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7 quotes from 1 episode on Dry Powder, each with a timestamped link to the source.
John Toomey tracks a shift in private equity toward specific risk exposures and middle-market co-underwriting partnerships. Allocators increasingly target a broad, risk-managed portfolio to capture a 200 to 300 basis point spread.
The co-investment space split into active middle-market partnerships and passive mega-fund syndication desks.
“The market's really bifurcated between co-underwriting, I wouldn't necessarily say co-lead, but really co-underwriting, where you're really providing a solution to the lead general partner, and then the syndication market…”
From HarbourVest CEO John Toomey on Middle-Market Co-Underwriting
Evaluators filter up to 1,300 live co-investment opportunities annually from capable managers to locate the viable deals.
“I think we evaluate between 12 and 1,300 live co-investment opportunities, all of which will be completed by a manager that is very good in the market…”
From HarbourVest CEO John Toomey on Middle-Market Co-Underwriting
High fund returns frequently stem from heavy sector concentration in software assets.
“They happen to be overweighted software in that vintage year relative to all the other industries, and that's what drove the relative performance…”
A sponsor managing a $1 billion fund faces portfolio concentration limits when writing a single $200 million equity check. These managers look for capital partners to share the execution risk before closing the transaction and syndicating the remaining equity.
“Where we've tended to play historically has been in the middle market, where if you're a manager that has a billion-dollar fund and you're looking to invest in a situation that requires 200 million of equity, boy, that feels pretty chunky for my fund.”
From HarbourVest CEO John Toomey on Middle-Market Co-Underwriting
“You're looking for a trusted partner with capital, with a dedicated team, with a track record of executing to work with, where we'll co-underwrite it together, and we'll both syndicate down to their and our investors after the fact…”
From HarbourVest CEO John Toomey on Middle-Market Co-Underwriting
Institutional and wealth allocators seek a reliable 200 to 300 basis point return over public markets. Private equity firms unbundle their proprietary data and property to help clients build broad, risk-managed portfolios.
“The real phenomenon that has been happening within our business and in the industry in the last few years has been what I call the next great unbundling of our intellectual property to help investors invest the way that we do.”
“…increasingly institutional investors, individual investors, they're really looking to buy exposures. Like, they just need the 2 to 300 basis points, broadly diversify, which helps you manage risk.”
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