The Private Equity Exclusive, Chicago
Trump International Hotel Monday July 22nd, 2019
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Registration, Meet and Greet
Mid-Year Investor Outlook
Highlights from the latest Global Private Equity Barometer
- Private Equity Returns and Allocations
- LP Performance and Remuneration
- LP Investments in GP Management Companies
- GP-Led Secondary Transactions
- ESG Considerations as Investment Criteria
- Innovation in Private Equity
- Diversity in Private Equity
Environmental, Social and Governance, (ESG)
- Do we have Proof that ESG Integration is a Driver for Better Returns?
- Do Firms with Good Performance on SASB Topics Outperform Firms with Poor Performance on those Topics?
- What are Some Common Myths About ESG?
- How should ESG be best Incorporated into the Investment and Due Diligence Process?
- How are LPs Currently Monitoring GPs’ Responsible Investment Practices?
- What is the Framework for more Consistency on Full Disclosure for GPs Reporting?
- Will there come a time when Plan Sponsors Only Invest with UN PRI Investment Manager Signatory Firms?
- Financial Stability Board, (FSB) and its Guidelines to Disclose the Risks that Portfolio Companies face from Climate Change – what Approach should be Taken? What Climate Change Risk Factors should we be Analyzing?
- What are ways you can use UN Sustainable Development Goals, (SDGs) to Help Investing in New Opportunities and Identify Future Areas of Risk?
- Have you Required all of your Portfolio Companies to Implement a Cybersecurity Policy, Code of Conduct or Apply Cyber-Risk Management Measures?
- With Diversity Gaining Traction, will Gender Diversity at the Portfolio Company Level be something that is Monitored? Will it get to the point of Setting Diversity Targets?
- Understanding Relevant Benchmarks for ESG Risk Measurement and Performance
- What are the Pros and Cons of Possible ESG Regulation by the SEC?
- How do you Best Align with UN’s Sustainable Development Goals? How can LPs best Evaluate the SDGs in their Allocation Decisions?
- What are the Opportunities for Impact Investing in Emerging Markets vs. Developed Markets?
- What are some Recent Trends you’ve seen in this Space? Most Promising Areas?
- What does the Future Hold for Impact Investing?
- When we have an Inevitable Downturn or Recession, will Investors Abandon this Investment? When and How will it Become Mainstream?
- Investing in Technology for Social Impact
- With Areas of High Water Stress and a Larger Future Shortfall Between Water Supply and Demand, where are the Most Attractive Opportunities?
- What are the Top Challenges of Impact Investing Projects? What are the Biggest Areas of Risk?
- What are some Roadblocks for Investors?
- Do Larger Firms have an Advantage in this Space?
- How should Impact Investors think about Reporting? Have you Embraced the Need for Disclosure with Sustainability Accounting Standards Board, (SASB)?
- Measuring Social Impact – should you verify that the Funds you Invest in have their Portfolios Independently Measured and Verified by B Lab’s GIIRS Impact Rating System?
- Cambridge Associates PE/VC Impact Investing Benchmark – any early Conclusions on Returns?
- Macro Overview and Recent Developments – how does that affect your Investments?
- With Central Banks Tapering, do you see Weaker EM Returns? What about a Stronger Dollar for a Prolonged Period? Weak Commodity Prices?
- How have Emerging Market Headwinds Impacted your Deployment?
- Who has Delivered Better Returns – Country-Specific Managers, Region-Specific Managers or Global EM Managers?
- How have Emerging Market Returns stacked up vs. Developed Markets over the long run? Given the Current Environment, will EM Outperform Developed Markets?
- Which EM Region is Most Promising over the Next Cycle?
- What is your Expected Outcome for China when considering their Credit and Real Estate Bubbles, Massive Gov’t Stimulus and the Ongoing Trade War?
- Do you see Opportunities in India with their Attractive Demographics and Urbanization? Have we seen Progress with Reforms for Investors?
- Growth and Outlook for Southeast Asia
- What is the Proper Approach to Africa Going Forward for Higher Returns? What Sectors will Provide the Greatest Opportunity?
- Any Frontier Markets that are showing Strong Growth that you find Attractive?
- With Pro-Investment Reforms for Key Markets in Latin America, what is your Outlook for this Region?
- How do Valuations look relative to Risk in Various Regions? Do you see Risk being Appropriately Priced?
- How should Currency Risks and Hedging be Factored in by GPs and LPs?
- What are the Most Common LP Concerns?
Cocktail Reception Concludes
Tuesday July 23rd, 2019 - Trump International Hotel
Pension Plan LP Perspectives
- Given the Macro Environment, what if anything are you Doing Differently? Are you Preparing for the next Global Financial Crisis? What are your Returns Expectations?
- How do you Balance the Concern of the Need to Invest in a Lower Returns Environment with High Valuations?
- Which Non-Correlation Strategies to the PE Space have you Allocated to or Favor?
- Are you Seeking Investments with a Subscription Model for Greater Visibility of Revenues and Less Volatility? If so, What Recurring Revenue Metrics do you look for in SaaS and Other Companies?
- Does it Concern you that Subscription Lines have made it Harder to Assess Return Sources? Have you Been Successful in Seeking Greater Transparency to Look Past this Fund-Level Financial Engineering?
- Have you seen the Pendulum of Power Swing Towards the GPs? If so, will this Change if we see an Extended Downturn?
- What Creative Deal Terms have you seen? Do you have the Freedom to Invest in Funds with Non-Traditional Terms?
- What are your Views on Fund to Fund Sales?
- What are your Views on GP-Led Restructurings?
- Is it a Red Flag to you if Managers coming back to Market Earlier than Expected to Raise Capital?
- How are you thinking about Gender Diversity at the Manager Level? Could it become a Deal-Breaker in the Future without seeing Meaningful Efforts by GPs for Diversity?
- Have you gotten More Involved in your GPs Valuation Process? How have you Achieved this Transparency Demand?
- From an LP Perspective, what does not work in Fundraising? What does it take to Stand Out?
- What are the Strong Points about your Program? How do you Differentiate yourself as a Good LP?
- What are your Top Priorities at the moment? Most Attractive Investments?
Featured Panel: Current State of the Private Equity Market
A) Investment, Deal and Exit Environment
- State of the U.S. and Global Economy – what is your Outlook and Expectations for its Effects on Private Equity? What is your Biggest Worry or Uncertainty?
- Private Market Risk – as a Consultant, what are you telling your Clients about how they should Manage Risk? As an LP, how are you Approaching New Investments or Guarding Against your Existing Portfolio?
- What can Pension Plans do to Avoid getting involved in Expensive Deals?
- Where are your Most Optimistic Returns Going Forward as far as Sector, Geography or Niche Strategy? What’s your Biggest Worry?
- What are your Expectations for the Exits Market?
- What’s Driving the Interest in Micro-Specialization? Which Recent Specialized Funds had a Successful Fundraise that’s of Interest?
- What do Demographic Trends and Population Aging Mean for Growth and Investments? Are there any Less Desirable or Favorable Investments as a Result?
- Which Technological Disruption will directly affect Private Equity and Create the Best Opportunities? How Prevalent will Blockchain or Artificial Intelligence Become for PE Managers?
- What are the Reasons why we’ve seen Outperformance of First Time Funds? Any Caution for First Time Funds in the Upcoming Downcycle?
- Does the Use of Subscription Lines Concern you with a Rise in Interest Rates and/or a Down Trending Market? Could it Cause an LP Default on a Capital Call in a Perfect Storm Scenario?
- With Momentum gathering for GP Led-Secondaries, how do you see that Market Developing?
- Do you see Reason for Caution in Co-Investments?
- With a Slew of Corporate Carve-Outs going on, what sort of Value Creation can one Expect? Is this a Lasting Trend?
(B) LP/GP Relationship – Fees, Terms and Alignment of Interests
- Will the ILPA Guidelines for Subscription Lines Impede the Use of these Facilities?
- Tax Bill Limiting GPs Interest Expense Deductibility – will this Create Negative Consequences for GPs Leveraged Transactions or Credit Strategies with a Bias Towards Preferred and Common Equity?
- Revenue Recognition Standard – how will New Accounting Standards affect Private Equity Firms’ Portfolio Companies and what Industries will be seeing the Most Drastic Changes?
- Will the Mandatory Performance Framework, (MPF) and the Certificate in Entity and Intangible Valuation, (CEIV) change the Industry’s Valuation Process?
- Have you seen Progress with Cyber-Risk Management for PE Firms and their Portfolio Companies? As an Investor, do you Demand to have a Policy in place?
- What has been the SEC’s Impact on you when it comes to Fees, Expenses or Transparency?
- With Direct Investments on the Rise for Large Pensions and Sovereign Wealth Funds doing Direct Investments, do you feel they have the Necessary Talent and Skills to Succeed?
- What Effect will the Growing Shadow Capital Space have on the GP/LP Relationship?
- Where do you see the LP/GP Relationship in the Future when it comes to Separately Managed Accounts, Strategic Partnerships, Co-Investments, LPs Concentrating Portfolios, etc.?
- Assess the Health of the Co-Investment Market Amid the Bullish Optimism
- Could the Co-Investment Boom Come Back to Bite? What is Highest on the Risk Curve that could Go Wrong?
- What will happen to Co-Investments in a Down Market?
- Have Co-Investments Outperformed Net Fund Returns?
- What do you want out of a Co-Investment Program other than Lower Fees? Better Control of Deployment Pace? Great Way to Deepen a Relationship?
- What is the GP Perspective? Developing a Process and then Giving it Away for something you Prefer to Charge for?
- Working with External Advisors vs. Doing it Yourself
- How can an LP go about Distinguishing Themselves in terms of getting Desired Allocations?
- Are Smaller LPs at a Disadvantage as far as Deal Opportunities go? If so, why?
- Adverse Selection – do GPs sometimes show the Worse Deals to Co-Investors and keep the Most Promising Deals for Themselves? Do GPs sometimes do Deals Outside of their Investing Size or Strategy Norm?
- What’s the right Balance of the Investment Decision based on the Quality of the GP vs. the Quality of the Deal?
- For Co-Investment Deals that Underperform, what are the Reasons Why?
- How do you Benchmark Performance of a Co-Investment Portfolio?
- Do Investors Target a Ratio of Fund to Co-Investments?
- What are the Advantages and Disadvantages of Sidecar Vehicles or Special Purpose Vehicles?
- Understanding the Trends and Performance of Co-Investments in Small, Medium and Large Buyouts. Where do Co-Investments make the most sense?
(A) Deal Flow, Financing and Areas of Opportunity
- What are the Biggest Macro Issues and Concerns?
- Given the Current Environment, how are you Navigating the Competitive Landscape for Deals?
- With High Deal Valuations, should LPs Expect Returns to Trend Downward over time? What are your Returns Expectations from Recent Vintages?
- How do you Avoid Mistakes? What is the Top Lesson You’ve Learned from Past Experience?
- What Sectors or Geographies should you Avoid in this Environment? Which ones do you find Attractive?
- Will the Surge in Tech Buyouts Continue? What are the Factors behind the Heightened Tech Interest?
- Do you see Attractive Opportunities in Europe? Which Geographies and Sectors?
- How does Underwriting Change for this Environment? Any Trends?
- How do you view Credit relative to the Risks in today’s Market?
- How do you think about the Use of Leverage?
- When you Raise your Next Fund, what Considerations do you make when thinking about your Fund Size?
(B) Post-Acquisition Value-Add and Exits
- What are your Expectations for Exits and Distributions over the Next Year and Few Years?
- If you focus on Long-Term Value Creation to Generate Stable Cashflow, how Long a Holding Period are you Embracing?
- How do you Consider Volatility when Valuing a Private Company?
- What Procedures have you Identified and Learned from recent Successful Exits?
- What Levers have you seen Pulled to Narrow the Spread Between Gross and Net Returns?
- How do you view the Risk/Reward for Quasi-Strategic Buyers to Grow their Portfolio Companies via Add-Ons?
- When is a Dividend Recap Appropriate? Can it create a Financial Burden and Future Risk for Portfolio Companies?
(C) LP Issues
- Will we Trend towards LPs Dictating the Format and Usage of Subscription Lines of Credit? Could that Erode the IRR “Head-Start” that Credit Lines have Generated for GPs?
- As an LP, should you Decrease Exposure to this Market? Decrease Commitments? Sell through Secondaries?
- Which Strategies might Perform Well Independent of the Economy?
- What are your Thoughts on GPs Selling Minority Stakes in their Management Companies to Investors?
- What are the Problems you see in the GP Space that you would Correct?
- What are LPs looking for in a Growth Equity Strategy? What do you Aim to Delver?
- How does the Operational Value-Add Differ from Buyouts? Is Sustaining Revenue Growth Most Important?
- How do the Risk/Returns of Growth Equity Compare to Buyouts and Venture?
- With Ferocious Competition, how does a GP Differentiate Themselves?
- How do you think about Companies you’re Making a Deal With? Do you Sway Towards or Away from VC Growth?
- Have you Altered your Underwriting with Current Market Conditions?
- Operationally Involved Post Investment – do you think it’s Effective as a Minority Investor to Build out Post-Investment Value-Add Groups? Do the Best Companies tend to be those with No Shortage of Capital?
- How does the Size of the Fund play into Performance?
- What is the right way to Benchmark this Strategy?
- Any Red Flags for LPs to Avoid when it comes to Growth Equity Managers?
- Aside from High Pricing, what are the Biggest Challenges Growth Equity Managers are Facing Today?
- What should Investors expect in terms of Returns for Diversified Secondaries Funds compared with a Diversified PE Portfolio?
- What are the Sources of Value-Add for Secondary Funds? Which are more or less Repeatable?
- What are the Risk/Return Characteristics of Secondaries vs. Private Equity in general?
- How is the Balance today between LPs Looking to Buy vs. Sell their LP Interests?
- How are you Sourcing Transactions?
- Current Pricing – Pressures/Opportunities
- What have you seen recently in regards to Leverage?
- How has the Use of Capital Call Facilities Reduced the Need for Secondary Funds in Managing J-Curve Exposure?
- Where are the Areas of Growth for you in the Secondary Space? New Categories of LPs, Separately Managed Accounts, Restructurings, etc.
- GP Fund Restructurings as a Meaningful Part of Secondary Deal Flow – Have you seen it as a Source of Friction with LPs? What goes on Behind the Scenes?
- Stapled Secondaries – why is there an Importance of GPs Disclosing both Optionality and their Effect on Pricing to LPs?
- What sort of Creative Ways to Find Attractive Deals in this Mature Market have you seen?
- With Tail-End Portfolios on the Rise, will this become a Steady and Constant Need? What are they Selling for?
- Fundraising – what should LPs look for to Identify Differentiation, Specialization and Diversification?
- How is the Current State of Play in the Asia Secondary Market?
- What would be your Advice to LPs considering Selling one or more Legacy Partnership Interests?
- Are we in Extra Innings for the Credit Cycle? Why Does Private Debt Continue to be Attractive for LPs?
- What are the Biggest Deterrents to Deploying Capital Today?
- What Speculative Excesses or Over-Exuberance have you seen?
- Where can we find Good Returns Without Taking Inordinate Risk?
- What Range of Returns should Investors Assume for the Various Risk Profiles Across Private Credit?
- How should Investors think about Fund Level Leverage? Is there an Optimal Leverage Point for Various Credit Strategies Across the Spectrum?
- What are the Latest Trends in Deal Structuring?
- What Sub-Sectors are you Favoring and Avoiding in the Middle Market Direct Lending Space?
- Do you Believe Non-Sponsored Investing could Grow with Signs of Crowding in the Sponsored Market? What are the Benefits/Risks?
- Thoughts on Unitranche? Expectations for Default Rates and Loss Given Default?
- Where do Investors see the Illiquidity Premium Available in Today’s Market? How Quickly can Illiquidity Premium and Spreads Move if we get a Spike in Volatility?
- How is the Opportunity Set in European Credit? Where is the Best Value?
- How much Transparency should LPs Demand from their Credit Managers during both Initial Underwriting and Ongoing Monitoring?
- With the Huge Inflows into Private Credit, how big is the Concern about how those Assets are Valued? Should Firms Outsource the Valuation Work?
- How should Pension Plans go about Analyzing, Selecting and Implementing the various Credit Funds?
- How do you Assess the New Credit Players in this Space when Selecting a Credit Manager?
- How Severely have other Forms of Financing Hurt Middle-Market Mezzanine? Have you Lowered your Lending Rates and Returns Expectations as a Result?
- What type of Value-Add can a Mezz Provider bring to the table? How does it Meet some the of Changes in the Market?
- Where does Mezz Fit within a Multi-Strategy Credit Portfolio?
- Do you Consider Mezzanine to be an All-Weather Allocation?
- Does it Make Sense to Invest in Mezz Right Now?
- Market Update: Purchase Price Multiples, Leverage Multiples, Senior Leverage Multiples, Cash Coupons, PIK, etc.
- What is the Tradeoff of Sponsored vs. Non-Sponsored Deals?
- What are you seeing in terms of Add-Backs and Covenants?
- What is your Approach to Equity Co-Investments? Warrants?
- How does the Need for an Equity Cushion to come into play for Withstanding a Downturn?
- What are the Deal Risks Associated with Mezz?
- Fund Level Leverage – what are the Financing Terms? How Much is Too Much?
- What are the Market Risks Associated with Mezz in regards to being Late in the Credit Cycle and Interest Rates?
- Risk/Reward of Small, Middle and Large Market
- What Returns Expectations should LPs have?
- Preferred Equity Explained – Raising Capital/Unlocking Liquidity Without the Constraints of Debt Financing or a Secondary Sale
- Benefits of Issuing Evergreen Securities with No Mandatory Redemption Date – does this Trump the Higher Expense to the Borrower?
- What are the Advantages and Cautions of this Financing Model?
- Which Industry Participants can Benefit and How?
- Do you see Seasoned Secondaries Players moving into Preferred Equity? Can this be the Next Evolution of the Market?
- How might Increased Competition in this Space affect the Preferred Equity Market?
- What is the Skillset Required?
- Should Secondaries Buyers be Worried about whether Preferred Equity will Eat Into their Potential Deal Flow?
- Where does Preferred Equity Fit Within a Portfolio Allocation?
Distressed Investing – Opportunistic and Special Situations
- What do you see as a Catalyst for the Next Distressed Cycle?
- Where are Default Rates now and how much do you Expect it to Rise in the Coming Years?
- How Big a Role do you Expect Corporate Debt to Play and the Huge Growth of BBB- Rated Bonds?
- Which Sectors are most Vulnerable at the End of the Cycle?
- How is Liquidity in the Distressed Space and how might that affect Valuations should a Credit Event Occur?
- Where are the most Attractive Strategies and Sectors? Any Areas that should be Avoided?
- Will Direct Lending Lead to a Distressed Opportunity? If so, why?
- How Critical is it to Buy a Distressed Opportunity Well vs. the Ability to Operationally Create Value?
- U.S. Distressed Opportunity vs. the European Opportunity Set. Which Countries, Sectors, Types of Deals should be looked at?
- Opportunity Set and Risks in Asia. Do you Find it Hard to do Business in this Region?
- What Skills are Required for Distressed-for-Control Investments?
- When taking Operating Control of a Company, what Problems/Issues can Arise? What’s the Upside of Getting it Right?
- Distressed Debt Vehicles in Hedge Fund Format vs. PE Draw-Down Style Structures – what are the Pros and Cons of each?
- What are the Biggest Challenges to Delivering Returns in this Competitive Landscape?
- What is the Right Style, Size and Approach for an Investor to Select a Distressed Manager?
- State of the Venture Industry – Valuations, Mega Funds and Exit Market
- Do you believe Valuations are at a Peak? Could Lower Returns be on the Horizon?
- Are Private IPOs replacing Traditional IPOs? Will this Continue to Grow and Flourish?
- Venture Capital Winners – Limited Access to the Top Few VCs that Generate the Bulk of the Industry’s Returns? What’s the Best Approach to this Challenge?
- Is Technology the Platform Behind the Next Big Thing in Venture? Which Specific Technology Stands Out as a Future Return Driver?
- Globalization of Venture Capital – which Overseas VC Markets do you view as Attractive? What is the Best way to Gain Exposure?
- What are the Biggest Challenges or Headwinds Facing Venture Today?
- What are the Dynamics Driving the Liquidity Challenge? What are the Solutions?
- Is it Hard to Find a New Venture Capital Investment? How Hard is it to Compete for the Best Companies to Invest?
- Thoughts on Seed Stage and Micro Venture Capital Managers? What do you need to know about this Approach?
- VC Access via Direct Fund Commitments, Fund of Funds, Co-Investments, Secondaries – Considerations for each, Allocation Issues, Internal Resources, etc.
- Pension Transparency Impact – what are the Regulatory Issues facing Pension Funds when Investing in Venture Capital?
Private Equity Energy
- Is now the Time to be Investing Given the Risk and Uncertainty? What’s been the Recent LP Sentiment and Approach? Have they Backed Off, Sold Stakes, Bought Secondaries?
- With Energy Private Equity in a Holding Pattern with EBITDA Multiple Offers coming in Lower than Valuation Expectations, what will Spur Exits?
- Where do you see the Best Opportunities and Most Attractive Sectors? Appealing Projects on Upstream, Midstream, etc?
- Where do you see Opportunities in the Royalty Space?
- How Important are the Credit Markets in the Deployment of Private Capital and what Role has it Recently Played?
- How much Leverage is Too Much Leverage?
- Finding a Common Ground on Risk Protection Between Management and a GP – will Hedging Protect you in a Multi-Year Price Disruption?
- How do you think about Supply/Demand in North America due to the Permian?
- What does the Future hold for Shale and Natural Gas?
- How should we think about the Risk and Approach to this Space in a Climate Change Focused World?
- When can we expect Secondary Buyers to Capitalize on GP-Led Restructurings of Energy Funds and Assets? Have we seen these Deals yet?
- Will Special Purpose Acquisition Companies, (SPACs) continue to be a Fixture in the Oil and Gas Industry? What’s the Appeal and Potential Downside?
- How have Tax Credits of Renewables Impacted the Industry over the Past Decade and how will the Phase-out of Subsidies affect the Industry?
- What Advances are Required to Increase the Penetration of Renewable Energy Sources? Thoughts on Battery Storage Technology?
- What Sectors within Renewables or Alternative Forms of Energy do you find Attractive? Will the Best Opportunities be in the U.S. or in Emerging Markets?
- What’s the Most Important Risk Factor for Investors thinking about Deploying Capital in Renewables?
- How will Technology and Big Data Play a Role in Renewables?
- Thoughts on the Renewable Energy Financing Trend?
- What are the Key Characteristics you should look for in a GP Team?
- With High Valuations, a Surge in Average Deal Size and High Competition, what does that mean for your Returns Expectations?
- With High Competition for Larger Investments, do you believe there could be More Return Potential in Smaller Projects?
- Which Sectors and Strategies do you see the Most Attractive Opportunities? Any Emerging Trends/Themes?
- Which Geographies are Most Appealing? Developed or Emerging Economies? Greenfield vs. Brownfield in those Regions?
- What are the Main Blockers to Investment in Countries outside of the U.S.?
- Do you see Infrastructure Debt as Attractive? Will it deliver for Investors Searching for Yield?
- What are your Views on the Growing Appetite for Direct Investment from Pension Funds Buying Assets from Infrastructure Money Managers?
- What are your Expectations for Growth in U.S. Energy and Transportation Related Projects?
- The Demand for Renewable Infrastructure – which Area is the Most Attractive?
- How have GPs Adopted ESG Principals and what are the Remaining Challenges?
- Implementation Considerations – Primary Partnerships, Direct, Co-Investment, Fund of Funds or Separate Accounts. Any Advantages or Limitations that Stand Out?
- What are the Advantages of Open-Ended Funds Over Closed-Ended Funds and do you expect a Surge in Open-Ended Funds in the Coming Years?
- What should you look for in an Infrastructure Manager?
- What Threats do Cyberattacks Pose to U.S. Infrastructure, Specifically Energy Infrastructure? Is the Industry Prepared?
- What are the Major Technological Trends that will Shape Infrastructure Investing in the Coming Years?
Wristbands for Networking Event handed out in Conference Room
Trump Terrace Cocktail Reception and Dinner Networking Event
Hosted by The Pension Bridge – Join our group for a cocktail reception and dinner at The Terrace, located on the 16th floor of the Trump Tower. Meet many of the most influential decision makers from our industry at this sophisticated outdoor oasis showcasing iconic views of Chicago's dramatic cityscape. The Pension Bridge Group will utilize will this glamorous space for meetings and conversation with quality contacts while taking in views of the Chicago River, Wrigley Clock Tower and Lake Michigan.
Networking Event Concludes