YouSaid · the spoken record

Sachin Khajuria

lines on the record: 70
first: 2022-12-05
most recent: 2022-12-05
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 would say it's okay to keep things very simple. To just follow the plan. You don't need to elaborate, you don't need to get too distracted. If you have certain goals in life, certain objectives Just follow them. And the way I would put it is make a long list of what you think you want in your life and go after it and only change it if you really want to change the list.”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“Or there's many. I would say Number of things related to basic values and right and wrong, justice, all those things. All of that applies to investing. I think more specific perhaps in this context and I put a quote at the beginning of the book actually that is relevant here. It's a quote from a speech by Roosevelt. It's not the critic that counts. It's the person in the arena. It's the person who's trying. And even if they fail, at least they'll never fail being one of those folks who knows neither victory nor defeat. That's something that my parents told me in the very beginning. It's quite hard for a child to kind of grasp maybe. But as I got older, I realized it's not the cricket that counts. It's the person in the arena.”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“The first founder I worked for Incredible man. Exceptional talent, and he's seen the movie before seventy times. He remains an enormous influence, and I'm incredibly grateful to have worked for him with him, with people around him. And then I would say the founders at the last firm I worked for, I think a lot of what they've done, one or two of them in particular, speaks for themselves.”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“Alluded to it before, it's when people leading a deal have an ability to push something through based on relationships rather than merit. And it's very rare.”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“So increasingly it's tennis. And so outside of work, family, socializing, I picked up tennis in the pandemic as a great outdoor sport, not that much contact involved. I got to say I'm hooked. One of the things about writing a book is you actually start to read a lot more. So I've been reading a lot. I'd give you those two reading in tennis.”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“Such a tough one. I think one of the most impressive is chapter seven Never React always respond. And it's about a leader who is under pressure because of a number of crises and comes out with amazing temperament and manages just to turn things around and just go from strength to strength. There's a lot of substories in that chapter you would have seen. But I think chapter seven is one of my favorites. I also think chapter one where the best game in town where there's an investment that a company used to own, they'd sold it and then suddenly they're looking at buying securities as if it's a public markets investment but they have great information. That's another good story. And then I think at the end of the book there's a chapter where the private equity firm actually looks to buy out assets from another firm that's in trouble. I think we're going to actually start to see a little bit of that. So that's something to think about.”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“The year. What I would very much hope, and we have started to talk about this with the publisher, with the agents, is some form of screen treatment or adaptation because I think there are so many stories that have not been told and that would be very interesting and also fun for people to see. So I think 2 and 20 being on the screen, I think would be a lot of fun for everybody. And we'll see what happens.”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's been a crazy experience, it's been incredibly positive. It has worked out pretty well with thousands of copies going across the board from regulators to corporates to individuals. And there's been a lot of talks. There's been a lot of private talks at corporates who've said we don't necessarily want to sort of advertise this, but can we buy or buy three 500 books, whatever, we'll distribute it to our company. And can you do a couple of one-hour private talks where we ask you everything we really wanted to ask and get at least one person's perspective on it, one insider's perspective. So I think that's number one. And then number two, as you've seen, the market environment has been a little bit more challenging. So I've tried to make sure I don't take my eye off the ball on my day job, which is actually investing. And so it's only been three months since the book came out, but certainly the markets have kept me pretty busy, and I think we'll do at least for the bounces.”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think, again, it goes back to people. You can't control who's hired, who moves on. You want to see that hunger, that intensity, that alignment. There'll come a time when I know a lot of people, a lot of firms, that may change over time, right? As people go off and do other things. And so that's probably the thing that I, you know, I started to be like, who have no idea who's doing that deal? Or who's the lead on that deal? I don't even have that number. I don't know how to call them. I'm not sure how to, I think it goes back to the people. That's the number one thing that I hope stays in the industry's high quality people with the alignment.”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“Makes a lot less sense than me doing it myself because if you take a distressed fund or a credit fund, a lot of things I've been offered, they're taking 10 plus percent risk at least, but they're offering six, seven. Doesn't make sense. And you're better off trying to create your own basket of whatever diversification you're comfortable with if you know how to do it. But I think I'm not sure that's accessible for everybody, but I think that's the way I've looked at it is trying to sort of be honest and open about things that I just know I can't do and then things that I have done previously and done for a long time just sort of back myself and be brave enough to sort of do things on my own in that sense. And so far it's working out reasonably well.”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I think when it's a scale that I couldn't do as a private individual or through a family office, then obviously you're going to be looking at firms that can look at a certain multi-billion dollar scale. In the same way, there are firms that have certain expertise and things that I don't have a personal background in or I have done a little bit of, but not enough to sort of feel, let me do this myself. It could be some more advanced areas of life sciences or commercial real estate or things like that. So I think it's a little bit self-selecting in a way. There are things that obviously don't make sense for me to do on my own. But I think when you look at things like distressed, when you look at individual credits or you look at smaller buyouts, as we talked about before, there's a lot of things I see where actually what I'm being offered as an LP”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“You don't want to go too large in your pie chart, but if you can size it right, looking at stuff that is just generally a lot cheaper and what makes sense in that I find attractive. And then, of course, with inflation where it is, you look at assets that could be a natural inflation hedge. And some people have talked about doing more in infrastructure or more in real estate. And so I wouldn't say it's anything particularly revolutionary, but it's about actually doing it and then actually introducing a bit of it in your portfolio. And then conversely, it's about rotating out of stuff that maybe doesn't make sense anymore. So if you've got capital coming out of a fund that was a great strategy in the previous five, ten years, not necessarily just reupping automatically, but also saying, well, let's be honest, are they really going to be able to deliver that or should I sit the next one out and come back in five, seven years' time?”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“Because the next two, three, four, five years are not going to be the same as we've had either pre-COVID or even through COVID. And so I'm looking at those kinds of opportunities. So that's number one. Number two, let's recognize a lot of things are a lot cheaper. Let's look at technology. If you look at a firm like a Silver Lake or another fantastic technology investing firm, the prices at which they're looking at today in the technology space, which is just about everything, right? It's just so much lower than it was a few years ago. So there's a slightly contrarian aspect of it too, where I think you've got to be careful how you size it.”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, right now, one of the best risk returns is in what I call hybrid capital or some firms call it tactical opportunities or things that have a lower possibility of default, right? The chance of losing money is lower. And perhaps you give up a bit of upside. That's quite a good risk return. If you can punch out 15% IRRs even with inflation where it is, even with rates where there are, but the chance of you losing money is extremely low. That is a good risk return. I wouldn't have said that a number of years ago when actually you could probably add a thousand basis points to it if you were in the right buyout strategy. And a lot of buyouts these days, as we found in the financial crisis, are being done with less leverage or in some cases no leverage, temporarily possibly. And so you have to pivot as a private investor. You have to pivot as an institutional investor. You have to pivot, frankly, as a pension fund too. You absolutely have to pivot.”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, as you look out at the potential for that to happen and broadening out these portfolios, we're also looking at a market environment that is more challenging than it had been in the past. Prices up, rates going up, leverage down, as you mentioned earlier, how do you think about in your own investing the opportunity set from here going forward?”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“These are my only objectives. Should I put ten, twenty, thirty percent into private markets? If so, and it's an if, how? To whom? Who's the Amazon of infrastructure? Who's the apple of buyouts? Who's the Microsoft of Distress? That's what we really want people to get to.”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“Managers. The difference is they're active. You've got passive investment, you have active investment. The passive investment guys, a lot of them do a great job. BlackRock and so on, Fidelity, Vanguard, whatever. And a lot of these private markets investors rather, they're just active investors, but they're also enormous. And so how do I construct my own portfolio that balances not just a bit of let's say treasuries and stocks and some real estate, but also introduces a bit of private markets into the pie chart so I can access all of these things in a way that makes sense for me. And that's what I would hope all investors can learn in the coming years, which is not just, oh, I got a pension, I got a retirement plan, what do I put in stocks? What do I put in bonds? Should I buy my house? Should I buy another piece of real estate?”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“The more the firms will become themselves every day. And you're starting to see it. If you looked at the websites today of the major firms versus those same websites even five years ago, it's not even close. You have continuous disclosure on social impact investing, on diversity, on impact in the community. If you, our mission is to serve everybody kind of thing. There are times when a lot of these firms didn't even have a website. And so as this migration has happened from small private partnerships to private partnerships managing large pools of money to, in many cases, public companies, corporations to now corporations managing both institutional and retail money, this democratization of finance, which is one of the key reasons that I wrote the book, it ends in a place where you realize that, you know what, these are just mainstream active.”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's Wall Street and Main Street are kind of the same thing. It's just the economy because that's really where we are with public markets now. If you're an investor in Apple or Disney or any of these other great stocks, you're not thinking like, oh, I'm going into a Wall Street product. You know what the company is. You know what it does. And I think not too far in the future, probably next decade or so, where people start to say, yeah, I'm invested in buyouts. And so I was like, what do you mean by-outs? What are buyouts? Well, I put, you know, $10,000 into this buyout fund that kind of buys companies. It keeps them private. So you don't get the daily share price movement. Maybe I don't understand everything about it, but they basically add some leverage to it and they try and sell the companies after five, ten years. And I get a profit off it. And they take some of the profit for themselves. So, you know, the more every day the lexicon, the language,”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“Strategy offered to them is different than let's say other investors. That's a possibility. The other way it could change the firms, I think, and I think this is very positive, is that As soon as we reach that tipping point where it's no longer Wall Street serving a bit of Main Street.”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“So I think you might get slightly different products offered to retail investors than you do to large institutional funds. You might have different protections, different risk return dynamics. There's a lot of smart people working on all these things to try to figure out how do we address retail well rather than just, you know, the first step was like, let's set up a feeder fund and let's feed this multi-billion dollar fund with not just institutional capital but retail capital through some kind of feeder or some wealth management unit or so on. And then there's like, how do we produce products which are specifically for the retail market? There's lots of different ways. And I think what you'll find is that as the menu available to retail grows, you'll find firms tend to emphasize or de-emphasize what's important to the end investor. So if you have, for example, certain retail funds which they want to emphasize the social investing component even more, you'll find”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“Hear more and more about call it the democratization of private equity, the platforms to bring it down to high net worth and eventually retail. As that money seems to be flooding into the industry, how do you see it changing what happens with these firms and their ability to go out and deliver the way they have in the past”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“With an alignment. And I think it's one of those things that's kind of so obvious and easy to say and to point out. But until you've really seen it work at every hour of the day, it can be hard to sort of remember or even in some cases believe. And so I think the best way to evidence it, of course, is the results. And that's where some of the most interesting and memorable things that I've worked on, or even that I've just seen on both sides of the fence, have been where a deal hasn't worked out in the beginning, but actually the folks have fought tooth and nail to make sure it works out at the end. That's not something that an ETF can do, Ted. That's not something that is going to work out in the passive markets. It's only going to happen with passive management. It's only going to happen with highly active management.”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“I wouldn't say I've met many LPs who just don't understand. But I think it's a different thing to know how deals work and to read the presentations and the tender conferences than necessarily seeing how it happens day to day. I'm not sure they need to necessarily see it day to day because otherwise to a certain extent Ted, they'll be working there, right? But I think the thing that the way I put it is that What I hope is increasingly appreciated is that private equity professionals do eat what they cook. They do act in”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“Having said on both sides of the fence of GP and LP, what are the things that you think you either don't have the information to understand or just misunderstood by those on the LP side that haven't sat inside the sausage factory at the GP?”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“Energy, aerospace defense, telecom financial services. It's also in lots of things that you don't associate with private equity. It's in dating apps. It's in cybersecurity. It's in college textbooks. It's in nurseries. It's, to take a recent movie, it's in the top gun fighter jet training school. It's everywhere. It's in Chelsea Football Club. And so this is how it's kind of moved. And as private equity starts to sort of mirror the economy, it goes alongside what I've been saying with there should be a general understanding of private equity because private equity has permeated not just Wall Street but also Main Street.”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“Evolution right throughout. So that's when it's kind of like a step away from what the firm is doing already. And then you have natural evolution. We talked about financial services. You have firms that are going into the pension space or going into aircraft leasing. They're doing performing credit and they start doing private credit. This kind of white space that is either left behind by the Wall Street banks, as we've seen since the financial crisis, or just space that's generated by these firms to say, well, listen, we're doing stuff which is adjacent to this sector. It's not that much of a stress for us to learn about it and try to do some stuff in this sector too. And those are areas where you don't necessarily need to hire a whole team. You may hire one or two people, but you need to sort of easier way in through research. And so that's why we've seen today that, you know, private equity, to be honest, Ted is very much mainstream. It's in everything from not just, you know, the big industries in the economy that you know about, chemicals.”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“You find that typically the firms merge a bit of their own DNA with the culture and expertise of who's coming in. So let's say a firm that does buyouts and credit starts to look at infrastructure, it'll take a person or two from the outside and they'll work alongside somebody from the inside. And that's how you get that meld of here's an amalgam of what we do well and what you do well, but let's do this new thing in our way so we can understand it. And sure, it can continue to evolve. Absolutely. And it also needs to be sellable to investors, right? Because if you're going to go out and raise capital and the firm has never done that before and hired people coming in, it probably looks better and it makes a lot more sense, of course, to look like a joint effort rather than, let's say, like buying a unit coming in from the outside. And we've seen that.”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“It can happen in any industry. And so I think that intellectual open-mindedness is what starts. You then have a sort of emotional acceptance that you've got to hire and bring people into your culture, your firm and integrate people and learn from their culture as they come in and so on. And as that happens,”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“So I think how it's happened is from the top where at the firms that have evolved the most You've had people consciously taking decisions that they want to look at things that make sense for the investors and grow in a way that the market is growing, that society is growing, move with the times. So in a certain sense, these folks at the very top can be generalists, right? Because their background might be buyouts or distressed or what have you. But then they look at it and like, well, you know what, we really need to get into performing credit because we know a lot about distress credit, but actually performing credit makes a lot of sense now or the other way around. And so it starts at the top with an openness to grow. And that's a little bit of an emotional decision as well because if you don't have personal expertise in the areas you want to grow, you've got to bring people in and you've got to make sure that works, that fits. And sometimes there are tough starts and there are restarts and there are hires that don't work out and there are teams that don't work out. I mean, we've seen it all. It's perfectly normal.”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“You mentioned that some of these large firms are really good at pivoting when needed conditions change. I'd love to chat a little bit about evolution and innovation. We've seen, for example, growth equity become a huge thing in the private equity community where if you went back 20 years, it was a lot more just cash flow generative businesses on leverage only. Now probably both. To hear your thoughts on what's changed over time and then how that's happened within the firms.”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“It works well, it's seamless. You don't look at one person and say, Oh is that? Is that guy from the deal team or is she from the operating executive side? It should be seamless. And naturally people will lean towards their area of expertise and whether they think they can help. And so if you have one person who's more a capital structure kind of person but has good insights on the operating side and one person who's more an operating person but has insights on the financing side, ideally they work together. And generally I've seen it to be pretty seamless because when it isn't, those relationships tend not to last very long and the teams tend to change.”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“The use of operating executives is far more ubiquitous than it was some time ago. How does the relationship work with the operating executives, the investment deal makers, and then the company in a lot of these firms?”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“Not particularly glamorous research that's like what is the thesis that we have? What are we going to present to the investment committee that is different? What's the edge I'm trying to create, sell, grow, develop? And that's basically taking a blank sheet of paper and try to come up with something new. So it takes a while and the early stages are not necessarily that high profile, but that's probably where the hardest work happens.”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, a lot of it is pretty under the radar. You have folks in these firms who are toiling away, getting to know sectors way before the sun starts shining. They could be out there attending conferences, industry events, talking to CEOs, building up a Rolodex can take two, three, four years, and it could be two, three years before they even look at a deal or start to discuss. I mean, I saw that with infrastructure where, again, the folks down in Australia were talking to people about doing things like carving out telecom towers and buying airports. And it took years for the sellers to get interested in these ideas. And of course, it cost them time, money, and effort to invest that resource in developing it. But when they didn't, it came off, they were miles ahead of everybody else. The same applies for insurance, the same applies for life sciences. And so a lot of it is kind of patient, careful.”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“Funding new kinds of drugs in life sciences. Or another great example, actually, probably another enormous one of the last 20 years is infrastructure. The function Australia had this idea to do infrastructure toll roads, airports, towers, when everyone else thought it was a crazy idea, frankly speaking. And I saw it firsthand. Like, what are you talking about? This is, you can't use project finance principles. This is a leverage buyout. You've got to use high yield bonds. What are you talking about? You can't do that. So there are firms that have proprietary ideas. At the time, they've consummated almost any of their deals, closed any of their deals. They're going to have competition. But it's about being ahead sufficiently either in the idea or in the preparation or ideally both that actually you have the best chance of winning unless Ted somebody overpays so badly”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“Two, there are ideas which are genuinely people of first movers. So the most The most important I would think in the last decade is financial services. The firms that looked at insurance, banks, ahead of everybody else have found that most folks at the similar scale of copy them since. And that tells you something. They had an edge. They had an advantage. It was proprietary. They had an idea. At the time they did their first, second, or third deals, they were ahead of the competition. And they've probably continued to evolve such that others, even if they are copying them, maybe those folks are now doing insurance two point zero, three point zero four point zero rather than insurance 1.0, right? Similar with energy. A lot of people, when I started investing, were looking at energy in a certain way. Then a bunch of people started to do energy in another way. And it was really pretty pioneering. The same thing, let's say, in pharma buying drugs which are expatent.”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, that doesn't really fly. And so I think there's a certain recognition that you're going to have competition at some stage. But if you have competition at the stage where you have been sufficiently ahead of the game, you've followed that industry for a long time. You've possibly looked at that industry through multiple lenses, the credit lens, the infrastructure lens, the real estate lens. Maybe you own the business before or its competitor. Maybe you looked at the business and backed away, or maybe you were beaten at by thing business because somebody else paid a higher price, or maybe you're buying it out of bankruptcy and you'd looked at it previously when the company was not in financial difficulty. If you're ahead of the game, then you developed, I would say, an edge. And it's that edge that counts rather than necessarily getting so hung up on the fact that it's proprietary. That's number one.”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“Hard to say that no one else will ever look at that deal other than you between the time the idea comes up and you closing the deal. No one's ever going to look at that deal ever. It's going to be totally under the radar screen and no one is ever going to even have any idea that it's happening. It's a total surprise. That's very difficult. Why is that difficult? Well, let's start with the seller. The seller probably has some obligation to stockholders, to their investors to actually check that the terms are good terms. And so at some stage, they will probably need to hire an investment bank or themselves or some other broker or something to check that what they're doing makes sense. You know, we're carving out this business. We're selling it to a unit of Carlisle or whatever. Is that the right price? Is that, well, then their advisor will be like, well, have you checked with anyone else? And they say, well, no, we decided not to check anything with anybody.”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a fantastic question. I think the reality is that firms of a certain reputation, so firms which are well known, of which there are many, many firms, and certainly firms of a certain size, as soon as you start to do deals which are like a billion dollars per deal or more, right?”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“About $10,000 tickets coming out, and it's not fully available to retail, but it's coming. And so I think ahead of that, there should be education for everybody. And again, I think that what that will do in addition to better public relations, better communication, it'll knower the noise and it'll help people find private equity more accessible. And that's what I think is missing at the moment.”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“Acronyms that make up Apple, Amazon, Microsoft, Alphabet, Google, etc., you need to, as somebody with a retirement account, know about Blackstone, Carlisle, etc. You should because these are kind of the equivalent of those big tech names that I talked about. It's big finance or it's what I call mainstream active asset management. And so that is just missing because if you asked most folks who maybe dabble a bit in their pension or they keep an eye on their pension or maybe even they're slightly active investors, they do a little bit of stock trading, they'll have a sense of like, you know, should I be buying Disney? Should I be buying Apple? Should I be doing this? And then you say, well, what about private equity? Like, no, got no idea. But the check sizes are getting smaller, Ted. It's not just multi-million dollar tickets. There are $50,000 tickets. There are $20,000 tickets.”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“Is changing. So, if you look at who invests in this industry, it goes back to the first question we had about the perspective and the reason for writing the book. Not many people know about private equity as much as they should. Not many people invest in private equity as much as they could benefit from. So some folks still see this as private equity is only for people of a certain wealth or only for certain kinds of institutions, whereas actually you and I both know that a lot of folks pension plans are invested or retirement plans are invested in private markets. They probably don't know about it. And so what we don't have being honest, and I think it's getting increasingly urgent, is a very good baseline understanding of private markets for everyone in the same way that people know about public markets. Why should you only know about the”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“Community service with all those things. I think that's certainly a lot better than potentially it was in prior national or even international crises, but I think there's a ways to go. So I think this is an industry that's an important part of the economy. It's almost a steward of significant parts of the economy, certain significant industries. And I think once we start to recognize it as kind of like these are sort of modern industrialists in a financial sense, I think that's a certain responsibility that goes with that, that things we're seeing a lot of great things. I think we should celebrate that. We should be very honest and positive about that, but I think there could be more.”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“They're kind of spread across the companies that are invested. I think we need to see a lot more of that. I'm not sure you want to get into a world where you sort of necessarily regulate it or force it. It has to make sense and it has to fit with the culture of the firm and all those things. But I think it's so good when you see it being done, when you see so much profits made and it's spread not just amongst the C-suite, but it kind of passes all the way. I think you need to see more of that. I think that's fair. And then equally, if you look at the size and scale of this industry, 12 odd trillion on its way to 20 trillion across private markets in the next decade, this is an important part of the economy, period. It's not just important to know if you're on Wall Street. It's important to know even on Main Street. And therefore, I think if you look at the way the industry responded to assist in corona, and assisted with donations, with”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“It has so many aspects. I think number one, and we should just get it out there because I saw that in the reaction to the book, we had generally some very good reviews, but we also had some comments from people that were reputable publications, but they just hate private equity. I think number one, the industry can do a better job of presenting itself. I think in general, the industry has done a much better job in recent years of emphasizing the positives it does for communities, for diversity, for all the right things for the environment, social investing. But I think it could do an even better job. And I think the reason that would be helpful is that there will be less noise around the industry so they could kind of get on with the jobs, right? So I think that's number one. Number two, I think it's not unfair to say that although the industry has gone a long way in spreading some of the returns, and you've seen that on specific deals quite explicitly, where the returns are not just given out at the C suite.”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“As you are writing the stories in this book, what occurred to you that you said, look, there are things that are good with private equity, there are things that could be better and the things that aren't there. What's some things that you see that you think could be better?”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“People. And so I'm quite optimistic. In fact, some of the things I'm looking at to invest in for my family office right now are actually a lot smaller than the mega funds simply because the numbers are out of this world. I mean, they're producing incredible numbers. And so it deserves a lot of investigation. I will say, however, that in the mid-market, I think you ought to be more careful because there are a lot of copycat kind of funds which do exist in the mid-market that you do find at the higher end, but I think is perhaps more prevalent in the mid-market. I'm not sure that's too controversial to say that. But I look at the people and I look at the numbers and I think all those things are applicable at the mid-market if you've got the right folks involved.”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“Individuals. So I tend to look at okay, who's doing that mid-market strategy as opposed to the fact that it's a mid-market strategy. But digging into that another layer, historically some of the best returns have been found in smaller pockets of the market that have been less mined than the larger pockets. Now, I think there's an argument to say that they're harder to find these days, but it's pretty ripe at all size levels. But I think you can scale it. So, for example, if you are a mid-market specialist and you specialize in, let's say, five, six different industries, right, you've been doing that for a fairly long time, or you're staffed by great people that have left larger firms or other firms who have done that in their careers, it's not that hard to scale up or down in size. It's probably easier to scale up than down. I think that's right. But it's not that hard if you got the right.”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I think the ones that do things really well in my view are able to adapt very quickly to changing environments, whether it's higher inflation and interest rates, slower macro, dislocation, one in a hundred year events like COVID, and so I think that although they'll find blips, they'll find certain investments don't do well, in general across a particular strategy or fund, they're going to do quite well. And this is why with the previous question I started with the strategies they run rather than necessarily the size. I think it's not necessarily just size as the driver. I think it's the people, Ted. If you have amazing people who leave one firm and start their own firm that's, let's say, five billion of assets or 2 billion of assets as opposed to 50 or 100 or 500, it doesn't mean that they're not going to be able to replicate the success. It's because it's, again, it's a people business.”
2022-12-05 · Capital Allocators · Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285) · IDENTIFIED FROM THE TRANSCRIPT · source