What are some things Fund of Funds managers look at before investing? and how do private equity funds capitalise on opportunities (such as dislocations from COVID) given that the whole fundraise period takes a significant period of time (6-12 months?)?
Context: Interviewing with a Sovereign FoF manager and another firm who are one of the largest secondary market players - any other tips are definitely welcome, thank you!
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My thoughts on one part of the question is that PE funds capitalize in a dislocation bc they already have capital commitments that they can draw upon. New funds definitely will struggle to raise and I think fund raise time is probably closer to 12-18months now.
Thank you! So I guess new funds or private equity firms with their funds fully deployed won't be quick enough to "capitalise" on these time sensitive opportunities then. Would you foresee that the fund raising process can be shortened, perhaps aided by tech or by more streamlined processes/regulatory checks?
The COVID opportunity was so short. 1-2 months that most investors using their experience from the 1-2 year opportunity that the GFC offered were surprised by.
From my perspective, one of the reasons fundraising is slower is because we can’t travel to do in person on site DD. Another is conservative as the denominator effect did mean PE was overweight (though that did reverse itself fairly quickly).
Do you have any idea about the mandate of FOF that you can share? To make sure, the SWF isn’t taking any outside capital? I think there are a few exceptional cases where that does happen.
The mandate for the FOF manager is largely general across most verticals with a focus on anything related to sustainable investments. And in this case the SWF is actually taking in outside capital so I was thinking that it might result in additional considerations in this case.
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