What Type Of MF Group Would You Want To Be In For The Next 5-10 Years?
Almost all MFs now have a variety of funds employing different strategies: classic buyout, special situations/opportunistic, credit, real estate, growth, etc. Given how things are trending economically and in respect to fundraising, what type of MF strategy would you want to be in for the foreseeable future? Is buyout PE still the most desirable/best career path, or would the capital flexibility of a special situations group be better even if it’s a smaller fund size? Is real estate looking at potentially outsized returns? Does credit make the most sense given higher interest rates and a favorable AUM/IP ratio?
Disclosure: currently trying to figure out what style of investing I’m most interested in and what makes the most sense to recruit for.
Bump
ESG / Impact fund --- the hurdle is relatively low and LPs can freely throw money at you without any ESG related restrictions.
You get to look at the same exact businesses as the flagship fund but just have to "find" the ESG theme, which could be as simple as the company recycling scrap (which most companies do anyways).
No
ESG funds are steaming hot garbage that have failed to produce meaningful returns almost universally (hence why the hurdles have to be so low). The same goes for many cleantech/impact funds given that's generally the same operating lens they look through. If you want a long career in PE those are precisely the roles you should avoid the most lol
This kind of points to how the entire idea of these funds is literally false marketing from the get go. It's about making up a narrative as they go along while setting the stage during fundraising for some BS that the senior IPs at institutional investors slurp up while not having to care about the outcome since they'll be long gone by the time chickens come home to roost. I (and many other senior PE folks I've spoken with) would argue that these funds almost by default operate counter to their fiduciary responsibility to their LPs. Definitely not a good way to build a track record.
The cynical perspective here is that you believe PE writ large is undifferentiated with poor returns more or less across the board. In that case, might as well go with the strategy with fundraising momentum and ride a few funds worth of management fees before the jig is up.
bump, having the same thoughts and questions. Previously, I was all set for buyout, but more recently been thinking about opportunistic/distressed credit and other strategies with flexible mandates
If I had my pick, I would do opportunistic/distressed, especially if they have the ability to do hybrid as well
Why is that? Wouldn’t a firm with a dedicated fund be better suited for special sits work? Vs having to go through a layered IC. Coming from a non credit perspective fyi
bump
What is general consensus on Infra PE
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