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Ken Kencel

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110
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2023-03-31
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2023-03-31
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  1. “In other words, really, we were managed and investing alongside leading private equity funds and managing the bank's capital. And we actually started raising third-party money back then as well.”

    2023-03-31 · Masters in Business · Ken Kencel on the Rise of Private Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “Kind of like that. I mean, I would say that what we really did is focus on the private equity firms that really had a great track record. We knew the principles. We knew that they had done good deals acquiring attractive and high-performing businesses. And so we looked to finance those deals, but essentially said to those private equity firms, look, we think you could do a great job. We love your investment strategy. We love the industries you invest in. We'd love to co-invest with you. Not as a control, but as a minority investor, right? So if they were acquiring a business, we would often take an equity investment as well. And that model proved to be very, very successful. Now, if you think about the time and place that we were operating, it essentially was the precursor to the current private credit world”

    2023-03-31 · Masters in Business · Ken Kencel on the Rise of Private Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “Did the financing for deals, we actually invested alongside those private equity firms as an equity partner, right? So the theory was that's great that you're providing a loan, but if you can co-invest with them and get the upside of partnering with some of the most successful private equity funds in the United States, a great way to enhance your returns.”

    2023-03-31 · Masters in Business · Ken Kencel on the Rise of Private Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “Right. So the first thing to think about is that when we first met with him, I'll never forget meeting with the gentleman who was heading up the band. Huge area of growth in the economy. PE at that point was really just developing in the middle market. You had a lot of the big buyout firms they were doing, the transactions in the 80s, early 90s. But these large firms were spinning off smaller private equity firms, and they were doing mid-sized deals. And so financing and actually investing, co-investing in those deals was a very interesting place to be. And it was an incredibly fast-growing area. In some cases, the big banks weren't quite as interested in financing those deals. So we created basically a mid-market lending platform that ultimately spun out some of the most talented and capable folks within the private debt world today. So lots of folks work there that now run very large alternative asset management firms and credit arms of firms. So it was a very, very interesting place. But we didn't notice...”

    2023-03-31 · Masters in Business · Ken Kencel on the Rise of Private Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “And in many respects, it was a lot like Drexel in the sense that super talented people, incredibly flexible, you know, in terms of giving young people opportunity, et cetera, it was a relatively small group, but we became one of the most active lenders and financing sources and investors to mid-size U.S. companies and had lots of very talented folks that we work with. So that kind of led one thing leads to another, and that led us to getting back with a lot of my old colleagues from Drexeland, built quite an interesting business there for almost 10 years.”

    2023-03-31 · Masters in Business · Ken Kencel on the Rise of Private Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “Of business cards That's exactly right. And back then, it was again, it was a very interesting place to be because they had lots of capital and they had lots of clients, but historically they had not been in that business. So we started the high-yield business there in the early 90s. And frankly, it was going quite well until the first of what turned out to be many mergers. And then I left there and joined a number of my colleagues from Drexel and launched a business that, as it turns out, was pretty much a carbon copy of the business we have today. And it was backed by the largest bank in France. It was called Indoz Capital.”

    2023-03-31 · Masters in Business · Ken Kencel on the Rise of Private Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “I think all of us were a bit surprised when Drexel left the corporate landscape. And all of us were out trying to figure out, okay, well, where do we go? And what was fascinating about Drexel and kind of the diaspora, if you will, of that era was that we all basically went out looking to take that experience, particularly in high yield and kind of buyouts and financing and do it at either banks or other investment banks. So I ended up at Chase in the early 90s, and they, interestingly enough, had just formed a Section 20. They really weren't in the investment banking business. And they looked at the opportunity there and said, gee, we should really have a high yield business and a financing business. And so Tom LeBreck and Art Ryan hired me to start their Hail business. And it was a great place to work.”

    2023-03-31 · Masters in Business · Ken Kencel on the Rise of Private Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “They weren't. In fact, that was pre merger with Manny Henney and Chemical and JP Morgan and et cetera. Well, you know, it was interesting. You know, when”

    2023-03-31 · Masters in Business · Ken Kencel on the Rise of Private Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “Barbarians at the gate, and the financing. What most people don't realize is that that deal had been hanging around as a potential transaction for a long time. And a lot of firms had looked at it, and it had conversations with the company. And it was, you know, frankly, for us, younger guys, and I was, you know, I was an associate or VP back then. I was one of the younger folks in the crew. It was a bit of a tar baby back then. In other words, the senior folks would go around and say, okay, we're going to do yet another analysis on RJR. I'm going to look at a buyout and look at the pricing and look at the structure. So, you know, it got to the point where, you know, it was exciting at first as a deal, but I would say over time, we were all kind of under our desks when the assignment partner came around looking for somebody to work on it. So, you know, it's funny how deals turn out to be Bellwether deals and known across the world.”

    2023-03-31 · Masters in Business · Ken Kencel on the Rise of Private Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “It was a fascinating time and an incredible group of people. I will tell you that, you know, in many respects, you look at experiences in your career and think about how they influence you and think about organizations and the environment you want to work in. And Drexel was an incredibly exciting place to work. Young people given tremendous responsibility at frankly a very young age in their careers. I got the opportunity to work with some really interesting folks who continue today to be involved in private equity and private credit and see them all the time. And very proud of that time. It was a great time.”

    2023-03-31 · Masters in Business · Ken Kencel on the Rise of Private Capital · IDENTIFIED FROM THE TRANSCRIPT · source