When investors default – part 2: prevention is the best remedy

In last month’s article, we looked at what happens when an investor in a private equity fund defaults on its obligation to meet capital calls. In this article, we examine some of the other issues arising from an LP default for the fund, its manager, investors and financial regulators. If an investor fails to meet…

When investors default – part 1: commitments and consequences

In this article, the first of two (click here to see read follow up), we look at what happens when an investor in a private equity fund defaults on its obligation to meet drawdown requests; the effects of a default on the fund manager and the other investors; and the tools available to the manager…

GP-led secondaries: Everything you wanted to know but were afraid to ask

Secondaries have been a hot topic in private equity in recent years. The first secondaries fund in history raised a mere $6 million in capital back in 1981. Forty years later, the biggest secondaries fund of all, managed by Ardian, has $19 billion in capital. In 2020 alone, secondaries funds raised $100 billion. Four of…

Performance analytics all PE firms should have

MJ Hudson recently acquired Oliver Gottschalg’s fund performance analytics firm PERACS. You can read more about it here. To be blunt, Oliver’s work is damn impressive. It is the first time I have encountered someone that can distil alpha down into something a lot more useful and understandable. He takes out the market bias, the…

The forever fund: evergreen capital in private equity

The traditional private equity fund is a 10-year close-ended vehicle, with a five-year investment period and an average holding period of three to six years. Some argue that the time-limited model encodes short-termism into the private equity perspective. The manager’s decisions to buy, hold and sell investments are influenced or even ordained by the ticking…

Crisis…which one?

Well, it’s hard to tell these days. There are many nominees for the most overused word of the pandemic, but “crisis” must be up there. Today’s crisis du jour is the one facing equity markets. No, no, not the one caused by hedge funds, this time: the one caused by seemingly ordinary people. Ordinary people…

Private equity fund economics – what a difference (or not?) a year makes

Every year, MJ Hudson surveys the terms of a large, diverse sample of recently-closed private equity (PE), venture capital (VC) and growth capital funds, for which we have advised either the fund manager or a prospective investor. In this article, we assess the recent trends in core economic terms. For more information, please contact one…

Doing differentiation, digitally

We’ve written before about the challenges of differentiating one’s private equity fund and firm from the crowd. As marketing and communications specialists, we have a vested interest here, of course. But if private equity fund managers were actually good at differentiating themselves digitally and their funds from their peers, the industry wouldn’t have adopted the…

GP stakes investing – the rise of a new alternative strategy (part 2 of 2)

In last month’s Alternative Insights, we looked at the reasons behind the rise of GP stakes – an investment strategy in which an investor or fund acquires equity interests in a fund manager, rather than one of the funds it manages. In this month’s piece, we examine some of the risks of taking stakes higher…

Real assets in a COVID-19 world

In this paper, we discuss some of real assets, namely infrastructure and real estate, investment trends that have been brought to the fore during the COVID-19 crisis, from accelerating digitalisation to the decline in retail property. We will explore how asset classifications are likely to develop in response to these long-term trends and why it…

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