Best FoF firms (Primary/Secondary/Coinvest)
A lot of info on this forum seems outdated. Can someone comment on the best shops in 2022 in terms of comp and exit opps? Talking about the likes of Alpinvest/Lexington/Hamilton Lane/Harbourvest/AIMS/Adam Street/StepStone). Specifically interested in their APAC offices, but any info is appreciated.
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None of those groups are very good at secondaries
What are some of the top shops at secondaries? Coller?
Coller raises a lot of money but their returns are pretty bad, but not as bad as Pantheon lol.
You're going to want to look at firms sub 2bn in aim dedicated to secondaries to find quality. The bigger you get the more crap the returns get.
Just FYI- most secondaries firms don't try to have herculean returns, that's not why LPs invest in them. It's more about consistency of an acceptable return. If a secondaries fund is coming back with consistent outsized return, you have to wonder what the risk profile they're taking on is.
I disagree. With that mindset you're living in 2013 when secondary funds only bought diversified LP stakes and used leverage to pump out 1.5x and 14-15% IRRs. With GP-leds in the mix most groups are aiming for Net 18-22%+, certainly higher than any run of the mill LBO fund. I work for a secondaries fund. We use no leverage and have a long track record of net 20%+ IRRs to our LPs.
HarbourVest is the best FoF
Benchmarks would state otherwise.
Landmark. Just got acquired by Ares too.
Their returns truly suck. Their fund is just an index of crap with lots of leverage.
Neuberger Berman and HarbourVest are top tier firms in FoF land.
How hard do you think it is to switch firms in the industry from say an Adam Street/HL etc to AIMS/Alpinvest/Harbourvest?
Certainly doable up to Senior Associate level. Churn at the top FoF shops is generally low because work life balance is decent, culture is good and pay is also very good, especially once carry starts kicking in.
That being said I don’t see these firms recruiting a lot of people above Senior Associate. Preference is to get juniors that grow within the firm.
Do your research on how well the firm you are interviewing has been able to hold on to its juniors. Why are they speaking to you? To fill a gap or because they are growing? For example, Stepstone and Partners Group in Europe have had a lot of churn. Not the best culture and pay at these two shops.
Mega fund level AM: Neuberger Berman
Private markets pure play: HarbourVest, Alpinvest, Adams Street, Lexington (Secondaries)
Investment bank AM: GS AIMS, MS AIP, JPM PE
Lexington pays well but their returns are junk, same with Landmark. Looking at some of their funds and it's mine boggling how they raised so much money.
Any thoughts on the HL platform
Too conservative. Not really risk takers. Over diversified. Low fees and low salaries. Not really a lead, just a coinvestor in deals
Based on all your comments in this thread - any secondary fund who is delivering 15% net / 1.5x-1.6x is "junk" and not taking enough risk.
I've been working in secondaries almost 20 years, and if you can consistently generate those returns without adding additional risk with single asset exposure, your LPs will be very happy. The fundraising of these firms is a testament to that.
Lets list the firms you say are junk and not very good at secondaries:
Alpinvest, Lexington, Hamilton Lane, AIMS, Adams Street, Stepstone, Coller, Pantheon, HarbourVest, Landmark, Partners Group.
I think you have a different view of what secondaries is and should be, and that's fine, but to say groups that have consistently delivered on their "target" returns are "junk", is a bit misleading to others reading this thread. Buying highly diversified LP portfolios and levering it to generate 15% net IRR is a much lower risk profile than single asset GP-leds; you of course know that, but this is for others reading the thread who are interested in secondaries.
any info on BlackRock?
Ton of turnover at the leadership level on the secondary side, almost whole team just left for Apollo
The three founding MDs of the secondaries practice all just left for Apollo and the co-invest/manager selection team has had huge turnover at the MD level as well. Three MDs left a couple years ago to found their own growth equity firm (Prysm) and two others just left to join RedBird and New York Common respectively: https://www.buyoutsinsider.com/ex-blackrock-pe-executive-julia-wittlin-… A friend who works in the group told me that there is only one MD doing deals remaining on the U.S. team.
Accolade is a much smaller firm than the Hamilton Lanes of the world and they only have one office (in DC) but their returns are excellent, focused only on venture and growth.
Are there any major differentials between the top pure play guys like Alpinvest, Harbourvest, Landmark, Adam Street etc? Looks like Coller isn't doing too well…
Us or UK?
Ardian has 81bn AuM in Secondaries, extremely strong in Europe
How is Neuberger secondaries?
Stepstone has good culture with high retention. The others you mentioned have a combination of lousy returns, lousy culture and lousy pay
Any views on culture / returns at Lexington and Alpinvest (UK)?
Generally speaking, HarbourVest is on top and NB Alts (Neuberger Berman) is a nudge below it. All the other ones are varying degrees of crap. FoFs are a dying breed and the business model is getting harder to justfy by the day. As a result of this, you've got FoFs like StepStone and Hamilton who masquerade as pseudo-advisors and consultants which I honestly think is messed up given the clear conflicts of interest in diligencing/reviewing funds all the while marketing your own FoF products. Both pay very poorly and in response to one of the posters above, StepStone has high retention because it's a cushy job and you can power-trip all day with various GPs. You're not going to be staying at a StepStone or HL for the pay. It will be because they're lifestyle gigs where you can maintain a great work/life balance while lording over managers.
Adams Street, AlpInvest, Siguler Guff, Grove Street, Schroder Adveq, Commonfund, 57 Stars, Portfolio Advisors, etc. are all terrible. Some are less terrible relative to others, but these are all solidly middling firms that will continue to exist but won't experience any type of revival/renaissance/whatever you want to call it.
Ardian is one of the premier secondaries firms globally. They do very little primary investment and I'm not familiar enough with the other secondaries players (Coller, Lexington, Landmark, Glendower, etc.) to comment any further.
Partners Group is in its own group as it was similar to Schroder Adveq and HQ Capital in starting out as a small FOF/pseudo family office but has solidified itself as a global asset manager. Frankly, they're just looking for assets in which to park their money to collect yield. Pay isn't great BUT many folks will get global carry, which can be lucrative.
Looks like their strategies are all the same. You mention HV is on top and curious what differentiates them from say HL or Stepstone
I never understood how consultants can also manage their own closed end funds. Are the teams siloed at Stepstone?
This is highly accurate.
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