YouSaid · the spoken record

Mario Giannini

lines on the record: 92
first: 2022-07-18
most recent: 2022-07-18
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“I wish I had learned, and I tell people this when they talk to me, younger people, keep contact with people throughout your life. I've always looked at life as stages and it's like a booster rocket. That stage is gone, as is everyone in it. And I wish I hadn't done that. I wish I had stayed in contact better with people from different parts of my life. And I look at people that have done that, and it's enriched their lives. It's made them smarter, and it has just made them happier people. It's amazing.”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“Any success or thing that would go well she'd always remind me that one, either someone's worse off, so think about them, or there were a lot of people that helped make this happen and remember that. And so I think that's always stuck with me, that, yeah, I try to take credit for everything that goes right, but there are probably other people that are just as involved”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“They were Italian Catholic. The guilt. I feel guilty about everything. I would say the teaching of humility, humbleness. I think for particularly my mother,”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“Mistakes are a funny thing. I always look at mistakes and think that it's the butterfly effect. I would like to redo a lot of things, but what I end up here, and the answer is no, and I'm okay with where I am, so I guess I hope I do the same thing. But I would say generically where my mistakes have been is I have an instinctual personal and investment predilection to say no to everything immediately. Just no, no. I used to do it with my kids. I learned to my kids to have a feedback loop. Like, don't say a word until you thought about what you're going to say, because I'd always say no, whatever it was, because it was about me. I'd say no too often. And the other was not really trusting myself or the people around me to believe we can get something done and just go for it. I would say those are the...”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“Just when issues would come up around strategy at Hamilton Lane, when issues would come up around where are we in the markets, what's going on, when issues would come up about how do you talk about where the industry was. I've always thought that the great minds are those that can do macro and micro and make it understandable to people. And he has a gift for that.”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“One would be a lawyer I worked with many, many years ago if for no other reason than I remember him looking at me once and he said You do realize you're not as smart as you think you are Was like, you know, Damn, he's right. The second one, probably Jim Coulter at TPG. He's been an enormous help and a resource to talk to and a sounding board.”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“I would say in this aspect, people that tell me they're long term investors, they're always telling me they're long term investors when they don't want to acknowledge a mistake they just made investing. No, I'm long-term. Yeah, you're going to sit on that investment. You're not going to do anything about it, right? Yeah, that's what I'm going to do. That one I find annoying”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“People chew with their mouths open that counted a personal pet peeve, and people that tell me they're going to give 110%. I'm like, where the hell do you get that extra 10%? I wish I had that. I don't have it.”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“Classic rock. I grew up. Jimmy Page was kind of, I wanted to be Jimmy Page, but obviously wasn't good enough to approach that. So I became Mario in private equity.”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think as more and more data gets to investors, they'll just invest more and more. I believe in ten years, fifteen years, that portfolios will by and large be 50% private, 50% public. I believe that there will be more and more private investing and part of it will be because of data because people will be able to look at what's in their portfolio, how it behaves, and they will become more comfortable that there's some transparency, that there's some understanding like there is on the public side of what's going on. There'll be different structures around liquidity, but that's a different story. I just think that the data is the key. If you can't know what is in your asset allocation portfolio, how the hell are you really going to get anyone to invest a ton of money in it? You won't. It will always be this weird little part that exists over here as kind of this separate thing that people tell you and you believe is doing well.”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“To afford the liquidity, they can afford the differences in behavior, fine. We'll see what happens with that, particularly in the United States, where I think you then have the regulatory and political background of, wait a minute, we have all these protections for public investing, and we're going to let this world over here exist without protections. I don't know.”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“Because that's what we're talking about. It's not democratization. It is. Give me more money. The ability to go after another big source, that train has left a station. I think the high net worth investor, the wealth channel will be a huge participant in the private markets. And they should be. They have enough of a portfolio, and most of them are beginning to understand how private markets work, how the liquidity works, how you deal with it. I think where we get a little riskier is when I hear, oh, we need to extend this to retail just like the REITs. Remember how the REITs did this, Mario? That's what we're going to do. The REITs did it with an entire shift in how the regulatory structure, the tax structure. I worry a little bit about the idea that the mom and pop investor, the people who really do not know how private equity works, are all of a sudden going to come into private equity. Man, that just seems like a bridge too far today. I'm just not in that camp. I think if you're dealing with people.”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, deal with that in two parts. I'll deal with the second part first. So over the 30 years that I've toiled in the industry, the question of too much money has come up every year. And every year, it's been okay. Like, I don't know, 20 out of the last 20 years, private equity has outperformed. And the last two years have been the best private equity has probably ever done in a time when there's never been more capital. I am not of the view that more money necessarily means lower returns. Sure, there's a point where it reaches saturation, but you even see, so we were talking earlier about LP running out of capital. The industry does have a self-regulating mechanism, and that is, I'm just not going to invest more. Go away. I'm not worried about the too much money part. The democratization of, we'll call it that, the ability to find another pool of capital.”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“Another big one is this whole notion of the democratization of private equity alternatives. It feels like that whole private wealth channel is the next potential big asset allocation shift into these markets. And the question I hear a lot is if that's the case and more and more money comes in, what will those returns look like?”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“Twisted into a private setting, but we are really early around that. I don't see that as right now just a lot of very, very happy talking people proud of themselves for caring about it.”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think things like that will continue where people will say, here are the five things that I am going to apply to my portfolio. And here's what I'm going to do as a result of that, because that's the other part. Okay, Mario's firm violated my view on what's important on the E. What am I doing about that? Am I liquidating my investment? No, I'm really not in the private market. So I think that's the part that people are struggling with. My sense is that certainly the E part will continue to be the driver. Everyone now is much more concerned on the environmental, and we will begin to measure that a little more. The S part will be very challenging because that is more geographically different. What an S issue is in the United States is very different from what it is in Japan. We're going to have to realize that. The G is being borrowed from the public markets. They're taking a lot of the metrics and things that matter on the G and trying to...”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“I would say a lot of it is hype. It's a lot of happy talk. It's a lot of feeling better about yourself saying you care about ESG. I think the real problem around ESG is first, everyone has a different definition of what the E and the S and the G mean to them. Everyone has a different take on which one's more important and which elements within each of them. So you have a very, very difficult system right now of what am I measuring? What am I trying to do? And how am I applying that to my portfolio? I think we're in the very, very early.”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“Been surprised at how indifferent being public has been to both employees and clients. I don't think anyone's seen a change in behavior. I think that at the end of the day is what has driven it”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it played out the way we were hoping it would. It did create a liquidity mechanism for people. The branding has really helped. I think being public has been an important part of who we are. It has helped that a lot of the industry has continued to go public. And so you're not the outlier where people go, why are you the only one public? It's almost more questions of why aren't they public? So I think that part's been good. The interesting part has been that what I didn't realize, because we're not, I'm not a public company person, is stock price may or may not have anything to do with the underlying company, but it becomes something people look at. And so when it's going up, the company may be doing what it was doing before, but you're smarter. And when it's going down, your company's doing what it was doing before, and you're not as smart. And so it's just an interesting data piece that you didn't have before that now is there. But I think I...”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's very clear that don't look at us quarter to quarter. You got to look at us year to year. It's just not an asset class that lends itself quarter to quarter. And I feel like our shareholder base knows that. I hope they know that. If they don't, they should hear from here.”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“Do whatever they want to do. And going public became an option given that a couple of firms had gone public. The other part of it was branding, particularly outside the US, where you can walk into a meeting and go, hey, wow, they're a legit firm. They must be because the SEC said they're okay to go public. So I think those were the two big drivers of going public. Since then, I mean, the one thing that I know public equity people hate this, but we went public as a controlled company. And that means that there's an unequal balance between economic ownership and voting control. And that was a big deal for us. It was a big deal for our clients because what people didn't want is hedge fund X decides, oh, we're going to take a big chunk of Hamilton Lane and tell them how to run the business. We said we've lived it. We are not doing anything differently today than we did before. Eric Hirsch, our vice chairman, has been really the lead in terms of dealing with the public.”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“While the Y was convoluted, the Y was we had always been an equity-oriented firm, so a large number of people in the firm had equity. And once you do that, it sounds great in practice, and it is. I firmly believe that equity drives behavior and it drives collective behavior, and it drives people working together because your economic upside is in the whole, not your little piece. But once you do that, and you've got a third, a half of your employee base with equity as a substantial part of their net worth, they begin to look at you and go, what am I doing with this? And I get it, you're going to sell the firm. I get what's going on. You're going to sell it. And we didn't want to sell the firm. And so you begin to go, how am I going to create a vehicle or a structure that provides liquidity for all of these employees and some way for them to estate plan?”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“Have eight things you're looking for. We can meet six of them, three of them, eight of them. I don't know. That's, I think, what the solution's approach to this asset class is. Do you want more co-invest? Do you want more venture? Do you want more Europe? Because remember, the market used to be dominated by funds of funds. And that was not at all customized. You just all were the same. You went in a fund of funds, and that's what you got. That's not where the world is today. The world today is, again, back to the Fidelity example. I want to mix and match what I need. And you may be able to provide all that may be able to provide only a part of it, and I'm going to get some of it from someone else.”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“So for us, I will brag a little bit on this. I think we were, if not the first, one of the first to offer customized services in the private equity world. And we did it accidentally. So in the lore of Hamilton Lane, we did it as a strategic move. Nah, it was totally accidental. We were with a client who said, can you help us with this part of the portfolio on a customized separate account basis? And we were like, what the hell's that? I don't even know what that is. Yeah, sure. And then all of a sudden it became a business line. And so that's what it is for us. What it is, is the solution is being able to walk into a client, a prospect really, and say, because I do believe everyone approaches the private markets differently, different objectives, different governance structures, different return profile, different liquidity constraints. What do we have that can help you meet whatever you're looking for? And hopefully we have enough that you have...”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“It depends because on some deals you're brought in so early that you're really doing the deal together. And I think on that, there's a much higher standard around what you're doing in some of the, I'll call them smaller deals or more growth-oriented deals, you're really doing a lot of that together. Whereas I would say some of the, I'll call more syndicated deals or some of the larger GPs, they're bringing you a package that is so, I'm going to question Bane on this one. Like, what does Bane know? You don't really do that. I think there it becomes more a question of area of expertise, portfolio fit. The other thing, so for example, general partners will do different deals at the beginning of their fund than they will do at the end of their fund. And how does that work for you? If it's at the end of their fund and they want a very low risk, but lower return deal, they're looking for more money multiple, that may or may not be what you're looking for, all deals are not created equal in a GP portfolio.”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, we have a team dedicated to that. I think it's very hard doing direct deals is just a different animal from doing partnership or a secondary, although secondary continuation funds is blurring. So we have a team that does that. And you have a philosophy around the kinds of deals you”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, we have a huge co-investment program. I think that is part of every portfolio today. I used to say, because I'm old enough to remember Fidelity when I only had the Magellan Fund, that's how you invested. You just invested in the Magellan Fund. And then as a mutual fund investor, you now have hundreds of choices. It's the same thing in the private markets. You have more choices. And one of them is co-investment. Do you want that in your program? How do you want that put together? How do you layer it in from a risk return perspective? So that's a trend that we've seen for, it started really before the Great Financial Crisis went down a little because everyone went, oh my God, you can lose all your money in a deal. How did this happen? And then memory's gone. Like no one remembers 13 years ago. And I suspect we'll have that same reaction as if markets have any kind of downturn.”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“And I'm not sure that people are comfortable saying I'm going to go into an illiquid asset class around that. So I think in the US, the international part around emerging markets and return has been a little disappointing. So developed country returns have been fine. And people have said, why take the extra risk? A little different when you start talking about investors outside the US. I think European investors still remain very, very international and Asian investors are and Middle Eastern investors are very international. So that question is a little bit, where am I as an investor located and how do I think about the world?”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“From the point of view of both fund raising and fund deployment, it is a far more international asset class. That has been one of the big trends over the last 20 years. And so I'll talk to fundraising. Nobody, well, except the smallest funds, nobody has a fund that doesn't have a huge international component. It's just the reality of the investing world today. Private equity, as I said at the beginning, is now part of every portfolio. So that will continue to increase. On the investing side, I think that we probably peaked on international investing a couple years ago. I think there is a little bit of a pullback, depending geographically who the investor is. But from the United States perspective, certainly there's been a pullback because of geopolitical issues. People are not sure what China and the U.S. relationships will be. Will an investment in China be okay? There was a period of time when Trump was president, when it was not okay.”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“inflation. I think you look at real assets and traditionally infrastructure has had an inflation component. And most investors are probably underallocated to infrastructure and real assets, certainly not in some areas of the world, but you look at the US, parts of Europe, Asia, they're underallocated. And so I think there's demand. There's probably a tailwind to most of it. There may be more tactical issues around pricing and what is an asset, but by and large, that's a part of the market that I think has a real tailwind behind it.”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, that is an area that will continue to grow. There are a couple of important good things and there's a couple of things people need to be aware of. I'll start with the bad because we're investment people and we're always negative. The pricing has not gone down in that space. With the public market correction, the pricing has not gone down. And so I think people need to be a little careful around what they're doing. Also, the definition of infrastructure has changed. When a lottery system is an infrastructure asset, you kind of go, is that really an infrastructure asset in the classic sense? So I think there's a lot of stuff going on in there that investors need to be careful about. But in terms of the underlying positives, take the whole energy transformation. It's real. The Russian invasion of Ukraine is certainly going to make Europe far more aware of moving away from fossil fuels. That's global. It's real and money's going to be invested in it. And so I think that is going to drive an enormous amount of investment. I think the whole sensitivity around it.”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“More carefully, again, I think not because we were geniuses, but because the pricing kind of prices you out and you look at some of the things that were coming in and you go, okay, you have to do one of two things, either willingly suspend belief and say these metrics matter and they're going to matter for the next five years because this is such a powerful trend or you go, I can't play in this part of it and you pull back a little. You really didn't have a lot of choice. There weren't a lot of middle grounds in some of the venture areas.”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“And it'll take a longer time with some of these because they got so much capital. Some of these companies got so much capital. And I think they can cut the burn rate back to where they survive for a little longer.”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“Good shape. I'm not as worried about that part of the market as I think some people are. Multiples have come down, sure, but you'd expect that they were very, very high. The venture side's a little different. When you look at venture, I think what people have forgotten is adventure is the most cyclical part of the private equity group of assets. That cyclicality has not been changed. And I suspect we're in for a fairly difficult period of time in the venture world. And unfortunately, that takes time. Look at the 2000, and I'm not all suggesting we're going to be like 2000. I don't think we are. But it took nine or ten years for that to play out. So venture cycles, and even if you go back to the 70s, I know no one remembers those times, but they played out over five year, 10-year periods. And I suspect we're going to go through a five-year period where you're going to have to pick out the venture firms and the venture underlying companies that are going to be okay. It just takes a long time.”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, that's been the place to be. I think with, let me divide them because I think growth equity has become a much bigger, broader thing than it was 10 years ago. I think growth equity 10 years ago was probably viewed as late stage venture. I think growth equity now has become both growth equity in the sense of late stage, but much more mature companies and growth equity around buyouts. And that's a fairly new, it's not a new phenomenon, but it's a new phenomenon in terms of the size of that part of the industry. And I think it's because technology is now something that's okay to do a buyout around. Because remember, 15, 20 years ago, that was a no-no. Oh, no, no, no, no. We don't do that. It's too risky. And then everyone said, again, because some of the firms you cited, that's not too risky. It's kind of a cool place to be because you get good cash flow. I think that part of the market, that growth equity part of the market, is in, I think, surprising.”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, part of it is understanding as a limited partner what do you value? So some limited partners value the relationship. And so what they do is instead of doing 20 funds at 10 million, they'll do 20 funds at 5 million. Others, and I think we are probably in this camp, say you can't keep proliferating funds because you also want to add some new funds. And so what you should be doing is... I just don't know that that's really where a lot of limited partners tend to go.”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“When you put on your pure LP hat, and let's just think about it maybe for a particular client, not so much a Hamilton Lane as an organization is growing, how have you made those trade-offs in partner relationships you want to maintain coming back with fewer dollars to put to work?”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“Market scenario. I don't care if the market flattens out here, goes up here a little, it will take a market going up fifty percent for some of this to ease, and that's not going to happen. So how does that work? I don't know what the repercussions are because this isn't a normal industry. It's sort of like general partners, they are like vampires. You cannot kill them off. And so they will survive, but will they survive with a smaller fund? Will they survive with fewer funds? I don't know. That's going to play out over two or three years.”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“It is the, I think, if it's not the single biggest issue in the private markets, it's one of the top three. I think that it has taken general partners by surprise in terms of there are two things going on. The one is the one you cited, which is limited partners, the good news is they've done really well. And so their NAV has exploded and that has put them over allocation and then you overlay the denominator effect and you have sort of a double whammy. They don't have enough money. And it's not even that they're worried about what's going on in their portfolio. They just want more money to invest into what they know is going to be a better cycle, or arguably a better cycle. And they don't have it. And then you couple that with the other side, which is the general partner world has exploded in terms of both the size of funds that they want and the number of associated funds they're all raising. It's kind of this two forces colliding, and I think it's going to lead to a reasonable shakeout under any market.”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“To people who want their money out. Now, we can argue about the economics, whether those are fair. I think there were some deals done on an economic basis that were you kind of go, there's greed, but then there's hypergreed. But why I think continuation deals are really interesting is that by and large, today you are seeing the better companies go out in those deals. I think where you worry is when it starts to be, oh, shoot, this is so easy. I'm just going to throw out any deal. I don't think we're at that point yet. And it's a low bar. I think we're still at the point where the deals have been pretty good deals.”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm going to go counter again to consensus on this. So the consensus continuation funds are terrible because you're taking companies that should be sold to somebody else and the GP's keeping it. I think what has today, the idea of continuation funds is an interesting one. 30% of deals in private equity, and this is over time, have gone from one general partner to another. That's been the exit avenue when everyone goes, oh, they're terrible. We've run numbers. The return is basically the same. There's no real difference between a GP to GP deal return and a non-GP to GP deal return. So there's no advantage or disadvantage. And so if I'm a GP and I've got a good company, why would I sell it to another GP? The continuation fund is actually a very interesting way to stay in control of that deal because presumably you know what you're doing and to move it from one LP base to another and have a better LP base in terms of who wants to stay in this deal compared to”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“In the larger end, you're talking a couple hundred difference, which is a lot. I mean, I don't mean to minimize and say, oh, they're all the same. They're not. But when you start getting into middle market, you're in hundreds more. And when you start getting into venture, you're even above that. And again, you know what's funny? I even fell into that trap. We in the private equity world, you know this. In the public world, in bonds or even in stocks, a basis point matters. 10 basis points. You're like salivating. In the private markets, we're kind of like ho-hum, 100 basis points here, 100 basis points there. No big deal. Who cares? It's just a funny world.”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“happened, and I have no explanation for why, but in the mid market, I think what you're seeing, why people go pricing is better, is because there's more opportunity to get outsized return or to have better return than what someone else in the mid-market has. And I think they ascribe it to pricing, but that's not what's driving it.”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“No, you don't. You might have a proprietary deal. You do not have proprietary deal flow because the reality is everybody knows private equity is around. And so there's no way to get a deal without someone going, hey, I'm going to call my private equity firm or my banker. So the pricing thing is not mid-market firms. It's the same thing. What we do see on return, which is, again, also interesting and part of why I think people don't understand private equity. The larger firms, the largest have a narrower dispersion of return. In other words, the difference in return is not that great between XYZ, big firm. Don't tell them that, because they're also all top quartile. In the mid-market, there's a vast spread of return. And by the way, that spread has increased over the last 10 years, which is contrary to what you would think would happen in a more efficient market. Everyone always says more capital, more people, the spread will come down.”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, that's the only place, I think, where you get the second, third, and fourth quartile. They're somewhere. I don't know where they are. I'm going to have to use that one. Sorry, I'm going to steal your Mars thing. I know where the bottom quartile is. They're on Mars. The other myth is we have proprietary deal fl”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“We invest across all of them. So I feel like we have familiarity with large, small, all the areas. So I would say the pricing myth is exactly that. It's a myth. There's as much competition in the mid-market as there is in the larger end of the market. There are probably more players in the mid-market, so that's a factor. But at this point, again, one of the good news, bad news about private equity being so much larger than it's ever been is... We always hear it. There are two big myths in private equity. One, it's the statistical anomaly I love to cite. Every private equity firm on earth is a top quartile firm. It's unbelievable”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“You mentioned earlier when we were talking about succession that it's more challenging for mid-market firms. And a lot of times you hear that maybe, particularly in frothier pricing environments, that the mid-market is sort of the place where people want to go, a little bit more rational pricing. And I'm curious your perspective, particularly at your size in investing in middle market funds as opposed to the large guys.”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, we're fortunate in the sense that we have a huge database just because when you have a trillion basically in assets that you're running on real time and doing cash flows, you have a lot of that data. But to have it all, like if I said let's go get all of the data in private equity, I think we have, I don't know, half of all that's ever been invested in the history of private equity, which may be among the most. I don't really know what some other people have, but you'd have to get all the general partners to agree, okay, we're going to put our data in and we're going to put it in for real. Good luck. Maybe some of the larger ones will. They're public and maybe they won't have as much issue with it. And you can get it through FOIA, kind of those things that people do. But the venture firm, some of the smaller ones, no way.”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“Spend any money ask an LP how much money they've spent on technology and data and they'll change the subject ask a GP the same thing most of them will go I don't need it I just need to raise money what the hell's that all about it will change but it'll change slowly”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think you'd want it ideally to look like you do in the public markets where you're looking at your portfolio and you're looking at risk metrics. You're looking at what happens if interest rates go up. How is my portfolio affected? What happens if commodity prices go up? What happens if there's an economic downturn? And then you're overlaying with that. What has happened to private equity when stock markets have gone down 20% in a year? Boom, here's what has happened in the past. Do I think it's going to happen now? How are different sectors affected? It will be able to take a look at, I want to add $10 million of exposure to, I don't know, pick a company, an industry, how does that change my overall? Again, to a public market person, this is second nature to a private equity person. We're the only industry that does not believe technology and data will change the way we operate. And yet we tell every other industry that we buy or control it, oh my God, technology and data is going to change your industry. But for us, no, we don't.”
2022-07-18 · Capital Allocators · Mario Giannini – View from the Top of Private Equity at Hamilton Lane (Capital Allocators, EP.262) · IDENTIFIED FROM THE TRANSCRIPT · source