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Buyouts East LP Panel: Will You Back an Emerging Fund?

Reporting from the 21st Annual Buyouts East conference at the Grand Hyatt in New York, I bring you highlights from this morning’s LP panel. In a lightening round, panelists were asked if they would back a first-time fund this year. Here are their answers:

Barry Gonder, Grove Street Advisors: Maybe. If it were a spin-out of a top tier manager who teamed up with some serial entrepreneurs, or a top decile manager.

Kevin Kester, Siguler Guff: Maybe. We have in the past, so if it is within our funds-of-funds strategies, such as BRIC or distressed, then yes.

Bill Walsh, Portfolio Advisors: Yes, we will probably do one or two. The host of those will be done through secondary deals, though.

Charlie Van Horne, Abbot Capital: No, unless it was a spin-out.

Other highlights from the panel, including the panelists’ thoughts on the New York pension pay-for-play scandal and GP/LP relations:

Barry Gonder, on the New York pension fund scandal:

“I truly hope people go to jail because it does give a bad name to pension funds and private equity. My advice is to run away from anyone who says they can definitely get money from a pension fund.

“There is actually a firm in California that actually advertises that ‘the staff of a fund is irrelevant, you need to go through the political side of things.’ The fact that that is even allowed to exist is appalling.

“One way to stop it … I think CalPERS has the right idea. They hire high quality people that get paid well, not Wall Street salaries, but on par with insurance and banking jobs. And they have a board that checks in and puts controls on their investments.”

Charlie Van Horne on GP/LP relations:

“This is when people get religion. The last few years were an aberration. We don’t like to be an LP that’s known for being hard on LPA terms, but we have certain standards that, if they can’t be met, we hang up the phone and walk away. One place we really care about is key man provisions. We think key man provisions have been diluted over the years, and we like to invest in managers, not firms.”

Lightening round #2: When, exactly, will the recession end?

Kevin Kester: Q4

Bill Walsh: March 2010

Barry Gonder: When GDP increases (ha)

Charlie Van Horne: On June 10, 2010. Because that is my birthday.