From secondaries to direct investments, still possible?
Hi, everything is in the title.
I have joined a well-known team years ago (now a senior associate at a Goldman Sachs RE Secondaries, Brookfield RE Secondaries, BentallGreenOak Capital Partners type firm) where I have been able to invest in funds (primaries and secondaries), but I also did a lot of co-investments.
Now, I am eager to transition into direct investments. After discussion with the team, it is very hard to make an internal move.
In your opinion, is it still possible to move from there to a direct investment team? I have been reviewing GP models and judging their funds/pipeline in order to put a stake in it, but I really would like to switch to the other side now.
Thank you
Bump, interested as well.
Can you share more about why you’re looking to transition to direct investments ? I’ve actually been considering making the opposite jump and just want to hear more about your thought process , pros and cons of secondaries, growth opportunities in that line of business, etc. thanks and good luck!
Hey, you can refer to the comment I just made below, I believe it says it all! do not hesitate to ask me again if I have not been clear enough.
Same, I just made the jump from direct to secondaries. What are some pros and cons?
Pros (in my case/current company):
- have been able to travel a lot and meet very senior executives, which is pretty useful to learn quickly and network efficiently
- have worked on several asset classes (hotels, residential, offices, logistics...) in several markets and countries
- generally secondaries team are small, meaning that you benefit from a lot of exposure to MDs and senior executives of your company
- sometimes, people are literally dickriding you as you got the money. They need some important commitments into their funds and can invite you to nice events
Cons:
- most of the time, reviewing material the GP have sent to you. You have to do your own research and models to challenge their assumptions and opinions, but you won't work as much as them on a deal as you are currently working on X other live deals, ventures etc.
- I have started on the GP side and it can seems weird but I miss the pressure of raising funds, put equity at work for the LPs, delivered great multiples/IRRs and create a business plan
- as mentioned above, you don't create much value. You are here to invest in funds or co-invest, so you will check that everything is ok, but you won't push the manager to transform an office building into a multifamily tower with services and high-end amenities for example
Thank you!!! This is super helpful. There’s really not too much info out there on this niche so appreciate the response
Curious about the space as well. Are there opportunities to capitalize upon distress here or is the space more so dominated by GP led transactions where you are recapping a portfolio whose business plan has been executed and thus are generating core or core plus returns? Do RE secondaries players also purchase stakes in debt funds ? It seems a bit different in the sense that in traditional acquisitions you deal with a buyer and negotiate a PSA. In this case, you are removed from the ground level markets and are instead negotiating between a fund manager and LP's in that fund? Do you think this is a good niche to go into and build a career in? It seems almost as if you are a capital allocator. Are the deals you work on in this space interesting ? If I'm purchasing a stake that is 50% invested and 50% capital has not yet been called, can I still lever the whole stake I am purchasing? Also, if a secondaries specific fund is raised, then is there not pressure to deploy capital just like any other closed end fund? How was your experience viewed when transitioning back to direct investments? Thoughts on giving this space a shot?
Send me a DM I can give you some ideas with a bit more specific information.
Done!
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