Top PE Secondaries Firms?
Looking in the GP-led / CV space. What are the best firms to be pursuing (in NY / CT) from IB?
SP and Lexington seem like the best from a fundraising + pedigree view, but interested in some other names.
If you’re looking for firms that tilt GP-led, SP and Lex aren’t in that bucket by the way. Majority of SP’s deployment is LP-led although they are still very active in GP-leds and Lex’s GP-led strategy is less than a year old and prior to that they weren’t very active.
Some of the bigger guys that are either 50/50 or tilt GP-led: Neuberger Berman, GS, CVC, Pantheon, Apollo S3, Blue Owel (newer), New Mountain (newer), Bregal Sagemount (newer), TPG (can’t remember if their team is in NYC), Warburg (newer), AlpInvest / Carlyle, and of course ICG. There’s other players out there and smaller ones too but I’d say that makes up the bulk of the NYC GP-led players that are writing minimum $100m+ checks.
Appreciate the info. Correct me if I'm wrong, but the bigger firms (SP and Lex for example) have dedicated GP-led teams vs someone like StepStone where I hear their juniors do a mix a LP, GP and Co-Invests.
Lex yes. SP, I’m pretty sure it’s still mixed but I could be wrong there. They do have one of the larger dedicated GP-led funds but I think like 30-40% of their flagship is GP-leds.
On Lexington - right on deployment - maybe 2/3rd LP, 1/3rd GP. But this is a function of the average LP deal being much bigger than your typical CV. Lexington has been doing CVs as long as the rest, but only recently created a separate team / strategy to represent. Juniors would be staffed across all types of deals, outside of the CV specific team.
Yeah, I guess my point is, historically it has been impossible to get Lex to lean in if they don’t have an existing relationship or it’s a diversified GP-led… that will be changing of course.
Thoughts on ares/landmark?
Will chime in with some additional data points from convos with senior people in industry:
- ICG: large player in the space; only firm that can do deals entirely themselves due to size which gives a huge advantage
- TPG: struggled to raise fund 1 but closed and are looking for fund 2. Heard the group is fairly sweaty through a friend.
- Blue Owl: heard the head guy is a dick and also not a great reputation. Also lower pay.
- Alpinvest: heard this team is super sweaty and to avoid.
- Apollo: heard this team is sharp and actually good to work for.
ICG: only firm that can do $1bn+ single asset deals entirely themselves*
Also not even entirely true anymore. There’s probably 2-3 other groups that can now take down a deal that size with co-investors
Will note that many established secondaries players (Lex as an example) very much prefer the promote from within, and rarely entertain PE laterals at Sr. Assoc / VP level, unless they came from secondaries already.
Very annoying for PE people looking to trade, and even in the GP-led focused funds the seats are few right now and they cross staff their existing PE IPs. Just beware, and try to get in earlier vs. later if you want secondaries.
This is coming from a few months of networking trying to figure out how the hell it’s so hard for someone with a good PE background wasn’t getting traction.
Did you break in?
AlpInvest, Hollyport, BlackRock, CVC/Glendower, Goldman, Neuberger Berman, ICG
Strategic Partners just does LP stakes, Lexington and a lot of the big names are just AUM games. You want to be somewhere leading deals based on the company level underwriting not just the name of the GP.
Would you say the firms you listed are at the top end for comp? Also would appreciate any info on CVC / Glendower. Most of their juniors join out of undergrad, haven't seen many join from IB as Associates (vs AlpInvest, NB, etc).
BlackRock and Hollyport def not. Alp, GS and NB are roughly in-line to slight discount to banking at junior levels. Not sure about CVC or ICG but would guess they are in-line with the others.
Glendower's returns are higher than most others, in-line with Hollyport's, they go further down market than the Lexington's and Ardian's. Not just going after the really obvious deals or big name GP's, doing more independent analysis verifying comps, pricing etc.
All the firms I listed are going to be mostly in-line with market, but secondaries comp has come down significantly since 2022. Associates looking at 110-150k with 50%-100% target bonus and no carry.
Just checked data on Preqin, Glendower returns are exactly in line with Lex, SP and Ardian
HarbourVest would be a good option, however I don't think they have offices in NY.
Blue Owl Strategic Equity could be worth looking into. They're a new strategy led by Chris Crampton in NYC that focuses on GP-led transactions (SACVs/MACVs).
They closed their first fund but heard it was a struggle, missed target, and took much longer than expected, new GP-led only funds are having issues with raising capital so would be careful about joining new strategies like this one
I'd hide from anything Blue Owl related that isn't apart of the legacy Owl Rock business. Dyal is a joke and is going to have a ton of issues on the liquidity front. There is nothing special about the secondary business they are attempting to build, just another run of the mill strategy they have added to boost their asset base (management fees).
Heard through the grapevine that this team isn’t that great and the head guy is a bit of a dick/not good to work with. They also pay lower comp than MF secondaries players
The fact that they did the Hub deal, a company that is too large to ever get liquidity and has like 5 sponsors in it, as one of their seed investments is pretty funny to me.
Would agree with this. Not sure I see the value proposition from an LP perspective for a new GP-led strategy as part of a larger PE platform.
EDIT - my comment is agreeing with being careful on new GP-leds. Not sure why it replying to the wrong comment
It’s obviously still too early to tell from a returns perspective, but I am starting to see the differentiation in terms of the sector expertise. There are some deals we’ve come across where we know traditional secondary investors will baulk at the multiple but we’ve had better luck with these groups because they understand the nuances of the business better and why a relatively higher valuation is justified. Whether this materializes into better returns is tbd, but as an advisor it’s helpful to get deals across the line.
There’s also a stark contrast in the DD requests we get from the direct players vs. traditional secondary funds. Sometimes that can be good, but it can also lead to analysis paralysis.
Would add on the analysis paralysis point, that’s bad for these investors because they know how to underwrite direct deals, but they don’t know how to underwrite GPs as well as traditional secondary investors.
A good example being, you have LMM/MM deal where a company doesn’t track a specific metric they find to be important so they pass. A traditional secondary investor may identify that same metric, doesn’t see it, but knows how to underwrite the GP to a point where they get comfortable on their ability to execute and eventually build the systems to track that metric.
It’s a different approach and time will tell which proves more successful.
Carlyle AlpInvest is very active in the GP-led space. Rumor is they are leading the single-asset Advent CV process which could be up to $4 billion and one of the largest single-assets ever done in the space. They previously led the multi-asset LGP CV. It’s a relatively large fund for a team that doesn’t focus on LP deals. Ardian, Lex and SP are very LP-heavy so they can deploy capital quicker than the GP-led folks and raise larger funds to do so. They’re still good at what they do and will continue to raise monster funds but doing different types of deals.
That deal closed awhile ago, it was only about a billion and AlpInvest and Coller co-led
also the SRS sale was not a good outcome in my view. They made 1.4x gross (before carry to Leonard Green and before carry to Alpinvest, which btw they gave above market terms to LG for this deal lol). Sure it was only in 6 months, but there's no way we would underwrite something to that return.
Assuming that’s 1.4x gross on just that asset and not the entire MACV? If so, would guess that wouldn’t put the CV in the carry given there were other assets in there so entire CV hadn’t returned cost. Idk the details but yeah agreed, no one’s underwriting that.
Will chime in that I heard this team is extremely sweaty/difficult to work with. Doesn’t surprise me based on how bad Carlyle’s culture is but it’s not your typical secondaries shop.
Leonard Green (newer), Accel-KKR, Kline Hill, Morgan Stanley, all have dedicated GP-led funds. Bunch of smaller firms have been launched. Secondaries Investor covers fundraise launches pretty well.
Morgan Stanley team all just left for HIG FYI
TPG only does GP-led funds afaik
They’re a smaller fund so are limited to syndicated processes. They’re in market/raising fund 2 and trying to get to ICG level where they can be the single player on a deal. Team is based in NYC and they’re recruiting a couple associates currently I believe.
Little insight is that ICG is the big player in the space due to fund size ($11bn which includes $4bn of committed co-invest). They’re able to charge higher carry (I’ve heard 20% vs. typical 10-15%) because they do entire deals by themselves and are the only ones big enough to write large checks. This also obv allows them to get first looks at deals where the firms selling would prefer 1 investor vs. having to syndicate.
I heard from a senior person at another fund (that obvs competes directly with them so take this with a grain of salt) that they’ve had a few bad investments. But they are the big boy in town.
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