YouSaid · the spoken record

David Conrod

lines on the record: 78
first: 2022-01-28
most recent: 2022-01-28
sittings or episodes: 1
sources: podcast

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“One of the coaches always tells me at the beginning of the gates for a practice run, keep moving forward. And I think just raising things are going to always happen. There'll be a key man event. Somebody will leave a portfolio company will blow up, you know, could be some other, you know, the Asian crisis pandemic can hit, but you can never stop. You just have to keep moving forward. And I would say you've got to be patient and you just continually have to persevere.”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I would say patience and perseverance. To come up with a couple words raising Raising capital, you can never stop. You just have to keep moving forward. Just like I ski race, I still do the masters.”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I would say definitely get an internship where you can. We try to take in two or three interns every year, and that certainly helps them when they graduate getting a position at an investment firm. Doesn't necessarily need to be a capital raising firm. I also think getting experience and credit, I would recommend that to anybody. Coming right out. I think that is a good foundation that you that Be very valuable”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's an amazing story. I think it would be a great movie. And I just recently read Elon Musk. I read a couple of the rocket billionaires. And then Elon, that led me to recently read Elon Musk's biography. Simultaneously trying to disrupt the three most complex industries in the world, aerospace, financial services with PayPal, when he got involved there. Automotive with Tesla. Simultaneously He left South Africa, I think, at 18, I think a distant relative of his mom had some relatives in Canada. Went for”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“At one point Yeah, and uh, It's an amazing story. Once Vladimir Putin seemed to cut his deal with the oligarchs. You know, strong willed”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“What am I reading right now? A GP gave me red notice. It came out of... A couple of years ago, Bill Browder's book where he had, I think he was the largest foreign investor in Russia”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I would say it would be David Patterson who ran HSBC's private equity business in China and Southeast Asia. He was based in Hong Kong, and that's who introduced me to private equity in 1992. And he showed up at our offices in New York with $235 million that he had invested in Southeast Asia and looking to raise a fund in the U.S. with some US investors.”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, they might. One anecdote for you is I know a tech investor probably sub $1 billion, a large $10 plus billion dollar firm was buying one of their portfolio companies. The smaller firm was going to roll their equity, a roll of 30 or 40 percent of their equity into the new company. The larger firm came to him and said, you know what, if we pay you a little extra, can we just take all of it? Sure. Sold to you. Yeah, right?”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think some of the larger firms are feeling the way to the money. They have to get the money invested. And so over they can't turn it down, overpaying a bit.”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think in the mid-market, let's call it the lower mid-market, 250 to a billion. Is probably 250 is the lower end. Mid cap would be, I'd say, between 500 and a billion and a half or 500 and a billion fund size. There's more exit opportunities when you have a company at that level than you have a $5 billion company, right? And so there's more options in terms of exit. You could potentially IPO it might fit for a SPAC or there's a lot of larger private equity firms that have raised significant amounts of capital and they have platforms and they're looking to grow. And I think Maybe some of them overpay for some of those assets.”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it's going to stay where it is. And it is significant, though. But that's what motivates these. Know very talented investors and”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Without having to sell it correct. And so they'll take their best asset, put it into a continuation vehicle, redeem out the LPs that want their capital back, bring in a new capital provider. Keep going.”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“And another dynamic is you're seeing these continuation funds being formed, where general partners now are basically creating their own secondary funds themselves. So a GPU will have their best asset, their taxpayers, and they'd rather just continue to compound. And so”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“They've raised incredible amounts of money, tens of billions of dollars from large LPs. They're paying a slight premium versus following the financial crisis. They were buying a lot of these limited partners were out of balance. When they rebalanced their portfolio, when the stock market declined, they were way over their targeted allocation to private equity, so they had to sell. The secondary managers did very well. They were buying those positions at steep discounts. Now they've continued to raise money, but they're probably paying a slight premium. And I think investing as a secondary manager when there's a lot of liquidity doesn't make a lot of sense to me. I think investing in a secondary manager when there isn't liquidity, they're going to be buying in at steep discounts.”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Definitely that on the fund of funds managers The fund of funds generally 10, 15 years ago could get away maybe with charging 1% and 15%. Yeah. And now. Now, they're all moving into trying to make money with co-investments, right? And so that's where they're going to make, that's their bread and butter, and they're almost giving away the primary investment. That the fees that they charge on that. Another interesting. Development where I think we'll see a lot of fee pressure are the private equity secondary managers.”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah. And so, you know, I'd say rule of thumb if a credit strategy is returning, say, a net return of between 8 and 10 percent, the manager probably can't charge more than 1% on invested capital versus committed capital. And maybe it's a 10 or 15% carried interest versus 20. If the return is, say, 10 to 12% net, the credit manager might be able to get 1.5% to 1.5 on invested maybe a 15% carry and then north to 12. They're working their way closer to 2.20.”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Alternative investment. Yeah, that's about right. So the rack rate for raising the capital for an established group is probably 2%. On committed capital, and then you're protected on the successor fund with, say, half fee on the 50% of the fee. They paid last time up to their level, and then maybe something a little more on the incremental. Generally, an investor is underwriting to do two funds with a general partner. And then they'll re underwrite them seriously on Fund 3. There just won't be enough to come through by the time they're back in the market, especially today when they're back every 18 months. On the credit side, the fees are a little less because they're charging a little less because the returns are”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, those three things are constantly moving, and we say we try to do it with rhythm and repetition. Each one of these market participants and how we spend our time.”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Seen any strategies in this area. If I look at the market, there's three components to it. I call it the trilogy. You've got the limited partners who are the investors. You've got the general partners, and you have the intermediaries, which are the consultants and the gatekeepers that work for a lot of the limited partners. And we're constantly hitting the limited partners, and they're meeting the Salesforce. They're seeing us at conferences. They're getting newsletters. They're reading about you in the press. And cold calls, whatever it may be, they're constantly getting introduced to products that we have. Same with the intermediaries and also with the general partners. We're trying to get them. But the intermediaries are going to influence the limited partners.”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“That have a good relationship with a group and maybe some of that team is spinning out to start something new. Some of our deal flow comes that way. Direct approach where we go out, introduce ourselves, a general partner may have been working with another capital raise partner for a number of years and might be thinking about, you know, maybe I should try somebody new and meet a new get introduced to some new investors that I may not have met that are not in the network of the existing capital raiser that I've been working with. So some of that and a lot we get emails all day long of new groups looking to raise capital. So I think it's a combination of all of it. Some incoming, some proactive, definitely we're always speaking to limited partners. What groups you like? Have you seen?”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, we have been doing, I haven't been doing it a long time, and some of my colleagues at Focus Point were also at Guggenheim from the beginning or early on. We all have a pretty good network of people. Our sourcing comes from some of the experienced investors that we've known a long time that may be at some large endowments or foundations”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“And there was a $1.2 billion of debt on that business, and this guy created the company for $300 million. And it actually relaunched it just prior to Thanksgiving all over the world. But we thought the same thing. He's launched his fund. He's got four positions completed since I'd say 2Q. And he's probably up 1.6. If you think about distress, you've got a management team that's on a treadmill. And the private equity sponsor every quarter is telling them, make the interest payment. And every quarter, the tilt's going up and the speed is going up on that treadmill. And these distressed investors are just waiting for that amortization schedule to kick in. And at some point, that's going to happen and they're going to lose the company. And so I think there's a number of positions being built on these potential targets, but we...”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“We were thinking the same thing. We saw an individual that we know well who led the creditor group in March, April of 2020 to get control of Cirque de Soleil, right? If you think about that business, their sales stopped overnight globally. Done.”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, absolutely. People are looking at that and allocating resource to it. And when you see the consultants also spending time and staffing up to do some research, yeah, it's probably here to say some of the larger endowments have already made some allocations in the crypto and the digital currency world. So it's... It's happening”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“In California, apparently in the state of California, there are no new liquor licenses. You have to buy an existing one, and 15% of the purchase price has to go in escrow while the due diligence is completed on the new buyer, and that's a 10% business. It's small. We've seen. Tax lien finance in different states, people buying the tax lien. And, you know, people are a lot of creative people out there trying to come up with... Strategies that'll generate an attractive financial return. So we try to work our way through that, but it's got to be scalable. and the management team has to be credible and where there's a process in place where it's systematic and repeatable.”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think in the slow interest rate environment, people are looking for yield. And income, and how do they have a benchmark and when bonds are returning zero, they need to look at other income related alternatives. We've talked about sale Eastback. We've talked about Music Royalties, talked about film and TV royalties. Asset base lending in addition to just cash flow lending and leveraged loans, people were starting to see litigation finance strategies. You've seen some of those Last week I ran into two new income strategies I had never thought of. I don't know if they're scalable or we would do it, but one is liquor license lending.”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“There's a lot of software involved in that. Yeah, correct. But you're seeing that in specialty industrial managers, healthcare managers. Obviously in venture capital, it's obvious, but any type of strategy, there's a technology element that they need to be thinking about it because the competitive intensity with their competitors is. Only going to increase”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“To make them more efficient. Previously you may have had a financial services investor that was providing balance sheet capital. Now they're focused on payments.”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think if I looked at our roster of general partners we were working with back to say 2016-2017 probably we probably only had one that had a tech technology element to it. Now everybody does even a distress for control manager that we're about to go to market with. With an assignment. This is an individual that led the creditor group to gain control of Cirque de Soleil last year. Every strategy has to embrace technology to improve their businesses and take advantage of the innovation and the competition is becoming increasingly fierce.”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“The private side. On the private side, and that's a big part of their due diligence to go through, there's ESG consultants now. That ESG standards definitely in Europe is probably further ahead than the US. But it is, most of the managers have to be aware of that, but I think it's going to make their portfolio companies ultimately better because it's all focused on innovation. And, you know, innovation is technology. And these companies will just be better and it's going to bring about better international standards that these companies have to operate under. And same with these GPs.”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“A guy who came out of a listed company called WP Carey. He built their international business, sold his share. He had a shareholding in that business, sold it back to WP Carey, informed his new firm 10 years ago. We've raised three sets of funds for them, both in North America and Europe. And I believe that firm probably is pushing $7 or $8 billion. In AU It's a great, yeah, it's another non bank source of financing and a low interest rate environment.”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“If you look at most spout sheets of most corporates, property, plant, and equipment is the largest line item. And there's an opportunity there to, it's another non-bank source of financing. So, a corporate looking to raise capital could unlock some of that, get out of the real estate business, sell the asset simultaneously release it back for a long period of time, 15 to 25 years. Have the use of those proceeds to reinvest in their business. I think has it been very popular? It hasn't been promoted a lot by the investment banking community because I think the cynical side of me says they're making more money on a bond offering or issuing some more equity than suggesting a sale leaseback for an asset. We came in contact, I guess, over 10 years ago with a very talented team from”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“The insurance company was pretty savvy in recognizing that end of last year. And these are all end-of-life ships. So they go to scrap at the end of the charters that they're currently on. So there's no exposure. Or a risk of rechartering them at the end of these Investor at that insurance company. Clever Sounds like actually ex colleague at Guggenheim.”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, the investors are looking for a higher return. And we've done some things in the real estate related, in the hospitality sector, focusing on the extended stay and the select service market with the former head. Form of principal at a large investment bank. He had a $20 billion portfolio. He oversaw one point he's been operating as an independent sponsor for 10 years. And we've done completed now six transactions with them. And we have, I guess, ownership in north of 60 of those types of hotels. We recently identified a New York Stock Exchange listed insurance company to invest in eight large shipping container vessels. That $170 million is now worth north of half a billion in only nine months as the container market is red hot right now.”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“The part percent of their carried interest for raising the equity, and in some cases we have invested in their GP. We noticed with independent sponsors when they do have a direct transaction, the lenders want to see a fund that the GP commit is generally two percent minimum. The lenders on a direct transaction for a sponsor who does not have a fund are asking for 10 to 20 percent for a GP commit. And they don't always have that lying around. And so being able to help them.”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's the entity that owns the Focus Point Private Capital Group. And I'd say since 2016-2017, we've been through the capital raising business. We meet some, we started meeting some talented independent sponsors that were confident in their ability to get a transaction done where they was unable to convince them to do a fund. And so we would raise equity for them, and we started to participate in the promote structure with them. So Land C owns a portfolio of ownership interests in some direct transactions. And on occasion, we participate in the promote structure with some first-time funds as part of our compensation.”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Talk about what it Got a son named Lucas. I've got a son named Alex. I've got a wife named Nina. My name's David, and my last name is Conrod.”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“And the companies are growing 30 to 50 percent annually and they need some equity capital to get to the next level. These growth equity managers provide that with their guidance, get them to $100 to $200 million in revenue, say. And then they show up on the radar screen of the larger. Private equity firms that are looking to add on looking for a portfolio company to add on to an existing platform. And so it's almost a food chain that we're starting to see. Which wasn't as apparent three to five years ago. With what's happening in the world of tech, it's increasing rapidly.”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“That are in the public markets. These are private equity firms that are not seeking control of the businesses. So they're generally backing a management team bootstrapped, and they're the first institutional money going into the business.”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure, we raise capital for private funds and direct transactions. The typical fund strategies we are focused on are, I would say, Private equity managers in the mid cap space. From 250 million to say 2 billion in fund size, growth equity managers, minority or managers focused on control, some software, but all throughout the tech sector, tech-enabled services, software, some hardware. And we've lately done a little bit in the venture capital world. And we do a lot in credit and income related strategies”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“And during the pandemic, they actually, this group collects their rent quarterly in advance. Versus monthly, and so they never had an issue all during the pandemic.”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“The opportunity when nobody Yeah. And so our job as a capital raiser is to identify the prospective investor that might be a little more thoughtful is looking for a product like this, which is generating 10, 11 percent cash on cash. But without a lot of.”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Than suggesting, you know what? If I look at your balance sheet, property, plant, and equipment is your largest line item, why are you in the real estate business? Why do you sell that, release it back, and reinvest back into the business? Another advantage for the company is to do it by entering into a long term lease, they're going to get a below market rate. Right, and the manager gets to buy the asset at a below market price. So we've worked with a group. It's been a little difficult raising capital for it because it's a hybrid. It's not quite credit because it's real estate-backed. And the credit guys don't understand corporate real estate. The real estate guys don't understand credit. The real estate guys think the market's going to continue to go up. And they're not looking at the importance of the credit.”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“And we've done three funds with this group. I think Sale Eastback, the investment banks haven't been promoting it because they probably, this is just me, a theory of mine, but the investment banks would rather convince the CFO of these corporates to do a bond offering or an equity offering because the fees are higher.”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Not quite 50 years, but yeah, that's exactly it. So you have the headquarters of a big pharmaceutical company. And they're looking to raise some cash, maybe not a pharmaceutical company, but some other business. It's a great non bank source of financing. You can sell the asset simultaneously release it back for 15 to 25 years. You're protected against inflation the manager is because the rent increases are built in contractually. And you own the asset. So you're actually in a better position than the bondholders that own the same credit.”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“A classic Christmas movie. Quite fascinating. Another interesting strategy that we've been three funds with a group focused on the sale ESPAC, of commercial real estate.”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Taking off with you see the number of series created and they're picked up from multiple seasons. So, and film is, you know. Yeah, and you know, once it's released theatrically. And you're still seeing the Godfather, every Christmas time. It's on four different channels.”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Investment sector. Music, it's, I don't know how big it will ultimately get to, but there's certainly a long ways to go. And I think the film and TV, the TV is really...”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“We've done three music funds with a group, and we've done two funds with another group that focuses on film and TV royalties. But their most recent fund, there wasn't a lot of new films being produced in 2020 and 2021. They dipped their toe into music. And so a little more diversified, I think. Be some good interest in that next year when they come out with their successor fund.”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Tell us about that. I think a song hits its steady state after about, I believe it's about six years. A good example, we worked with a music royalty group. We've raised three funds for them since 2010. So we've been at it for a while. But I think it was during the Olympics in London in 1992. Call me maybe was on the radio every five minutes. Now you never hear it. Right. And so it took about a song hits at steady state after about six years, and they can monitor, you know, they collect those revenues globally now. So whether it's played on the radio, whether it's played in a bar, at a skating rink, on its set list at a concert by a musician, those artists receive those royalties every quarter. You're basically just doing a cash flow analysis to see how it's going to play out. But you probably would.”
2022-01-28 · Masters in Business · David Conrod on Successor Funds and Growth Equity (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source