Leonard Green execs to form $10m employee-assistance fund, Great Hill’s Chris Gaffney talks business actions amid covid-19, How coronavirus outbreak is hammering PE fundraising

Leonard Green partners commit $10 million for an employee-assistance fund and a placement agent is surprisingly optimistic about the long-term effects of the coronavirus outbreak on private equity fundraising

Morning, Hubsters. Hope you’re staying strong.

Don’t know about you, but depending on who I talk to, my mood goes from reasonable, calm and rational, to some version of paranoid/depressed. And I’ve talked to a lot of people this week, so it’s been an adventure.

Any recommendations on good de-stressing practices? My usual go-to was the gym, but that’s out. Avoiding news helps too, but that’s out, at least during work hours. Taking breaks to play with my girls (6 and 4), is very helpful.

Hit me up with your de-stressing practices at cwitkowsky@buyoutsinsider.com. I’ll share them here.

Anyway, let’s get to it …

Help: The partners of Leonard Green & Partners have pledged to commit $10 million to an employee-assistance fund, a person close to the firm told me. The fund will be for employees of Leonard Green portfolio companies adversely impacted by the outbreak of covid-19.

Leonard Green is hoping other folks in private equity follow its lead on this, the person said.

My understanding is the firm is working out exactly what situations the assistance will target, whether employees with health problems, or any potential lay-offs. Details are being worked out now. Leonard Green, like probably every other firm in the market, continues to assess the impacts of the outbreak on its portfolio.

Any other PE/VC folks doing similar things? Let me know at cwitkowsky@buyoutsinsider.com. And read more here … I’ll update this post as more information comes in.

Fundraising: Staring out the window of his Manhattan apartment, the placement agent could see people jogging along the street.
“That’s going to come to an end soon,” he said, with a hint of resignation in his voice. He was referring to a potential shelter-in-place policy many New Yorkers were expecting in the next few days.

Our conversation was on private equity fundraising, and the placement agent was being fairly optimistic. The coronavirus-related economic chaos was a blip, he reasoned, because once a vaccine was developed, or as soon as the outbreak began to slow down in the US, the pent up demand of consumers and businesses would be unleashed.

“The huge difference between this and every other crisis is that this is a global, non-financial-related blip. The demand is there and as soon as we’re allowed out of our houses, everyone is going to start spending,” the placement agent said. “It’ll be insane.”

The placement agent’s view was one of the most optimistic I heard over a week of talking to every source I could think of. Others had similar feelings, but not quite so cheery. Some seemed to be hunkering down for an extended period of uncertainty.

All agreed that private equity fundraising, at least for the present, was going to slow down, save for the most in-demand funds already in the market and close to closing. Those funds would likely squeak over the finish lines.

Others though, were in for a rough ride. Prevailing wisdom is that funds in market or just coming out would have to add another three-to-six months on top of their fundraising schedules. This is because limited partners, like most other professionals around the world, are restricted from traveling.

And, as public markets crater, LPs will be reassessing their portfolios and their allocation levels. First-time funds were likely out, for now, and emerging managers without extensive GP relationships were going to struggle to gain commitments.

This is going to be a different reality for private equity, where last year funds raise more capital than any time in history. US private equity and mezzanine funds raised about $310 billion in 2019, according to PEI data. Read my full story here.

Top Scoops
Chris Gaffney, managing partner at Great Hill Partners, said the firm’s top priority is ensuring its portfolio companies and CEOs have action plans to continue running their businesses. Adjustments could include developing strategies to focus on a workforce and customers in at-home settings, he tells Milana Vinn on PE Hub. It could also mean opening up multiple call centers and additional warehouses to diversify from having a single point of infection risk, he said. Read the story here on PE Hub.

CalPERS CIO Ben Meng warned the pension’s board Wednesday that the rough stretch in public markets due to the coronavirus pandemic is affecting other parts of its portfolio. “Because of the fluctuations in the market over the past few weeks, our portfolio rates are deviating away from our strategic asset allocation targets,” Meng said at the meeting, which was conducted via teleconference. “If market volatility remains aggravated, we may slip to the outer range of these targets.” Read the story here.

Stay safe and healthy, Hubsters! Reach me with your thoughts, tips, gossip, whatever at cwitkowsky@buyoutsinsider.com, on Twitter or find me on LinkedIn.