Dispatches from the peak: late-cycle behavior from aggressive recruiting to heavy pricing
Happy Thursday!
This is Chris, on the Wire for Luisa who is dealing with some doctor stuff. Wish her luck!
Thanks to everyone who sent in their memories of Jay Fewel, who we wrote about earlier this week. I got a ton of feedback from folks who knew him and worked with him. I wanted to share one more from Robert Smith, founder of Vista Equity, which got early backing from Fewel:
“Jay was always a thoughtful gentleman, inquisitive personality and a man of his word. He approached Vista with a very open mind and was one of our first institutional investors and developed conviction about us a new firm and backed all of our PE Funds. I always appreciated his honesty, integrity and playful banter. Our industry and planet lost a great spirit.”
Late cycle: I could call this Wire column something like “Dispatches from the Peak” because a lot of what we’re talking about looks like late-cycle behavior. Read below, and let me know what sorts of late-cycle behavior you’ve seen. I’m at cwitkowsky@buyoutsinsider.com.
Stakes: This was interesting. San Diego County Employees’ Retirement Association CIO Stephen Sexauer said at a meeting in October the system had concerns about Blackstone Group buying a minority stake in New Mountain Capital. Blackstone acquired a 9 percent stake in the firm.
SDCERA learned of Blackstone’s stake in an Oct. 15 letter.
“Institutional investors like us put money with Blackstone, and the money is now being taken from that fund to go buy another private equity fund,” Sexauer said at the pension fund’s October board meeting, according to a report from LP watchdog Dietrich Knauth.
“We talk a lot about where valuations are, the amount of cash that’s trying to go to work. On average, it just can’t end well when you have things like this. That’s why we’re going slow, that’s why we’re looking for good long-term partners. It’s just too asymmetric against us.”
SDCERA has already expressed reservations about committing to the asset class while valuations are high and LPs are hungry to get more capital out in market.
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