Welcome to The Private Equity Podcast, by Raw Selection. Host Alex Rawlings interviews Randy Cohen, a lecturer at Harvard Business School, and Jean-Louis Lelogeais, co-founders of PEO Partners. Together, they dive into liquid private equity, its uses, and how it complements traditional private equity.

Breakdown:

[00:00] Introduction to Randy Cohen and Jean-Louis Lelogeais, founders of PEO Partners, and their experience in private equity and distressed debt

[00:30] Randy introduces the concept of liquid private equity, its performance profile, and accessibility benefits

[01:00] Jean-Louis highlights his background at SVP Global and their goal to create a liquid private equity solution

[01:29] Explaining liquid private equity and how it aims to replicate the benefits of private equity in a liquid vehicle

[02:26] Historical private equity performance and its outperformance compared to public markets with less volatility

[04:20] Use cases for liquid private equity as a funding asset for capital calls and an accessible option for retail investors

[06:16] Liquidity challenges for institutional investors and how liquid PE solves them

[08:29] Challenges in achieving buy-in from institutional investors due to AUM requirements and consultant blessings

[11:49] Retail investor access and diversification from traditional 60-40 portfolios with liquid PE

[12:47] The rise of liquid private equity and why the concept is gaining traction

[13:45] BlackRock's acquisition of Preqin and the growing focus on liquid market versions of private equity

[16:07] Liquid PE strategy: mimicking leveraged buyouts through public companies, leveraging data, and hedging to reduce volatility

[18:25] Steps to replicating PE returns: matching industry tilts, choosing LBOable companies, and implementing derivatives for downside protection

[22:39] Challenges and limitations of liquid PE compared to traditional PE, including the inability to perform operational improvements

[27:17] How liquid PE matches average private equity returns while offering lower fees and liquidity advantages

[32:13] Broad sector diversification versus specialized vehicles in liquid PE portfolios

[34:35] Trends in private equity sectors and the dominance of software and services in PE portfolios

[37:01] Researching top quartile funds and leveraging insights for better industry selection

[39:49] The importance of copying PE's strategic sector allocations instead of predicting trends

[41:00] Closing thoughts on liquid private equity and its potential to complement traditional private equity

[43:48] Jean-Louis reflects on founding SVP Global and managing $26 billion in assets

[47:26] Randy shares his experience teaching at Harvard Business School and learning from PE professionals

[49:05] Randy recommends the blog Marginal Revolution for insights on finance, economics, and culture

[50:57] Jean-Louis highlights the entrepreneurial journey in Shoe Dog by Phil Knight and insights into building businesses

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