Arjun Raghavan, CEO of Partners Capital is the man private equity executives trust with their money. And not just them. Partners Capital has evolved from managing private equity executives’ wealth to overseeing $60 billion for smaller endowments, family offices, and foundations globally.
In this conversation, Arjun speaks to Ross Butler about the firm’s “Advanced Endowment Approach”, emphasizing diversification, resilience, and early-stage access to niche opportunities.
Origins and Growth Partners Capital was founded in 2001 to offer investment management services inspired by the endowment model. Initially focused on private equity partners, the firm expanded to serve smaller institutional clients and family offices. Under Arjun’s leadership, the firm scaled operations globally, now managing $60 billion across Europe, Asia, and the US.
Twin-Engine Investment Philosophy Central to Partners Capital’s strategy is the twin-engine model. The beta engine focuses on cost-efficient diversification across traditional and alternative asset classes. Meanwhile, the alpha engine targets illiquid, high-return opportunities, providing both resilience and enhanced returns. Together, these engines ensure robust portfolio performance through cycles.
Adapting to Market Dynamics In a challenging market environment marked by concentrated gains in public equities and the saturation of alternatives, Partners Capital remains agile. It prioritises resilience through true diversification, embracing strategies like private debt, venture capital, and specialist asset management.
Ross Butler speaks with Edward Talmor-Gera, Founder and CEO of NewVest, and Matthew Chapman, Director at NewVest. NewVest is a pioneering company providing low-cost, diversified index funds for private equity, private debt, and other private market strategies — revolutionizing how investors access private markets.
Edward and Matthew delve into how NewVest is challenging the conventions of private equity by creating passive exposure to the asset class, similar to index funds in public markets. The conversation looks at the rationale for a passives component to private markets programmes, and highlights NewVest’s novel approach, which offers institutional and private investors access to the world’s largest private equity funds with reduced fees and simplified processes.
Insights: Why Passive Investing in Private Markets is Revolutionary
Edward explains how indexing challenges traditional notions about private equity by providing diversified exposure to the market’s average return, which has consistently outperformed the median. He reveals that 70% of private equity funds in any vintage year underperform the pooled average, making an index approach both efficient and attractive.
Debunking Myths About Private Equity Performance
Edward and Matthew address a common myth: that trying to select top-performing funds is the only way to succeed in private equity. They share data proving that relative performance persistence among fund managers is statistically limited, making an index strategy a reliable alternative.
NewVest’s Unique Approach
Fund Structure: NewVest employs a no-management-fee structure, charging only a low carry.
Access to Top Funds: NewVest invests in the 50 largest private equity and private debt funds each year, gaining near-complete access to the top players in the industry, including Blackstone, KKR, and Carlyle.
Diversification and Cost Efficiency: By weighting investments according to target fund sizes, NewVest offers exposure to the asset class while drastically reducing fees and risk compared to active fund selection.
The Evolution of Private Markets Investing
Matthew emphasizes how passive instruments complement active strategies, allowing investors to focus on areas where they can achieve true alpha while leveraging the stability of an index for broader diversification.
Future Plans and the Vision for Private Markets
NewVest envisions a future where passive investing in private markets is as ubiquitous as it is in public markets. They aim to introduce sector-specific and niche indices, such as clean tech or geographic-focused products, and even indices for first-time funds.
Aligning Interests and Democratizing Access
Edward shares how NewVest’s alignment with LPs and innovative approach is attracting institutions, family offices, and even individual investors.
Fund Shack is a private equity podcast and global media channel for alternative investment professionals. Fund Shack is produced by Linear B Group and if you are interested in appearing on the show, wish to propose a client, or are interested in sponsorship, contact:
Ross Butler speaks with David Whileman, Partner at Inflexion Private Equity, about the untapped potential of minority private equity investments. David shares how minority investing provides entrepreneurs with the resources to scale without selling their businesses. The conversation explores the fund’s strategy, its impact on portfolio companies, and the competitive advantages of minority investments in addressing a vast market underserved by traditional private equity.
RW Blears: Our sponsor for this episode is RW Blears, a UK law firm specialising in fund management. If you are a UK venture capital manager or growth investor and need a trusted legal adviser, visit https://blears.com/
Insights:
The Untapped Potential of Minority Investments: David explains how minority investing offers private equity benefits without requiring businesses to sell outright. This approach opens private equity to 75% of companies that are not typically for sale, particularly family-owned or entrepreneur-led businesses.
Inflexion’s Partnership Capital Fund Performance: Since launching in 2015, the fund has raised £1.75 billion, completed 24 investments, and exited nine, including several that achieved exceptional growth. David emphasizes the fund’s ability to serve as the first institutional investor for established companies averaging £350 million in value.
Building Trusted Relationships: Key to minority investing is fostering trust and alignment with entrepreneurs. David highlights how Partnership Capital avoids prescriptive exit strategies, allowing for collaborative decisions that benefit both investors and business owners.
Expanding Globally and Corporate Partnerships: Inflexion has extended its reach across Europe and recently into corporate partnerships, where it supports divisions of large corporations seeking independence while maintaining alignment with their parent companies.
Value Creation Beyond Capital: Inflexion delivers more than funding, offering expertise in talent management, technology adoption, pricing strategies, and global expansion. Its offices worldwide provide portfolio companies with the tools to enter new markets and scale effectively.
Cultural Fit and Talent Recruitment: David underlines the importance of hiring professionals with emotional intelligence and entrepreneurial mindsets. He describes Inflexion’s team as diverse and collaborative, ensuring alignment with the needs of entrepreneurs.
Fund Shack is a private equity podcast and global media channel for alternative investment professionals. Fund Shack is produced by Linear B Group and if you are interested in appearing on the show, wish to propose a client, or are interested in sponsorship, contact:
In this episode of Fund Shack, Ross Butler speaks with Colm Walsh, Managing Director of ICG Enterprise Trust. ICG Enterprise Trust is a listed private equity investor managed by ICG, a global alternative asset manager. Colm shares insights on ICG’s investment strategies, including their focus on buyouts, the benefit of being part of ICG’s extensive platform, and the importance of experienced managers in achieving consistent returns. They also discuss the unique advantages of the investment trust structure for private equity and Colm’s perspective on the evolving private equity landscape.
ICG Enterprise Trust and Its Role in Private Equity: ICG Enterprise Trust is a listed private equity investor focusing on buyouts. As part of ICG’s broader alternative asset management platform, it benefits from access to a vast ecosystem of managers and market insights. ICG Enterprise is the UK’s oldest listed private equity vehicle, having been formed in 1981.
Investment Strategy Focused on Buyouts and Defensive Growth: ICG Enterprise Trust primarily invests in cash-generative, EBIT-positive companies, favoring the established private equity markets in North America and Europe. They focus on sectors that demonstrate “defensive growth,” such as pet products and fire protection services, which can sustain growth even during challenging economic times.
Diversified Portfolio with Primaries, Secondaries, and Co-Investments: ICG Enterprise Trust diversifies its investments through a mix of primary fund commitments, secondary investments, and co-investments. Around 30% of the portfolio is tied to ICG’s network, providing Colm and his team with enhanced diligence capabilities, particularly for co-investment opportunities.
Balancing Risk and Return Through Experienced Managers: Colm emphasizes the importance of backing experienced and established managers who have developed a strong playbook and pattern recognition. This conservative approach is geared towards minimizing loss ratios and achieving consistent returns, appealing to public shareholders seeking stability in private equity.
Advantages of the Investment Trust Structure for Retail Investors: Colm highlights the unique benefits of the investment trust structure, which allows retail investors access to private equity returns with the liquidity of a public company. This structure has facilitated democratized access to private equity long before recent innovations, such as LTAFs, were introduced.
Fund Shack is a private equity podcast and global media channel for alternative investment professionals. Fund Shack is produced by Linear B Group and if you are interested in appearing on the show, wish to propose a client, or are interested in sponsorship, contact:
In this episode, Ross Butler talks to Karen Sands, COO of Federated Hermes Private Equity which manages some $6bn of AUM. Karen provides insight into Federated Hermes’ shift into private markets, their strategic focus on ESG, and her role in managing operations. They explore the importance of scalable infrastructure, the evolving investor landscape, and the operational challenges faced by private equity firms today.
Detailed Insights:
Federated Hermes and Private Markets: Federated Hermes transitioned into private markets in 2018 when it acquired Hermes, positioning the firm to grow its ESG and private market offerings. Karen explains that while Federated Hermes had roots in mutual funds and money markets, the integration of Hermes has helped them expand into lower mid-market private equity.
The COO’s Role in Private Equity: Karen highlights that, as COO, her responsibility extends beyond back-office functions. She collaborates closely with the investment and sales teams, ensuring infrastructure is aligned with investor needs, fund performance, and operational efficiency. The operational backbone is critical to delivering first-class service and maintaining investor trust.
Importance of Data-Driven Operations: Karen emphasizes the need for a robust, scalable infrastructure. Federated Hermes uses a “target operating model” that integrates data from various systems, providing a comprehensive view of fund-level, asset-level, and investor-level information. This enables the firm to be nimble in responding to investor queries while maintaining efficiency.
Risk Management and Investor Relations: Operational risk, liquidity management, and transparency are top priorities for Karen. She discusses the importance of having systems in place to handle investor demands, manage cash flow, and ensure the firm’s resilience against macroeconomic shocks like the recent Silicon Valley Bank incident.
Emotional Intelligence in Leadership: While strong analytical skills are essential, Karen underscores the value of emotional intelligence and relationship-building in leading operational teams. For her, fostering diversity of thought and nurturing strong, empathetic leadership are key components of success.
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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 and if you are interested in appearing on the show, wish to propose a client, or are interested in sponsorship, contact:
Founded in mid-1990s, Partners Group launched its first vehicle accessible to individual investors in the early naughties. Today it is at the frontline of the democratisation of private equity.
In this episode, Ross Butler speaks to Joanna Asfour, the firm’s global head of consultant relations, to discuss how private equity can help DC pensioners in the UK access private markets.
We look particularly at the benefits that private markets exposure can bring to a pension fund, as well as some of the complexities around the management of such less liquid investments. We al LTAFs, the UK equivalent of ELTIFs and the various nuances of providing relatively simple access to the asset class for DC pension trustees.
Top insight The UK DC market will be worth about a trillion by 2030. It’s a £100bn opportunity for private markets. There’s been sub-£5bn invested so far. i.e. This is going to be big!
Highlights
Historical Context and Current Position Partners Group has been a pioneer in making private markets accessible to individual investors since the early 2000s. The firm currently manages around 150 billion euros in assets, with private wealth being a rapidly growing segment.
Democratization of Private Markets The term democratization refers to broadening access beyond institutional investors to include individuals, such as DC pension scheme members and wealth management clients. This trend is seen as mutualization, akin to what mutual funds did for public markets.
Regulatory and Operational Challenges The key challenge has been the regulatory and operational barriers that limit DC pension schemes from investing in private markets. The introduction of the Long-Term Asset Fund (LTAF) by the FCA has been crucial in providing a UK-authorized fund structure suitable for DC schemes.
LTAF as a Solution: LTAFs are designed to meet the specific needs of DC pension schemes, allowing them to blend private markets into their default fund arrangements. This structure addresses both regulatory requirements and the operational demands of life insurance platforms that manage many DC pension schemes.
Implementation Considerations: Trustees need to consider where in the pension lifecycle private market allocations are most appropriate, particularly focusing on the growth accumulation phase. There is a need to balance liquidity management and stress test the potential impact of including private markets in DC schemes.
Performance and Valuation: Performance fees and daily valuations are critical aspects that need to be managed to ensure fair treatment of all investors in an evergreen fund format. Partners Group has developed robust systems to handle daily valuations and liquidity management, drawing on their long experience with similar fund structures.
Fund Shack is a private equity podcast and global media channel for alternative investment professionals. Fund Shack is produced by Linear B Group and if you are interested in appearing on the show, wish to propose a client, or are interested in sponsorship, contact:
Jim Strang, serial private equity NXD and chairman of Hg Capital Trust, discusses the complexities of the private equity landscape on the Fund Shack podcast.
Fundraising and Market Dynamics: Market Polarization: Large platforms and top-performing specialists continue to raise significant capital, while mid-sized players face extended fundraising cycles.
Liquidity Challenges: Investors are managing overexposure from the 2021 boom, causing liquidity issues across different regions.
GP Strategy and Growth: Clear Ambitions: GPs focus on defining clear ambitions and achieving team alignment.
Strategic Growth: Balancing ambition with operational capacity, strategies range from maintaining a single focus to expanding into adjacent areas through M&A.
Wealth Market and Semi-Liquid Structures
Growing Market: Wealth market growth through semi-liquid structures designed for high-net-worth individuals.
NAV-Based Exposure: These structures offer accessible entry points for private market investments, requiring careful liquidity management.
ESG and Cybersecurity: Central to Strategy: ESG considerations driven by investor demand and talent acquisition needs.
Top Risk: Cybersecurity remains a top risk, with firms prioritizing mitigation measures to protect portfolios.
Thank you to our episode partner Quest Fund Placement.
The firm recently launched QuestInvest, the digital hub and gateway to alternative assets that connects accredited investors with leading GPs.
Fund Shack is a private equity podcast and global media channel for alternative investment professionals. Fund Shack is produced by Linear B Group and if you are interested in appearing on the show, wish to propose a client, or are interested in sponsorship, contact:
Sunaina Sinha, Global Head of Private Capital Advisory at Raymond James, talks to Ross Butler about the challenges of raising private capital funds in today’s market. Tl:dr – it’s not easy.
This episode is supported by Datasite, the leading M&A platform for dealmakers. https://www.datasite.com/en
Fundraising cycles have extended to 22-23 months on average, reflecting the challenging environment. Firms must offer co-investments, fee discounts, and management fee holidays to attract investors. The tenor of fundraising conversations has shifted, with private equity firms needing to provide various incentives to secure commitments.
We cover dry powder, the rise of co-investments, and the influence of Middle Eastern and private wealth in the market.
2023 was marked by significant challenges due to a liquidity squeeze and reduced exit activities.
This environment has been tough for institutional limited partners, leading to a shift in investment metrics. (i.e. DPI is the new IRR)
Rise of Co-Investments
How investors are leveraging their power to demand fee-free co-investments.
Sector Focus: Private Credit and Infrastructure
Private credit is booming due to bank pullbacks and high-interest rates, while infrastructure investments are attractive due to their tangible nature and inflation resistance.
Thank you to our episode partner Datasite, the leading M&A platform for dealmakers.
Contact Information: About Fund Shack: 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
Ross Butler hosts Patrick Turner, Managing Director at VSS Capital Partners, a US-based lower mid-market private equity firm founded in 1981, originally named Veronis Suhler Stevenson. Patrick joined VSS in 2014, bringing a wealth of experience from his extensive career in leveraged buyouts in the US, and private equity in China. VSS focuses on the US lower mid-market, specifically targeting three verticals: education, healthcare, and outsourced business services with a technology angle. VSS’s approach to structured capital, which includes debt, preferred equity, and equity, tailored to the needs of founders looking to grow their businesses without giving up control. This strategy allows VSS to be competitive and less dilutive compared to traditional growth capital.
Key Highlights:
VSS focuses on the US lower mid-market, specifically targeting three verticals: education, healthcare, and outsourced business services with a technology angle. VSS’s approach to structured capital, which includes debt, preferred equity, and equity, tailored to the needs of founders looking to grow their businesses without giving up control. This strategy allows VSS to be competitive and less dilutive compared to traditional growth capital.
Fund Shack is a private equity podcast and global media channel for alternative investment professionals. Fund Shack is produced by Linear B Group and if you are interested in appearing on the show, wish to propose a client, or are interested in sponsorship, contact:
Fatou Diagne is co-founder of Bootstrap Europe, which acquired the German portfolio of Silicon Valley Bank in 2023. The discuss is a fascinating insight into the elite world of lending to the top tier of venture-backed businesses.
This episode also features our supporters, RW Blears, a UK law firm specialising in fund management. If you are a UK venture capital manager or growth investor and need a trusted legal adviser, visit https://blears.com/
In this episode of the Fund Shack podcast, 🎙️ Ross Butler interviews Fatou Diagne, co-founder of Bootstrap Europe. Fatou offers a compelling look into the world of venture debt, focusing on its role in funding high-growth technology businesses and its strategic advantages compared to traditional equity financing.
Key Highlights:
Introduction to Venture Debt: Fatou Diagne explains that Bootstrap Europe provides debt funding to technology companies that have already received substantial equity investment. These companies are usually 5 to 7 years old, generating revenues of 5 to 20 million euros, and are backed by top-tier venture capital funds.
Target Companies: Bootstrap Europe targets mature technology companies that have a proven growth formula but prefer not to dilute their equity further. The firm focuses on sectors like semiconductors, life sciences, and energy transition, seeking to support technologies that can significantly impact society.
Venture Debt is way cooler than you think! Fatou clarifies that venture debt is often misunderstood. It is not a last resort for companies that cannot raise equity; instead, it is a strategic choice for well-capitalized companies looking to accelerate growth without further dilution.
Deal Flow and Timing: Bootstrap Europe follows potential investment opportunities for several years, waiting for the right inflection point to provide growth debt. The firm typically invests after one or two rounds of equity funding, although this can vary.
Benefits for Companies: The main advantage for companies using venture debt is the avoidance of dilution. Founders and early-stage investors can maintain larger stakes in the company, enhancing their returns upon exit.
Terms of Venture Debt: The terms are transparent, with interest rates typically around 8-10% over the base rate. The debt is repaid over 3-4 years, with monthly payments of interest and principal.
Bootstrap Europe’s Approach: The firm emphasizes a strong relationship with portfolio companies, focusing on providing support during both good and challenging times. They prefer to work closely with management teams to navigate growth and financing challenges.
Acquisition of Silicon Valley Bank’s German Portfolio: In 2023, Bootstrap Europe acquired the German portfolio of Silicon Valley Bank. Fatou discusses the strategic and operational steps taken to complete this acquisition, emphasizing the importance of speed and expertise.
Current Market Conditions: Fatou comments on the impact of global economic challenges on the tech sector, noting that while the market has cooled, there are still many high-quality investment opportunities. She highlights the importance of well-capitalized companies that can navigate difficult conditions to gain market share.
Future Growth and Challenges: The discussion touches on the growth potential of venture debt in Europe and the challenges of increasing market penetration. Fatou believes that with more education and understanding, venture debt can become a more prominent part of the funding landscape.
Fund Shack is a private equity podcast and global media channel for alternative investment professionals. Fund Shack is produced by Linear B Group and if you are interested in appearing on the show, wish to propose a client, or are interested in sponsorship, contact:
