InterGrowth Buzz III
May 14, 2009
If a theme developed during InterGrowth's Thursday morning panel on fundraising, moderated by Private Equity Analyst's Shasha Dai, it's that LPs rarely rely on pure trust when it comes to vetting potential fund investments.
Gijs Van Thiel, a managing partner at fund of funds 747 Capital, represented the limited partner perspective on the panel and noted that his job is to "find the holes" in the GP story.
"Everyone has the same story," he told the audience, pointing to overlapping claims of proprietary deal flow and operating expertise. He added that reference lists provided by GPs are largely useless, since he's more interested in what a firm's critics have to say. "We have a much wider reference list of our own than anyone realizes," he added.
Fund terms have largely stayed static the panelists said, although Van Thiel noted that the universe of limiteds is changing. With the larger pensions moving to the sidelines and the funds of funds and family offices making up a larger proportion of potential capital sources, Van Thiel said it is easier to coordinate with other investors. "We're speaking to our colleagues on a very regular basis... That's the only way LPs will be able to apply any pressure on terms."
Paul Verbesey, of Goodwin Procter, echoed this point, noting that he's heard already GPs complain about limiteds "ganging up." He noted that LPs are pressing fund managers on fees and expenses, and he has seen some GPs even agree to caps on capital calls as a way to moderate the pace of investment. LPs have also made some headway in offsetting their management fees by taking a larger portion of other GP fee income.
Trivest's Troy Templeton, the lone general partner on the panel, confirmed that limiteds are ramping up their diligence. Trivest successfully closed its most recent fund over target at $325 million. Templeton's advice for other GPs was to identify and rectify or have an explanation for any weaknesses, whether its partner turnover, bad deals or a shift in focus. He added that the numbers "have to be right," and alluded to Van Thiel's investigative efforts, identifying that GPs, even before a fundraising process begins, should "reach out to the folks that just don't like you too much."
0 Comments
Be the first to comment on this post using the section below.
Add Your Comments...
Already Registered?
If you have already registered to Money Management Executive, please use the form below to login. When completed you will immeditely be directed to post a comment.
Not Registered?
You must be registered to post a comment. Click here to register.