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Month: March 2024

Chris Field, Dechert, Fund Shack podcast

Private equity gets defensive: a global lawyers perspective

With a deal drought across the global private equity industry, we talk to Chris Field of global law firm Dechert about what’s next for M&A and buyout deal flow for 2024. We discuss valuations and defensive deal structures as vendors and buyers find ways to come together.

Top quote: “I have never worked on an earn-out, ever, that has not resulted in some form of dispute.'”

In this Fund Shack podcast with Ross Butler, Chris reveals what it takes to make it as a top private equity lawyer.

Fund Shack Podcast Featuring Chris Field of Dechert

In this engaging episode of the Fund Shack podcast, 🎙️ Ross Butler interviews Chris Field, a partner at the global law firm Dechert, to discuss the current state of international private equity markets and the intricacies of private equity lawyering.

Highlights:

  1. Market Sentiment and Interest Rates: Chris Field highlights the fluctuating sentiment in the private equity market, noting the anticipation of rate cuts and their potential impact on deal-making. He explains how interest rates have become the biggest challenge for private equity firms, affecting deal volume and value.
  2. Deal Volume and Value: Despite a significant drop in deal volume and value over the past year, 2023 outperformed 2019 levels. Chris explains this apparent paradox, attributing it to the short-term memory of market participants and the exceptionally high activity levels in 2021 and early 2022.
  3. Fundraising Trends: Chris discusses the bifurcation in the fundraising market, with capital being concentrated in large multi-strategy managers at the expense of smaller and newer funds. This trend is influencing the strategic decisions of private equity firms.
  4. GP Stake Sales: A significant portion of private equity firms are considering selling stakes in their own businesses. Chris outlines various motivations behind these sales, including succession planning, liquidity injection, and bringing in external expertise to enhance the firm’s capabilities.
  5. Valuation Gap and Deal Structures: The podcast explores the creative deal structures being employed to bridge the valuation gap between buyers and sellers. Chris highlights the increased use of deferred consideration mechanics, such as earnouts and vendor loan notes, to align the interests of both parties.
  6. Regulatory Environment: Chris delves into the evolving regulatory landscape, focusing on antitrust scrutiny and foreign direct investment regulations. He explains how these factors are shaping deal-making strategies and the need for private equity firms to navigate complex regulatory requirements.
  7. Private Equity Innovation: The discussion covers innovative liquidity solutions in the private equity space, including the rise of NAV facilities, collateralized fund obligations, and GP-led secondaries. These innovations are helping firms return liquidity to investors despite challenging market conditions.
  8. Technological Impact: Chris touches on the role of technology in private equity transactions, particularly in the context of regulatory compliance and deal execution. He discusses the potential for AI and other technologies to streamline processes and improve efficiency.
  9. Dechert’s Positioning: Chris outlines Dechert’s strategic positioning in the private equity market, emphasizing their global presence and expertise in complex transactions. He highlights the firm’s commitment to providing high-quality advisory services across various geographies and sectors.

Summary:

Chris Field provides a comprehensive overview of the current state of the private equity market, emphasizing the challenges posed by interest rates and the creative solutions being employed to navigate them. He discusses the evolving regulatory environment and the impact of technological advancements on deal-making. Dechert’s strategic positioning as a global leader in private equity advisory services is highlighted, showcasing their expertise in navigating complex transactions and regulatory landscapes.

#PrivateEquity #MergersAndAcquisitions #InterestRates #Fundraising #GPStakeSales #ValuationGap #DealStructures #RegulatoryCompliance #LiquiditySolutions #InnovationInFinance #Podcast #BusinessPodcast  #FinancePodcast #Entrepreneurship #ThoughtLeadership 

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Fund Shack is a private equity podcast and global media channel for alternative investment professionals.

If you are interested in appearing on the show, wish to propose a client, or are interested in sponsorship, contact:

Katie Mitchell
katie@linearb.media

Stephane Bacquaert

Private equity in Africa. A conversation with Stephane Bacquaert

Private equity is a great way of investing in uncertain, high growth environments. Strange then, that the African private equity industry is so small. In fact, Stephane Bacquaert of Adenia Partners argues that the Western, established private capital industry has systematically misunderstood the African opportunity, and in particular its risk profile.

In this Fund Shack podcast with Ross Butler, he talks about managing one of Africa’s largest control buyout funds, and the value that so many investors are missing out on.

Key Highlights:

  • Stephane’s Journey: Transitioned from strategy consulting to private equity in Africa, driven by personal connections and a desire to support African businesses. His initial venture failures led him to focus on supporting management teams through investment.

  • Investment Strategies: Emphasis on control buyouts and majority deals, which provide more influence over business outcomes. Investment decisions are driven by bottom-up analyses, focusing on companies with strong growth potential, robust management teams, and pricing power. Importance of being embedded locally to source and execute deals effectively, given the lack of structured deal flow and the necessity of relationship-based deal sourcing.

  • Market Dynamics: Africa’s high growth potential is driven by demographic trends, urbanization, and a burgeoning middle class. The continent’s economic fundamentals include rapid population growth, significant urban migration, and high GDP growth rates in several countries. These trends create opportunities in sectors such as consumer goods, retail, financial services, and infrastructure. Challenges include currency devaluation, regulatory complexities, and the need for infrastructure development.

  • Challenges and Opportunities: Navigating Africa’s complex regulatory landscape requires deep local knowledge and adaptability. Currency devaluation is a significant risk, necessitating investments in companies with strong local demand and pricing power. Building infrastructure is crucial, from establishing retail chains to upgrading production facilities.

  • Impact and ESG: Private equity investments in Africa have a profound impact on job creation and economic development. Adenia Partners focuses on improving ESG standards, such as transitioning companies to more sustainable practices and ensuring compliance with international environmental and social standards. Examples include the transformation of a retail chain in Kenya and the shift to water-based paints in East Africa. These efforts not only enhance business value but also attract international buyers and investors.

#PrivateEquity #AfricaInvestment #ImpactInvesting #ESG #VentureCapital #InvestmentStrategies #EmergingMarkets

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Fund Shack is a private equity podcast and global media channel for alternative investment professionals. Fund Shack is produced by Linear B Group.
Contact:
Katie Mitchell
Email: katie@linearb.media
Company: Linear B Group

Henry Freeman, The Fund Society, Fund Shack

Repackaging private equity, with Henry Freeman

Private equity fund managers are racing to find structures that will allow small private investors to invest with them. Meanwhile governments are introducing ELTFI and LTAF structures to encourage retailisation. Henry Freeman has been working at the nexus of public and private equity for two decades. And he has concerns.

Henry is founder of the Fund Society, an insight aggregator for investors, launching imminently. Sign up here for free and be among the first to benefit: https://thefundsociety.com/

An in-depth discussion with Henry Freeman, a seasoned investment manager and founder of the Fund Society. The conversation covers private equity’s accessibility to mass markets, the evolution of investment structures, and the launch of the Fund Society.

Key Highlights

Henry’s Journey: Henry Freeman has a diverse background in public and private investment markets, fintech entrepreneurship, and investment trust board membership. His career includes roles at Lloyds Private Bank, Foresight Partners, and Liberum, showcasing his extensive experience in managing and structuring investment funds.

Investment Strategies:

  • Semi-Liquid Structures: Emphasis on creating investment vehicles like LTIFs and ELTs that offer some liquidity while maintaining the benefits of private equity.
  • Commitment Focus: The critical role of commitment in private equity, arguing that commitment is a feature rather than a bug, essential for achieving the high returns associated with private equity investments.
  • Public-Private Hybrids: Development of funds that invest in listed private equity firms, providing liquidity and accessibility while capturing private equity’s growth potential.
  • Risk Management: Approaches to managing liquidity risk, including the potential for forced asset sales during market downturns and the implications for fund performance.

Market Dynamics:

  • Historical Discounts: Analysis of historical opportunities in listed private equity during the 2008 financial crisis and recent market conditions, highlighting significant discounts to net asset value (NAV) and the impact on investor returns.
  • Current Opportunities: Examination of current market conditions post-COVID, with a focus on identifying value in listed private equity and the potential for significant returns as market conditions stabilize.

Challenges and Opportunities:

  • Scalability Issues: Discussion on the scalability of closed-end fund structures versus open-ended vehicles, emphasizing the challenges and potential solutions for scaling private equity investments.
  • Mis-Selling Risks: Concerns about the risks of mis-selling private equity products to retail investors, particularly with open-ended structures that may not align with the traditional private equity investment model.
  • Technological Integration: The potential for leveraging technology, such as tokenization, to streamline the transfer and management of private equity interests, enhancing liquidity and accessibility.

Fund Society:

  • Platform Overview: Introduction to the Fund Society, an online hub for investment professionals, providing curated intelligence-based content, news aggregation, and thought leadership.
  • AI Integration: Use of AI and large language models to curate and prioritize content, ensuring relevance based on market trends and news events.
  • Community Building: Efforts to build a community of investment professionals, facilitating knowledge sharing and networking opportunities across asset classes.

#PrivateEquity #InvestmentStrategies #FundSociety #MarketDynamics #Commitment #InvestmentProfessional #LTIF #ELT

Follow Fund Shack on your Preferred Platform

LinkedIn
Spotify
Apple Podcasts
YouTube
Google Podcasts
Amazon Music
PlayerFM

Fund Shack is a private equity podcast and global media channel for alternative investment professionals. Fund Shack is produced by Linear B Group.
Contact:
Katie Mitchell
Email: katie@linearb.media
Company: Linear B Group