Limited Partners turning into direct investors

30 November 2017 | Debbie Eidelman, Principal Consultant, Head of IR & Fundraising

There are a notable number of LPs taking the European direct investment market by
storm, setting up direct platforms and strengthening teams across all levels. The
definition of direct investment still varies from one institution to the other: some
focus on traditional syndicated co-investments but more and more we are seeing a
strong commitment towards co-underwriting / co-sponsoring and pure direct – a la GP style!

This transformation is largely led by some of the highly capitalised North American Pension Funds and some of the long-standing independent fund investors that have evolved and changed strategies to get further access to the economics around direct transactions. In some cases, this transition has had a positive impact on the LP/GP relationship by bringing them closer, and in others not so much, as tension around the competition for deals starts to build up.

                                              D.E Insight Photo 2017

For potential and experienced private equity professionals alike, this presents an exciting new opportunity in the market.

In the last 12 months, PER has placed over a dozen investment professionals within the direct teams of what traditionally used to be limited partners. Some of the benefits of moving into these teams include:

  • They are showing long-term commitment to direct investment strategies, with clear long-term plans that are rapidly being implemented.
  • Access to deal flow is high and deal completion rate is also very high. This has allowed professionals to build their experience of completed deals which is something many investment professionals complain about when they come to see us!
  • Many of these teams are active in origination efforts, allocating significant equity stakes and taking board seats.
  • Long term objectives and return appetite tends to differ from traditional GPs. This allows for greater diversity on deals and potentially more flexibility around investment structures.
  • Strong commitment to build the right teams with top talent. They are keen to attract professionals with direct investing experience that will effectively help them to implement the ambitious plans.
  • Compensation levels are competitive and attractive. They can provide smart long-term incentive plans as well as significant short term upside.

In short, these are highly capitalised investors providing access to great deals, getting involved in origination and all aspects of execution and an ability to complete deals in a competitive environment. They are also competitive when it comes to compensation and long term incentives. So, if you enjoy being surrounded by all the above and like the thrill of a deal, a new alternative opportunity has now become available to you.

Come and talk to us if you want to learn more!


About the author

Debbie is our Head of IR & Fundraising, focusing on roles in direct investment, funds and secondaries. She has made over 200 placements across all levels in investment and investor relations roles since joining us in London in 2008 from wealth management at Citi Group.

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