellow institutions as LPs in the partnership. Cost of capital, IRR versus MOIC, compensation basis, duration of investment expectations, sheer size and priority to drive scale of capital deployment over returns are all factors LPs should consider when assessing the other investors in the fund partnership #london #alternativeinvestments #privatemarkets #privateequity #europe #capitalmarkets #navloans #limitedpartners #institutionalinvestors #fundmanagers #allocators #investors #diversification

#dailyorbit: “Why GP stakes is the strategy of the moment” Private Equity International recently published an interesting article with the above title, referring to funds that make minority investments in private capital firms themselves, rather than in the funds they manage.* “For years, the number of participants in this niche corner of the industry could be counted on two hands; now, the strategy has had enough time to prove itself a viable one and is benefitting from LPs’ increased appetites and potential investment targets as a result,” writes Helen de Beer. The article also highlights how non-institutional investors seeking defensive investments might find GP stakes “incredibly appealing”. This appeal stems from the potentially more stable nature of cash flows. Indeed, GP stakes funds can unlock a distinctive return profile that includes management fees, carried interest and capital appreciation. Find out more about these features and GP stakes in general in our article below. #PrivateCapital #GPStakes #InvestorInsights *https://moonfa.re/3wLlRVe

Banner Ridge Partners, LP, a $7.3 billion multi-strategy private equity investment firm, has completed fundraising for Banner Ridge Secondary Fund V at its hard cap with $2.15 billion of total commitments. BRP V is the latest fund to be raised as part of the firm’s #flagship secondary program. The Fund was oversubscribed, receiving capital commitments from a wide range of institutional investors, including pension funds and several prominent family offices. This is the fifth fundraise since the firm became an independent business in June 2019. Banner Ridge Partners is a $7.3 billion alternative investment specialist that identifies best-in-class private equity managers in niche markets. The Firm manages discrete investment vehicles for primary, co-investment, and secondary investment strategies. Anthony Cusano, CFA C.J. Driessen Rob O'Connor Matthew Brewer Eric Vanderhye, CFA Prashant Sundar Andrew Wu, CFA Michael Toraason Dianelys Perez Morales Riccardo Tirelli Panos Voulgaris Kareem Kubeisy Vanessa Liang, CPA Jacqueline Sellinger #funding #vc #investment #startups #investors #usa

The secondary market is booming. An article by Jessica Hamlin on PitchBook underscores that Hamilton Lane, a global investment management firm, has successfully closed its largest fund ever. The proceeds, which totalled $5.6 billion, will be invested in the secondary market, which has garnered traction in recent years. A recent Pitchbook report outlined that in 2023, funds focused on #secondaries raised 124.5% more than in 2022. Given the liquidity challenges that have affected the overall fundraising landscape, secondaries have become more attractive for LPs. Investors in Hamilton Lane’s fund include pension #funds, sovereign wealth funds, and foundations, among others, which signals the bullish outlook that financial institutions have in secondaries to generate attractive long-term returns and boost #investor outcomes. Read the full news here: https://lnkd.in/e8VaJH3m

How does a private equity fund come to life? Ever wondered how these sophisticated investment vehicles are born? Learn about all the steps in today's edition of #PrivateEquityMasterClass. Our short article looks at the critical events that occur during the formation stage of a private equity fund. Read the full article below. Don’t invest unless you’re prepared to lose all the money you invest. #PrivateeEquity #InvestorEducation #FundLifecycle #Formation

I wanted to give a bit of insight on why today's launch of the Northern Powerhouse Investment Fund II by the British Business Bank is so important to the North. I speak to lots of entrepreneurs and businesses are finding it increasingly hard to raise money. Investors have battened down the hatches against a backdrop of high interest rates and continued economic uncertainty. High net worth individuals (HNWIs) are choosing to sit on their money as investment periods get stretched from four or five years to seven or eight. Venture Capital Trusts (VCTs) and the Enterprise Investment Scheme (EIS) are expected to be down by between 30-40 per cent this year. It's a perfect storm. The Northern Powerhouse Investment Fund II can free that log jam and get businesses in the North growing again. Well done to David Foreman; Gary Guest; Michael Vassallo; Louis Taylor; Sue Barnard and everyone else involved in such a monumental day for the North. https://lnkd.in/e4CewJcS

Falfurrias Capital Partners, today announced it has closed its latest, oversubscribed lower middle-market private equity fund, Falfurrias Growth Partners I (FGP), at $400m investor commitments. Demonstrating alignment with its investors, the General Partner of the fund committed $45m in capital alongside FGP limited partners. FGP is the firm’s first dedicated growth buyout fund. In addition to FGP, FMP manages its larger $850m fund, Falfurrias Capital Partners V, and has raised over $2.2bn of capital since inception. Investments in FGP will range from $20m to $50m. “We are delighted to have recruited world class investors and operators to join our team to help launch and lead FGP. The fund will allow us to pursue attractive investment opportunities that are identified through our Industry First process but where we previously did not have the investment expertise or fund strategy to pursue,” said Ed McMahan, Managing Partner of FMP. #PEInsights #privateequity #investments #fundraising

Signal Hill’s unique 20 year term for its Fund IV stands out from other private equity companies which typically have a much shorter 10 year term for their funds. The extended life of our investment fund allows us to work with the management teams to execute a strategy patiently and thoughtfully. Acquisitions and investments can be completed with a long-term investment horizon and avoid the need for a short term win or a quick flip.    The 20 year fund life also allows us to manage through economic disruptions caused by unforeseen events such as Covid or a recession without the pressure of selling a business because the investment fund is coming to an end or the investors require a liquidity event. We can wait out macro-economic changes and help companies accelerate through market events.   Working with our partners who oversee the portfolio companies for a longer period allows Signal Hill to create bigger, better, and more resilient businesses. A true invest-and-build approach that allows us to take a long-term approach in decision making and focus on what matters: employees and customers.   Our approach to private equity allows our management team to see-through long-term growth in their companies and avoid a quick flip to impress investors. A long-term fund life means we have the freedom to sell, when management advises that the time is right. Over 10-15 years, real partnerships can be formed; and great, enduring business can be created.   Follow this link to learn more about how we have created enduring business: https://lnkd.in/gyg-cCkB

Trends in LPs' expectations are moving towards where the Texas Legacy Fund already is. From Chamath Palihapitiya's observations: 1. Lower fees 2. Lower carry 3. Higher hurdle rates 4. Lower ownership in winning companies 5. Lower terminal value of their enterprise when the sell a share to secondary firms. From Pitchbook: 'Sturman, who sees mostly larger institutional investors like public pension funds and asset managers, said many of his clients are declining to commit wholesale to a venture fund. He said some are even setting up pledge funds, a concept borrowed from private equity, which allows LPs to provide capital to a particular deal or pool of deals.' https://lnkd.in/ePYbmeyJ

Last year, private equity fundraising was among the many things that suffered at the hands of high interest rates and geopolitical headwinds. But this year when it’s all said and done, experts are pointing to a brighter bounce-back calendar year for PE investment. As Jerome Wallace of William Blair states, “It feels like 2024 is off to a better start than last year. There is more deal activity, which sends distributions back to LPs, public market performance is improving and there are a number of groups raising new capital.” This feeling is largely shared across the PE community. Good reason to be optimistic for this year. #PrivateEquity #PEInvestment #deals #capital #officeofthecfo