The elusive quality that makes for a great co-investor, Providence makes majority investment in Tenstreet

LP demand for co-investment opportunities have risen in recent years and expect to remain strong, says new study.

Morning!

The severe shortage of computer chips to run all kinds of processes from onboard vehicle computers to smartphones is an opportunity for North American investors to help fund a revitalization of manufacturing in the US.

That’s according to Prashant Boccasam, partner at Cota Capital, who spoke on an alternative assets panel as part of EisnerAmper’s Alternative Investment Summit Thursday. Boccasam was answering a question about attractive areas of investment overlooked by other investors.

“There’s a very severe chip shortage in this country and we relied on one main source to get access to silicon-based chips. We need to take our head out of the sand and head back into silica, and start creating foundries and making chips in the states,” Boccasam said.
Co-investing: The panel also spent time talking about the rise of co-investing, and what characteristics make an institution a great co-investor.

Some of the factors are well-known: Institutions need to be able to make a quick decision on an investment, and they need to be able to give a solid yes or no answer.

But quick decisions on making a direct investment involves something that is perhaps less understood. It’s the willingness to plunge directly into an investment with less than perfect information about the business, Hunter Carpenter, partner at RedBird Capital, said on the panel.

Investors have to be comfortable “working on a deal on a compressed timeline with pressure where, frankly, you don’t know the answer, because if you knew the answer, you would be seeing into the future,” Carpenter said.

It’s this sort of elusive quality that is part of the investor mindset, as opposed to that of an allocator, who is used to making decisions after gathering as much detailed information as possible. The art of direct investing is the willingness and ability to make judgements based on incomplete information, he said. Read more here.

Strong demand: LP demand for co-investment opportunities has risen sharply in recent years and is expected to remain strong this year. Private Equity International’s LP Perspectives 2021 Study found 71 percent of LPs plan to participate directly in deals alongside managers in the next 12 months to achieve fee savings and other benefits.

That’s it for me! Have a great weekend. Reach me with your juicy tips n’ gossip, feedback or explication of unknowable mysteries at cwitkowsky@buyoutsinsider.com or find me on LinkedIn.