Q&A: Private Equity Fund of funds - GP Evaluation/ Due diligence

To give you a bit of background, I work at a Global Private Equity Fund of Fund as a Senior Associate. 6 years of experience, Chartered Financial Analyst. Work primarily involves GP Sourcing +Evaluation, Due Diligence, and Portfolio Monitoring. I evaluate GPs across the spectrum - Growth/ Buyouts/ Co-investments/ Secondaries/ Venture Capital across US/ Europe and Asia.

I'm happy to answer questions related to
- The functioning of a PE FoF work
- FoF Interview Preps
- GP Evaluation
- Portfolio Monitoring

p.s - if your Fund is raising capital, feel free to DM me for a chat!

WSO Mentor

Want to work with me? Check out my profile here

Add comment

Start Discussion

30 Comments

AlphaCompounder

PE

3y

This can be an extremely long answer. I'll keep it short - the opportunity for exposure, meet and work with brilliant minds, put my analytical and logical skills to right use, $ increment from a Big4 role.
Over the years, the team members (10+ years each) have built solid connections in the industry. Networking events (eg. SuperReturn)+ leveraging our personal connects to stay in touch with these GPs. We also use databases (eg. Preqin, PitchBook, CapitalIQ) to find the funds in the market, do some benchmarking in terms of historical returns and then reach out to them when we are looking to commit to a typical strategy.
Placement Agents play a rather big role in this space. We are conscious of the fact that we may or may not know every single GP in this world. Over the years we've realized that few placement agents take very high-quality mandates and they are always good to look at. PAs are to FoFs what IBs are to PE/VCs - will always be critical to this industry.
+5+6- start with the GPs pitch decks, then calls with the teams, if we like the team and their strategy fit then we do a face to face meeting (unfortunately pre-COVID only). We keep a database of who all we've met/ our comments/ reasons to accept or pass. Start conducting intensive benchmarking with other similar funds in the industry/geography. Conduct reference checks on a few select GPs and independently rate them based on our proprietary ranking model. Select the top GP from this (always end up having heated debates within the team ;) ). Agree to commit to a particular fund. Start preparing investment memo. Conduct more detailed reference checks, thoroughly read their legal documents, conduct legal and tax DD from 3rd party service providers. IC and Advisory meetings. Get approvals. :)

Reply

Quote

Report

Other

Authored by: Certified Private Equity Professional - Assistant Vice PresidentCertified Private Equity Pro

AltRightWarlord

O

3y

Most Helpful

AlphaCompounder:
1. This can be an extremely long answer. I'll keep it short - the opportunity for exposure, meet and work with brilliant minds, put my analytical and logical skills to right use, $ increment from a Big4 role. 2. Over the years, the team members (10+ years each) have built solid connections in the industry. Networking events (eg. SuperReturn)+ leveraging our personal connects to stay in touch with these GPs. We also use databases (eg. Preqin, PitchBook, CapitalIQ) to find the funds in the market, do some benchmarking in terms of historical returns and then reach out to them when we are looking to commit to a typical strategy. 3. Placement Agents play a rather big role in this space. We are conscious of the fact that we may or may not know every single GP in this world. Over the years we've realized that few placement agents take very high-quality mandates and they are always good to look at. PAs are to FoFs what IBs are to PE/VCs - will always be critical to this industry. 4. +5+6- start with the GPs pitch decks, then calls with the teams, if we like the team and their strategy fit then we do a face to face meeting (unfortunately pre-COVID only). We keep a database of who all we've met/ our comments/ reasons to accept or pass. Start conducting intensive benchmarking with other similar funds in the industry/geography. Conduct reference checks on a few select GPs and independently rate them based on our proprietary ranking model. Select the top GP from this (always end up having heated debates within the team ;) ). Agree to commit to a particular fund. Start preparing investment memo. Conduct more detailed reference checks, thoroughly read their legal documents, conduct legal and tax DD from 3rd party service providers. IC and Advisory meetings. Get approvals. :)

Preciate you!