Fund Shack Private Equity Podcast

By Ross Butler, Fund Shack is produced by LinearB Group LTDBusiness Investing

Fund Shack Private Equity Podcast episodes

March 14, 2024 African private equity: a conversation with Stephane Bacquaert
Private equity is a great way of investing in uncertain, high growth environments. Strange then, that the African private equity industry is so small. In fact, Stephane Bacquaert, managing partner of Adenia Capital, argues that the mature Western private capital industry has systematically misunderstood the African opportunity, and its risk profile in particulare.
In this Fund Shack podcast with Ross Butler, he talks about managing one of Africa's largest buyout funds, and the value that so many investors are missing out on.
Key Highlights:
Stephane’s Journey: Transitioned from strategy consulting to private equity in Africa, driven by personal connections and a desire to support African businesses. His initial venture failures led him to focus on supporting management teams through investment.
Investment Strategies: Emphasis on control buyouts and majority deals, which provide more influence over business outcomes. Investment decisions are driven by bottom-up analyses, focusing on companies with strong growth potential, robust management teams, and pricing power. Importance of being embedded locally to source and execute deals effectively, given the lack of structured deal flow and the necessity of relationship-based deal sourcing.
Market Dynamics: Africa’s high growth potential is driven by demographic trends, urbanization, and a burgeoning middle class. The continent’s economic fundamentals include rapid population growth, significant urban migration, and high GDP growth rates in several countries. These trends create opportunities in sectors such as consumer goods, retail, financial services, and infrastructure. Challenges include currency devaluation, regulatory complexities, and the need for infrastructure development.
Challenges and Opportunities: Navigating Africa’s complex regulatory landscape requires deep local knowledge and adaptability. Currency devaluation is a significant risk, necessitating investments in companies with strong local demand and pricing power. Building infrastructure is crucial, from establishing retail chains to upgrading production facilities.
Impact and ESG: Private equity investments in Africa have a profound impact on job creation and economic development. Adenia Partners focuses on improving ESG standards, such as transitioning companies to more sustainable practices and ensuring compliance with international environmental and social standards. Examples include the transformation of a retail chain in Kenya and the shift to water-based paints in East Africa. These efforts not only enhance business value but also attract international buyers and investors.
#PrivateEquity #AfricaInvestment #ImpactInvesting #ESG #VentureCapital #InvestmentStrategies #EmergingMarkets
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Fund Shack is a private equity podcast and global media channel for alternative investment professionals. Fund Shack is produced by Linear B Group.
Contact:
Katie Mitchell
Email: [email protected]
Company: Linear B Group
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53 min
March 01, 2024 Henry Freeman: Repackaging Private Equity
Repackaging Private Equity—Why Retail Investors Are the Next Big Battleground
Private equity has always been a game for the big players, until now. Fund managers are racing to repackage private equity for smaller investors, while governments push for new structures like ELTIFs and LTAFs. But is this shift a revolution or a recipe for risk?

Henry Freeman, investment expert and founder of The Fund Society, has been at the heart of public and private markets for two decades. In this episode, he shares his unfiltered take on the push to retailise private equity, why commitment, not liquidity is the real secret to success, and how tech might be the missing link in solving PE’s accessibility problem.
Henry’s Journey: Henry Freeman has a diverse background in public and private investment markets, fintech entrepreneurship, and investment trust board membership. His career includes roles at Lloyds Private Bank, Foresight Partners, and Liberum, showcasing his extensive experience in managing and structuring investment funds.

Investment Strategies
Semi-Liquid Structures: Emphasis on creating investment vehicles like LTIFs and ELTs that offer some liquidity while maintaining the benefits of private equity.

Commitment Focus: The critical role of commitment in private equity, arguing that commitment is a feature rather than a bug, essential for achieving the high returns associated with private equity investments.

Public-Private Hybrids: Development of funds that invest in listed private equity firms, providing liquidity and accessibility while capturing private equity’s growth potential.

Risk Management: Approaches to managing liquidity risk, including the potential for forced asset sales during market downturns and the implications for fund performance.

Market Dynamics:
Historical Discounts: Analysis of historical opportunities in listed private equity during the 2008 financial crisis and recent market conditions, highlighting significant discounts to net asset value (NAV) and the impact on investor returns.

Current Opportunities: Examination of current market conditions post-COVID, with a focus on identifying value in listed private equity and the potential for significant returns as market conditions stabilize.

Challenges and Opportunities:
Scalability Issues: Discussion on the scalability of closed-end fund structures versus open-ended vehicles, emphasizing the challenges and potential solutions for scaling private equity investments.

Mis-Selling Risks: Concerns about the risks of mis-selling private equity products to retail investors, particularly with open-ended structures that may not align with the traditional private equity investment model.

Technological Integration: The potential for leveraging technology, such as tokenization, to streamline the transfer and management of private equity interests, enhancing liquidity and accessibility.

Fund Society:
Platform Overview: Introduction to the Fund Society, an online hub for investment professionals, providing curated intelligence-based content, news aggregation, and thought leadership.

AI Integration: Use of AI and large language models to curate and prioritize content, ensuring relevance based on market trends and news events.

Community Building: Efforts to build a community of investment professionals, facilitating knowledge sharing and networking opportunities across asset class

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Fund Shack is a private equity podcast and global media channel for alternative investment professionals. Fund Shack is produced by Linear B Group.
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42 min
February 15, 2024 Daniel Zwirn, Arena Investors: Avoiding moral hazard in private markets
Moral Hazard in Alternatives - Daniel Zwirn on Fund Shack's Private Equity Podcast
Daniel Zwirn discusses his unique approach to alternative investments through Arena Investors LP, emphasizing a merchant banking style. He explores the advantages of historical financial models, moral hazard in fund management, and strategic flexibility in navigating global markets.
Key Highlights:
Arena Investors' Philosophy:
Historical Best Practices: Arena is inspired by successful financial models dating back to the 1600s, focusing on strategies from the Rothschilds, global grain traders, and Asian merchant houses.
Moral Hazard Prevention: Prioritizing structural advantages where Arena's scarce resources (capital) are needed, reducing the risk of moral hazard.
Investment Strategies:
Cyclical and Opportunistic Investing: Identifying and exploiting cyclical opportunities across various sectors and geographies, avoiding overreliance on a single strategy.
Regulatory and Structural Arbitrage: Taking advantage of inefficiencies and regulatory differences across markets, providing a unique edge in capital deployment.
Market Dynamics and Opportunities:
Global Macroeconomic Trends: Analyzing the impact of QE, fiscal policies, and inflation on asset bubbles and market corrections, and strategically positioning investments accordingly.
Sector-Specific Strategies: Focused on distressed assets, special situations, and high-value sectors like real estate, structured finance, and commercial lending.
Operational Complexity:
Global Multi-Strategy Approach: Operating across North America, Europe, and Asia with a diversified portfolio including corporate, real estate, and structured finance.
Joint Ventures: Leveraging over 50 joint ventures worldwide for deep domain expertise, aligning interests, and maintaining variable cost efficiency.
Ethical and Social Responsibility:
Social Utility Investments: Focusing on investments that provide social benefits, such as healthcare and rehabilitation centers, while maintaining high returns.
Consistent Ethical Framework: Avoiding trends like greenwashing, with a focus on long-term ethical investment practices.
Conclusion/Takeaway: Daniel Zwirn highlights the importance of a disciplined, ethical approach to alternative investments, focusing on long-term value creation and strategic flexibility. His insights provide a comprehensive understanding of navigating private markets amidst evolving economic conditions.
#PrivateEquity #InvestmentStrategies #MoralHazard #MerchantBanking #ArenaInvestors #MarketDynamics
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Contact Information: About Fund Shack: Fund Shack is a private equity podcast and global media channel for alternative investment professionals. Fund Shack is produced by Linear B Group.
Contact:
Katie Mitchell
Email: [email protected]
Company: Linear B Group
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53 min
December 19, 2023 Hans Lovrek on private equity's ancient precedent
Hans Lovrek stumbled on Medieval Florentine documents that showed structures were being used to align interests in ventures with high information asymmetry that were uncannily similar to today’s limited partnerships.

Through a method of historical institutionalism, Hans demonstrates how the same techniques have been used to solve similar problems, down the ages, and that today’s private equity industry is based on ideas that successful trading nations have used before.

This episodes was recorded in March 2019 and is released on podcast for the first time in December 2023.

Hans Lovrek, Founder of Commenda Private Equity uncovers the historical foundations of modern private equity by analyzing medieval Florentine documents, revealing structures similar to today’s limited partnerships. His method of historical institutionalism demonstrates how successful trading nations historically addressed information asymmetry, influencing contemporary private equity practices.

Historical Parallels:
Medieval Commenda and Modern LPs: Lovrek discovered that medieval commenda contracts from the 6th to the 14th centuries share striking similarities with today’s limited partnerships (LPs), highlighting features like profit sharing, limited liability, and limited duration.

Structural Analysis:
Profit Sharing: Medieval contracts typically had a 25% profit share for the general partner (GP), akin to the 20% carried interest in modern private equity.

Limited Liability: Essential for allowing families and other investors to participate without risking their entire fortunes.

Duration: Projects were financed for specific ventures (e.g., sea voyages) with fixed terms, similar to the ten-year lifespan of modern funds.

Regulatory Influence:
Role of Regulation: Increased regulation in Venice facilitated the rise of commenda contracts by providing a framework that reduced moral hazard and ensured fairness, leading to a thriving venture investment environment.

Comparison to Modern Regulation: The historical necessity of regulation for venture success parallels modern regulatory practices, suggesting that a codified international structure could simplify private equity investments.

Due Diligence and Moral Hazard:
GP Clawback: Medieval practices included mechanisms to ensure GPs returned excess profits if investments later underperformed, a concept still relevant today.

Challenges of Information Asymmetry: Both medieval investors and modern LPs face similar challenges in monitoring GPs and ensuring aligned interests.

Medieval Foundations of Modern Private Equity – Hans Lovrek on Fund Shack’s Private Equity Podcast
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Fund Shack is a private equity podcast and global media channel for alternative investment professionals.
Fund Shack is produced by Linear B Group. Linear B Group
29 min
December 19, 2023 Hans Lovrek on private equity’s ancient precedent
Hans Lovrek stumbled on Medieval Florentine documents that showed structures were being used to align interests in ventures with high information asymmetry that were uncannily similar to today’s limited partnerships. Through a method of historical institutionalism, Hans demonstrates how the same techniques have been used to solve similar problems, down the ages, and that today’s […]
29 min
December 07, 2023 Yaron Valler, Target Global - AI, VR, venture capital and separating hot air from substance
Yaron Valler is a founder of venture capital firm Target Global. He is a successful entrepreneur and investor, and was part of the team at Intel that invented the Pentium Processor. In this episode of the Fund Shack podcast, he talks to Ross Butler about how AI will change ‘everything’, virtual reality, how government’s should direct innovation and risk capital, and much more. [00:00:00] Ross Butler: You’re listening to Fund Shack. I’m Ross Butler, and today I’m speaking with Yaron Valler, a founder at Target Global, a venture capital firm with offices in London, Berlin, Barcelona, Tel Aviv and elsewhere. […]
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47 min
December 07, 2023 Yaron Valler, Target Global – AI, VR, venture capital and separating hot air from substance
Yaron Valler is a founder of venture capital firm Target Global. He is a successful entrepreneur and investor, and was part of the team at Intel that invented the Pentium Processor. In this episode of the Fund Shack podcast, he talks to Ross Butler about how AI will change ‘everything’, virtual reality, how government’s should […]
47 min
November 30, 2023 Prosecuting a mid-market healthcare strategy with Sanjay Panchal, Livingbridge
Prosecuting a mid-market healthcare strategy, with Livingbridge
Sanjay Panchal is a partner at Livingbridge, a leading international growth capital investor, where he specialises in healthcare. In this episode he speaks to Ross Butler about the opportunities for private equity investors across the healthcare sector.

Sanjay Panchal, Partner at Livingbridge discusses the dynamics and opportunities in the healthcare sector from an investor’s perspective. He explains how Livingbridge focuses on thematic investing, identifying long-term trends like aging populations and technology adoption. Sanjay emphasizes the importance of improving healthcare outcomes and the role of private equity in driving innovation and efficiency in the sector.

Healthcare Investing Approach:

Thematic Investing: Identifying key growth trends and focusing on businesses driving change in healthcare outcomes.

Mid-Market Focus: Investing in UK mid-market businesses and helping them scale, targeting areas with growth rates significantly above GDP.

Investment Philosophy:

Outcome-Driven: Partnering with businesses focused on improving healthcare outcomes, believing that commercial success follows quality care.

Employee Focus: Emphasizing the importance of recruiting and retaining skilled staff, crucial for sustainable healthcare businesses.

Service vs. Capital-Intensive Businesses:

Service Models: Primarily investing in service-oriented businesses, including technology services, rather than capital-intensive sectors like hospitals.

Examples: Investments include businesses like Helping Hands (home care services) and Nourish Care (digital record management for elderly care homes).

Changing Healthcare Trends:

Ten-Year Truths: Identifying long-term trends such as aging populations and shifts in care from hospitals to the community.

Technology Adoption: Significant focus on healthcare technology to improve service delivery and patient outcomes.

Life Sciences and Biotech:

Complex Drug Pipelines: Trends towards more specific, complex drug developments targeting smaller patient populations.

Outsourcing in Pharma: Increasing reliance on third-party providers for drug discovery, clinical trials, and commercialization.

Geographic and Sector Focus:

International Presence: Investments in various geographies, including the US and Australia, with a focus on scalable, specialized healthcare services.

Consumer Healthcare: Noting a shift towards greater consumer control and visibility over health, though the private pay sector still has growth potential.

Sanjay Panchal’s insights highlight Livingbridge’s strategic approach to healthcare investing, emphasizing thematic investing, improving healthcare outcomes, and leveraging technology. The firm focuses on scalable service models and recognizes the critical role of private equity in driving innovation and efficiency in the healthcare sector.

#HealthcareInvesting #PrivateEquity #ThematicInvesting #HealthcareOutcomes #LifeSciences #HealthcareTechnology

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Fund Shack is a private equity podcast and global media channel for alternative investment professionals.

Fund Shack is produced by Linear B Group. ⁠⁠Linear B Group⁠⁠

34 min
November 23, 2023 Marcus Maier-Krug, Arcmont Asset Management
Marcus Maier-Krug is partner and co-head of portfolio management at Arcmont. He has been working in private credit since before the global financial crisis. In this episode, recorded in November 2023, we discuss what constitutes alpha in private credit, what it’s attractions are as an asset class, whether it can retain the market share it has taken from the traditional banking world, the different mindset and culture of private credit lenders vis a vis their borrowers, and much more… [00:00:00] Ross Butler: You’re listening to Fund Shack. I’m Ross Butler, and this week I’m talking with Marcus Maier-Krug, partner and […]
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46 min
November 17, 2023 Alejandro Alcalde Rasch, Advent International
Alejandro Alcalde Rasch is a senior director in Advent International‘s portfolio support group. He joined Advent in 2010 having been chief transformation officer and head of supply at Gröhe AG and a partner in McKinsey’s chemicals practice. In this Fund Shack podcast, Alejandro talks to Ross Butler about the genesis of Advent’s dedicated portfolio support group, how it has grown over time, what he looks for in value creation professionals, how the team works alongside deal executives and the importance of a value creation plan. [00:00:00] Ross Butler: You’re listening to fund Shack. I’m Ross Butler, and today I’m speaking […]
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52 min