YouSaid · the spoken record

Nigel Dawn

lines on the record: 57
first: 2024-04-08
most recent: 2024-04-08
sittings or episodes: 1
sources: podcast

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“Take more risk. I think we as humans overestimate the risks in doing something and underestimate the benefits. And so being willing to jump at an opportunity and expect to succeed. If you don't, then at least you tried.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“Focus on communication skills. Become a good speaker. Learn how to present, learn from the best. Because technical skills only get you so far. Being able to communicate and get your ideas out so other people can understand them, I think was really good advice because I was pretty crappy at it.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“Richard all supp because I think his vision, there's few people who see round corners, he's one of them in this business, and giving me the opportunity to think, why don't we set up a liquidity advisory business in the early 2000s? No one else is really doing it. So giving me that opportunity and then moving to Evercore meeting Ralph at the time and then him seeing this business willing to back us and be a big supporter of the business. Both of them have been amazing.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“Is going to sound incredibly petty. Probably after the pandemic, if you go to Starbucks and you get a coffee, you can no longer put the half and half in yourself. And so I always get too much in or it's too little. And I'm like, we pass COVID, put the milk back on the side.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“Probably I've lived in China and speak some Chinese. The other one, maybe I think I've seen U230 times back in the day, but not recently in the sphere, unfortunately.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm a big supporter of Sheffield United, who are a disaster this year in the Premier League. I got my first season ticket when I was 12. And when I go back, I sit in the same seats with my high school buddies. So that's the passion of mine.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“This is an information business, and the more you're in the market, the more valuable you are to the clients. So if it's a GP client, our visibility on price and terms is second to none. So we're advising a client, we'll tell them exactly where we can come out. And on the LP side, we'll have pretty good visibility where pricing will come out. What's the art of the possible? Who's bought what? Who's just missed a transaction? Where the appetite is. So I think that information is pretty important. So when we think of any advisor, I think in any market, the more information you have, the more insights you can have, the more value you are to your clients. So it becomes, I think, a bit of a self-fulfilling prophecy.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“What we're finding is maybe 10% of our buyers right now, maybe slightly more, but what we are seeing is that when both GP and LP side, when buyers are presenting their offers, often one of the buying vehicles will be their Fortiac fund. And those funds generally, they're compounding 11, 12, 13%, they're getting bigger every single year because I think generally the withdrawals are very low. So there's a snowball going down a hill here. So I think they will be majorly buyers in a few years time.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“Think that it is poised for significant growth. And that comes from the new entrants that are coming out. Wouldn't be surprised in the next couple of years, this 10 to 20 new secondary funds focused on the GP side. So they're going to focus on the side where there's the least capital. And they're going to bring a lot of capital. So it would not surprise me if the GP side of this market is $200 to $250 billion in five years' time. So if you add that onto what we think is a natural growth also in the LP market, getting to $400 to $500 billion is reasonable. I think the other thing that really fires that is the growth of retail in private equity and particularly the Fortiac type of funds, which have a natural desire to buy secondaries because they raise capital every month. They need to put it to work. You put it into secondaries, then you can get into ground very quickly. So what we're finding right now, they're becoming increasingly important.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“The first thing is that having a real relationship with actually the advisor, whoever it is, is actually pretty important because it's very important that we understand that your bid is good and that you're trustworthy and we believe you can get to the finish line. So having that relationship with the advisor, I think, is pretty important. Also being pragmatic on documentation, on the purchase of sale agreement, things like that, and being able to move pretty quickly. understanding what your limits are, understanding where you walk away on price. And my experience over time is that in terms of pricing, if a deal is good at 86 cents on the dollar, it's usually good at 88 too. I've seen buyers walk away for a point. I'm pretty confident would them have made a difference. So for us understanding how they think about the market and the fact they have the capacity to transact.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“And then, if you put the hat on the other side, which is you're advising someone who wants to pick up these assets through the fullness of time, different cycles, what have you seen as the practices of the best buyers of secondary assets?”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“And so getting excited about certain assets can cover up a lot of sins. That's one thing I would say. Also having a real good sense where you're willing to transact and being very clear with the advisors at what point a transaction is possible. So I think that clarity because I think it's difficult to come in and out of the market and not sell without losing some credibility with the buy side.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a great question. When we work with them, we always give a very, very good sense where the pricing is likely to come out. And if LP doesn't like the pricing, it's not acceptable. Best thing, just don't move forward at that time. I think you've got to realize that poor assets generate poor prices. So often that you will get premium pricing for your best assets because the buyers can sleep well at night and are willing to accept, in a sense, lower returns of very high quality assets. You've got to be willing to put some good assets in a portfolio as well as a one.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“I've referenced some of them where, for example, a GP is a surprise when a transaction comes to an author. That's never a great thing. Or perhaps full transparency has not been provided of what's going on in a portfolio company. We have seen situations like that might happen recently. It's more things like sharing of information of folk being economic with the truth in certain situations. So that is what I see as more problematic. Secondary investors invested in multiple GPs, they can often triangulate these things between different GPs. They are their relationships and they rely on them. So I think the times where things go well, I think, is a vast, vast majority. And there's very, very little litigation, if any that I've seen in the secondary market in 20 years.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“GP's NAV is the anchor, so all pricing is based on discount or premium to NAV. And usually those are somewhat conservative numbers in terms of most GPs exit their portfolios around 25% premium to their NAV. In very hot markets, usually they tend to trade at a premium. And part of the reason they trade at a premium is because the buyers can use more leverage in their transactions, which is usually in better times, but it's cheaper leverage. In this market right now, a price in the 90s is more a price where equity capital is being used by the secondary buyer. So there's less leverage, there's more equity. There's arguably less upside in the GP's portfolio at a time like this, given we've just gone through assets that were put on the books in 21 are arguably overvalued by historical standards.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“Across the board price these days, or what price is what NAV is a subject of a lot of debate. Would love to see from your perspective of looking at these secondary transactions across private equity venture infrastructure, what have you seen in terms of the reality of pricing of these assets?”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“GP sponsors tender offers where the GP will help facilitate the diligence process with secondary buys to provide an offer to the GPs investors in their previous vintage funds. The new investors typically make a commitment to the new vintage funds and the GP is deeply involved in the diligence on the existing portfolio, which typically generates a better price for the LPs. Those transactions tend to be a win-win.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“Lavloes have been around for a long time. I think they've become much more popular recently given the lack of distribution activity within private equity bonds. Navloans that are raised against a portfolio to send capital back to LPs, very unpopular. Very high-priced. Many LPs don't like them. They can raise capital cheaper themselves. So those are not popular. Navloans raised to support portfolio companies are often much more acceptable to LPs, particularly in a situation where the fund has no more unfunded capital, but the GP needs to grow their portfolio or they need to defend their portfolio. Those situations are much more preferred. Also, particularly in a time where that might be a cheaper form of capital to grow companies rather than drawing equity capital down from LPS. So if they're given those choices, that's a good way to use a NAPL loan. Other things we're seeing recently is”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“As secondaries get increasing importance in this period of time where people are looking at liquidity, there have been other things, other innovations, Navlones and others about ways of generating liquidity for LPs, and would love to get your take on, let's start with just the Navloan market.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“Where they want to roll, they spend time with a manager. Usually user the presentation from the manager with the same one they give to the secondary buyers. And then there's an election period where the LPs of the GP decided they're going to sell or reinvest.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“Is usually four to five months. We usually take four weeks or so just to prepare the transaction, and the key thing there is the projections for the company going forward, because really what you're saying is if you had another five years, what would it look like? And if you had some more capital, what would you do with it? And what were the projections look like? Then the diligence period then starts with what we think are the lead investors. So we would invite five to ten groups. And typically to spend time with the GP first on the business case. And at that point in time, they would access to a data room, perhaps some access to the CEO, but somewhat limited. These are very light in terms of the underlying management team. Then there's usually a second round where we have pricing and terms discovery. There's legal documentation. And finally, there's four weeks where the LPs get to decide whether they want to sell.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“When something is down the middle, say it's a private equity firm with a good asset performing well, end of fun life, they want to do a continuation fund. Curious what the process looks like and how long it takes from when someone's reached out to you, say, hey, we're thinking about this to closing the continuation fund.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think from the LP side is to make sure there's a robust process. What was the price discovery process? Who was involved and what information were they provided with? I think from an LP's perspective also, have I been provided with the same information? Do I have the same information to be able to evaluate the transaction? Because I don't know at this point if I'm a seller or a buyer. I think that's pretty important. Also, giving the LPs enough time and a good heads up. LPs don't like surprises. So you need to start with as a GP, telling them why you're doing this and that you're only going to execute this transaction if it makes sense for them. Springing these transactions with little time on LPs doesn't end well.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“Of business or a big acquisition, that's not great. These are not turnaround stories. So these should be a very successful company that is growing. And really that should be maybe 10% of your portfolio. So sometimes we end up getting asked the question from a GP, how many of these do you think I can do? The answer from me usually is, well, how many companies are worth it as the markets develop? Obviously, you get certain practices that are less favorable. Ultimately, though, these are alignment transactions. Is a new buyer aligned with the GP. So if you have a situation where GP wants to take most of their carry off the table, people sniff that out pretty quickly. Got to be in, you've got to be aligned. The price and the terms have got to be right. A lot needs to go right in these transactions to make them successful.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“For a GP drum transaction, the rationale's got to be there for why you're issuing a continuation. And usually that's got to be there's a lot of upside in the asset. We want to keep a holder. There needs to be growth capital. And we are aligning ourselves with that transaction in terms of the amount of capital we are putting as GP. The transactions that are less favorable to the market is where there's been a fail sell side on that company. And then, oh, that sell side failed. Why don't we do a continuation fund? Now, the market figures that out pretty quickly. So it isn't a transaction for underperforming or failed assets. So when we see situations like that, we look very carefully. It's not a distressed market. The clue is in the term continuation fund. So you're trying to continue what is being done. If the transaction's been set up to go into a new type.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“If someone was sitting in your seat and seeing all of the transactions that happen, all the ways GPs are behaving, all the ways LPs are behaving. What are some of your favorite stories of either good practices or bad practices?”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“A good question. So it's probably one of the areas of the market that's getting the most attention right now. A significant amount of capital has been raised in the secondary credit market to buy portfolios. It's still early days. And it is an asset class that naturally unwinds. So Willoughby as big as a private equity market? I doubt it. But at the same time, in the current market, private credit is probably trading in the 90s. So for an LP looking to generate liquidity across their private assets portfolio is a good place to look. So we are positive on the growth of the market, but it's still relatively small compared to private equity.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“Along Large private equity market with a smaller secondary market. You've got this burgeoning private credit market, also a liquid assets. What have you seen in terms of secondary liquidity to private credit?”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“Existing investors in the funds. So I think that accelerates this market. In some ways, it could supersize it in the relatively short term, short term being three to five years.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“Secondary market is around 2% of outstanding AUM. In some ways, it's hardly a secondary market at all. I think that the change will be the amount of capital being raised by secondary funds right now. We've seen a couple close this year on 22 billion. There's others talking even north of that. Plus, I think when the new entrance I've just identified, the types of group start their secondary funds just focus on single asset continuation funds, then we anticipate the syndicate market for these transactions will grow rapidly because you'll have well-known GPs entering the market with their secondary funds. Their investors are used to co-investing with them and it comes with their mark of approval on the transaction plus they're working with their secondary fund partners who may be already”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“In the selling funds need to be offered a status co-op option. In other words, the option would mean economically I mean in the same spot as I am right now, which really means if that LP wants to continue being invested in the asset, their carried interest is not crystallized at the time. Effectively it's held in escrow until the final determination of the company when it's finally sold. That change set the guardrails for the growth of this market.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“There's been a big evolution over the last few years. Several years ago, a lot of LPs did not like continuation funds for a variety of reasons. Their concern was they are inherently conflict transactions. LPs generally don't like conflict transactions. However, I think a lot of LPs appreciated the industrial logic of why would you sell your best company, particularly to another GP, to a competitor, so you can watch them generate two to three times the money after you've generated. So that was a problem. That is the asset you don't want to sell. So if that transaction can be set up in a way that provides a fair option to the selling LP at a fair price, then that would be a good transaction. So ill per about a year ago issued updated guidance on continuation funds. And the key change in their guidance was the LP.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“Mentioned early on that if an LP went to sell, they were looked at to say this is a separation of divorce. What are some of the interesting dynamics that you see between LPs and GPs in the process of secondary transactions?”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“Continuation funds, there's some value added they can bring that maybe increase the value of the company in a continuation fund. But also clearly it will position the GP who has set up a continuation fund to be the buyer of choice at the time those assets are then sold.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“I would just preface it saying one is very new. So this is evolving. The second thing is the capital base for single asset continuation funds is very, very small right now. And there was about $20 billion of single asset continuation funds done last year out of $50 billion of GP driven transactions executed. Our sense is, A, they would value the capital right now. Having the capital is valued, but often it will be a GP investing in a company where the GP is smaller than they are. So they would generally looking to buy from smaller GPs and then they work on the companies and then they sell those companies on later. So what we found often they will bring some capabilities that maybe a smaller GP doesn't have even though they are a passive investor in a”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“The thread on incentives and all this. So in this example, you can envision a GP not wanting certain GPs to participate in their deals and have transparency of their process. What have you seen in that GP dynamic for the sponsors who are setting up secondary phones?”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“A lot of the really best companies actually won't be in the sponsored or sponsored channel. They'll be in the sponsored continuation fund channel, which was around 10% of exits last year. Then these managers will take the view if my job fundamentally is to get exposure to the best companies for my LPs, even though the majority will still be through my main fund, then I need a pocket where I can still get exposure to those companies and that might, even if it's via a continuation fund. As long as the returns make sense. And as long as I'm an acceptable investor for the GPUs issuing the continuation fund.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“That can invest both in the LP market and the GP market. And that is still in terms of the buyer base, the majority of the market. In addition to that, there are dedicated groups who just focus on LP transactions and those who are just focused on GP transactions. The growth of the market over the last few years has been on dedicated GP transactions. So what we're seeing right now, I would say a fairly new development, is traditional buyout managers actually looking to set up their own secondary funds just focused on investing in single asset continuation funds. And some of these GPs, particularly those who get a meaningful part of their deal flow from other GPs. We'll look at this as a hedge on their core business and an opportunity. And if one takes a position going forward that in the sponsor to sponsor”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“Infrastructure secondary buyers dedicated venture buyers dedicated buyout buyers and dedicated private credit secondary buyers. So trying to fix that puzzle just so we generate the best price is the importance of an advisor in this market. On the GP side, given that the GP is conflicted and that on both sides of the transaction, having an honest broker between to make sure the best price is achieved for the selling LPs and terms are appropriately set by the market is really our role there to make sure it is a fair transaction. When you look at the buying side of this market, what is the composition of the buyer base when you map that to transaction volume? Mostly it's still large, dedicated secondary groups of Alpinvest, Lexington, Colla, Strategic Pond, his Hobbivest, and the like who have raised large funds.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“He sighed that on a single company, it usually transacts around the GP's NAV, typically not at a discount, but if it is, it's at a modest discount. As you look at the market today, which is north of a hundred billion dollars annually and growing, how do you bring these buyers and sellers together? Now our job really is on price discovery. A GP driven transaction is really price and terms discovery. Like an LP transaction is really about price. Our job is to run the auction process to get best price for the LP. And what that can mean in this market has become more sophisticated is the best price for each asset. So if the portfolio, for example, consists of a buyout venture, real estate, infrastructure, we want to find the best price for each particular asset or each particular asset class. The development of the secondary market means a dedicated”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“Transaction really designed to generate DPI for their investors across a number of their companies. And these could be three, four, five more companies. We would put them together, sell them into a new vehicle, provide an option for their investors to receive liquidity from the buying group, often dedicated secondary groups to roll over into the transaction on their existing terms. What does pricing look like across these different types of transactions? Start with the LP business. So in this market, which is good, good quality buyouts probably in the 90s. Venture and growth very much name specific. So some managers still very difficult to access. So you pay an access premium, but probably more like 60 to 80 cents on the dollar because there's a little bit of skepticism still about the manager's marks from 21 deals beginning of 22 deals. So that's roughly where pricing is. Generally on the GP.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“If I bring that forward to today, these are the best GPs with their best assets, leveraging the secondary market for a number of reasons. Often it's a single company continuation. This is often their crown jewel, trophy asset, where in the past a managing partner may have to sell their bastets to generate liquidity, to get DPI back to the investors so they could raise NX fund. A continuation fund allows them to achieve most of those objectives to keep a hold of their bass assets, to generate the next leg of growth and return for their own investors, while at the same time providing an option, but not a requirement for their LPs to take liquidity. So that is a fairly major development in the market. That can be one company. Or in this environment where distributions of almost been at historic lows compared to assets under management execute a”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“In time did the GPs get involved in initiating some of these secondaries? When I think the first continuation funds, as we know them now, probably about 10 to 12 years ago, sometimes they're called zombie GPs, franchise challenge GPs, some of the GP who had a portfolio, they were coming to the end of the fund, they were what you would say under the pref so that we're not going to generate any profits. But the assets still needed to be managed. There was some upside on them. So the GP would go to the advisory board and say, I'd like to issue a secondary transaction. So I sell my portfolio into a new fund. And we'll reset the fees and carry. If you're an existing LPs, you could just roll into this new fund on your existing terms. But for those who want to sell any new investors who would come in, they would pay the new fees to motivate and incent the GP. That was about 10 years ago.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“And all funds don't generate co investment business. Many LPs these days have very active co investment programs, so they would do it for that reason. I think other reasons are strategically pivoting between buyout and venture and growth. So I might be overweight buyout. Maybe this is a great time in a market like this to be in growth. More relative value transactions are being executed with easeday, particularly with, I would say, public pensions who are over-allocated to private equity compared to their benchmarks and maybe they're supposed to have 15%, but actually there's very few distributions over the last few years. They may be at 20%. So there comes a time maybe to rebalance towards the benchmark they're supposed to be adhering to. Through most of the early years of this, you said LP-led transactions or some LP use case they're going to the GP. At what point?”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“This original. Distressed interest from the LPA and turns into more different use cases. How do you think about the breadth of why an LP does one of these transactions today? There's a number of reasons. It's usually strategic in a sense that it could be I have non-core exposure. I'm not going to re-up with these particular managers. I would rather use that capital that is invest in those managers right now and redirect it to core managers going forward. That's one reason. Sometimes it can be actually that it's core managers, but it's old funds. So I will sell my old funds to reinvest in the new funds so I can generate co-investment.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“Who came from asset management compared to a leader that's running a bank? I thought in the case of Ralph it was a business builder, somebody who's built a business rather than somebody who's just focused on doing deals. It's a founder's mindset. You have a core has a more long-term perspective on clients and how we work and realize it's not all about doing the deal this year. What's the scale scope of your team today? We started with 10 people in 2013 and 10 who miraculously all appeared on the same day happened to be at UBS, coincidentally. We're about 100 people right now and spread between Chicago, New York, London, and Singapore. We really focused on two main things which are advising limiter partners on the type of business that most secondary groups still direct most of their capital to, and a very active GP driven business, which is mostly but not exclusively continuation funds. So let's break apart those two. You started talking about...”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, what was the dynamic that led you to join Evercore? I had a great run at UBS. I loved it. I'd been there 16 years. I felt like I was given a great opportunity to set this business up and grow the business. I was looking for a new opportunity, perhaps a little more entrepreneurial. So I met Ralph Sloststein, who was the CEO of Evacor at the time. And he convinced me that Evercore would be a good platform to grow a business like this. Also, I think that these are pure advisory businesses that require no capital. And they're challenging to run in big integrated banks that do require a lot of capital. So I thought this was a natural platform. And also Ralph was one of the co-founders of BlackRock. I thought it was very interesting to work for someone who really understood the asset management business and was willing to lean in to help us grow this business. What are the subtle differences you've seen between a leader?”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“2021, which is a high watermark up to this point, is about 130. And I suspect we will beat that number this year. So as this business is starting to get traction in the community post-crisis, you have a little change in your career.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“Was not just about being distressed. It wasn't just about removing non-core exposure. You could actually use the secondary market strategically to reposition your portfolio and think about it in terms of more a relative value transaction. I can sell these funds at a certain price. I can reinvest into this exposure and perhaps get a better return. So I think during that time the development of the secondary market and the sophistication probably match the development of LP sophistication at the time. If you look at that post-GFC transaction volume, just rough sense, what did numbers look like that for the industry back then? When I started off, it was about a $6 billion market. Back then, it was probably around a 20. Still pretty small. If you roll the clock forward to today, last year was about 100%.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's definitely well financial crisis was one because then a lot of LPs had to sell. Probably remember you went from the years 2004, 5, 6, 7, where LPs made somewhat unprecedented commitments on private equity. And then the economy fell off a cliff. And there was a challenge funding a lot, particularly endowments and foundations who were way overweight private equity. There was a big concern they couldn't meet the capital calls. During that time, we worked with endowments and foundations and the principal reason for the transaction was to remove unfunded exposure that they were concerned they could not fund. And during this period, public pension funds, in addition to banks and others, were sellers on the back of that. It became more usual and more normal to be a seller in this market. As a result of that, a momentum developed where it was okay to sell and sell.”
2024-04-08 · Capital Allocators · Nigel Dawn - Secondaries in Private Markets (EP.378) · IDENTIFIED FROM THE TRANSCRIPT · source