I saw Clearlake was ranked 4th (out of like ~650) in this year’s HEC Paris - Dow Jones Large Buyout Performance.
Found this super surprising given it seems everyone here shits on their portfolio performance with apparently many portcos in serious financial distress.
Anyone got an explanation here? Are they returning a bunch of 10x’s as well to make up for it?
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Based on the most helpful WSO content, Clearlake's strong ranking in the HEC Paris - Dow Jones Large Buyout Performance might seem surprising given the criticism of their portfolio performance and financial distress in some portfolio companies. However, rankings like these often focus on overall fund performance metrics, such as IRR (Internal Rate of Return) and MOIC (Multiple on Invested Capital), rather than the health of individual portfolio companies.
Clearlake could be achieving high returns by successfully exiting a few standout investments with significant multiples (e.g., 10x or higher), which can offset underperformance or distress in other parts of the portfolio. Additionally, their strategy of operational improvement and sector-focused investing might be yielding strong results in aggregate, even if some companies face challenges.
It's also worth noting that rankings can sometimes reflect timing, fund vintage, or other factors that don't always align with anecdotal perceptions of portfolio quality.
Sources: Which of the large liquid distressed managers are still good seats?, PE Ranking - Europe, PE Outlook over the next decade, https://www.wallstreetoasis.com/forum/venture-capital/vc-is-a-laughable-shitshow-change-my-mind?customgpt=1, Q&A: Distressed/PE Associate
Those rankings cover funds from 2011 onwards. Clearlake’s fund pre 2020 did exceptionally well so they’re ranked highly on the basis of these earlier funds. The most recent funds that are in trouble will either not be counted or have limited weight in the ranking formula
The ranking is a lagging indicator as others have pointed out
A few of their assets also aren’t going to hit their fund track record as well given already in continuation funds ie; Wheel Pros and I think Pretium.
They also took a lot of cost out of certain assets driven by divvy recaps from the people imminently pissed at them (CLOs). Their ranking for DPI on a lot of funds is top quartile for most funds beyond their most recent vintages because of divvy recaps and continuation vehicles.
Definitely a lagging indicator. Clearlake’s performance has taken a nosedive once they started doing bigger deals.
No need to repeat the obvious everyone has already stated. If you’ve been unfortunate enough to review one of the turds they’ve tried brought to market, you realize how in trouble some of their more recent investments truly are
Peak multiple on peak earnings is MO at Clearlake/Platinum and they took it to new heights on all 2020-22 deals.
Is Platinum doing that poorly? I’m aware of a couple of dogs in the portfolio and know they’ve done a CV or two, but they just raised 12.5bn last summer. Have the real problem assets just not been written down yet?
Elevate Textiles likely a zero, Incora likely a zero. Based on recent headlines, looks like at least three newer portcos are headed to zero. Multiple LMEs completed/ in the works. Few more portcos with tanking YoY performance or debt trading levels plummeting. Dated article but gives you an idea:
https://www.transacted.io/platinum-equity-distressed
It’s nowhere near as bad as the other guy claims. Yes they’ve done some bad deals, but a couple of them they managed to put into CVs (so they won’t impact fund performance) and they have a few absolute home runs that more than offset the negative performance. They also got really lucky in that some of the best deals were on the bigger end of the ticket size range they do. This is from a very good friend of mine who works there.
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VI and VII going to look roughhhhh and I'm all here for it
I'd love to see the internal financials compared to what they were out marketing for Fund VII
I mean it doesnt matter it's still too early for it to be meaningful
HEC doesn't take into account the performance of all their most recent funds. They're not going to be able to raise at a fraction of the same pace they have been once they figure out how to unload the dogs they've got in market right now.
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