Hello there! I’m Michael, your guide to the world of private markets. You’ve just found your way to AGM, the hub where the dynamic world of alternative investments gets its spotlight.
I’m thrilled to introduce you to my newsletter, AGM Alts Weekly, released every Sunday. It’s your go-to source for the latest news, trends, and insights shaping the private markets. Inside, you’ll discover news articles, insightful commentary, an index of publicly traded alternative asset managers, job opportunities at private market firms, plus podcasts and thought pieces from Alt Goes Mainstream.
Join us as we explore the private markets, ensuring you and your firm remain informed and agile in this fast-paced environment.
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Greetings from DC! Earlier this week, I visited Omaha to speak with the CFA Society of Nebraska. Thanks to an invitation from Lee Martin of Mutual of Omaha (and a dedicated Alt Goes Mainstream subscriber!), I shared insights on the trends reshaping private markets. Lee led a captivating discussion with a plethora of questions from the audience, many of whom are involved in investment management.
During my Omaha visit, I connected with numerous local allocators. It struck me that while I initially ventured to discuss the nascent “institutional LPs” like wealth channels, my conversations with insurance companies reaffirmed their significant role as allocators in private markets.
These discussions underscored insurers’ keen interest in private markets. Whether building teams or early in their investment journeys, there’s a clear eagerness to align with private market opportunities to match their strategic investment philosophies.
This week, General Atlantic and MetLife Investment Management announced Chariot Re, a reinsurance company, highlighting the increasing insurer activity in private markets. Such moves signal a growing trend of insurers embedding themselves in the ecosystem.
At the CFA Society event, a pertinent question arose about BlackRock’s acquisition of HPS and its implications for BlackRock and its rivals. Just before this acquisition, Guardian Life expanded its equity stake in HPS and transitioned $30B in assets to their management. This suggests Guardian’s investment paid off well amidst BlackRock’s acquisition.
An interesting theme within the BlackRock-HPS acquisition discussion centers on integration. Last week, I delved into the implications of BlackRock’s monumental HPS deal.
While strategic synergies abound, successfully uniting two firms’ cultures and operational ethos is paramount, particularly now, as the industry undergoes consolidation and attracts wealth channel engagement. Integration stands as a vital benchmark on this journey.
Strategic acquisitions are pivotal for alternative asset managers pursuing growth, enabling them to broaden their investment offerings, LP bases, and AUM to augment enterprise value.
Recent Bain & Company data shows upticks in acquisitions by leading alternative asset managers in recent years. BlackRock’s giant purchases of GIP and HPS, TPG’s Angelo Gordon buyout, and General Atlantic’s move for Actis are testaments to this trend.
A June 2024 report by Bain highlights that firms excelling in M&A systematically outperform due to repeat integration practice, evidenced by higher shareholder returns for frequent acquirers.
Yet, integrations pose challenges. Bain cites integration issues as the culprit in 83% of failed acquisitions. Blue Owl’s Co-CEO Marc Lipschultz emphasized their focus on meticulous integration planning, long before any deal closes.
Blue Owl is a case example in private markets, their formation rooted in the 2021 merger between Owl Rock and Dyal Capital Partners. Several strategic acquisitions have fortified their platform with specialized brands, showcasing effective integration.
Such efforts haven’t gone unnoticed, given Blue Owl’s rapid growth, signaling adept integration of brands into their operations, culture, and value offerings.
Consolidation carries a dual benefit. Scaled platforms leveraging public currency for acquisitions enjoy diversified strategies and increased AUM. Public alternative asset managers dominate recent strategic acquisitions, affirming this.
Acquisition acceleration surpasses building organically, as EQT’s swift market entry into Asia via Barings Private Equity Asia’s acquisition attests. Utilizing public stock currency can work in favor of alternative managers, bolstering stock performance.
Yet traditional asset managers, dealing with legacy products’ outflows and potential stock depressions, face obstacles in attracting potential acquisitions. Consequently, employees, cultural fit, and integration incentives remain key considerations in acquisition decisions.
Asset managers’ decisions on integration hinge on talent retention, compensation structure, cultural alignment, office logistics, investor relations strategies, shared services utilization, and distribution methodologies—all while safeguarding LP investment outcomes against cultural shifts.
The need for speed in market positioning is critical in the private markets race. Large firms, particularly, aim swiftly to establish a wealth channel presence through varying approaches—build, buy, or partner. Each strategy reflects differing internal cultures and integration capacities.
We’re at a groundbreaking die-hard consolidation phase, with private markets tech potentially on the horizon. Engagement in this intricate chess game is surging.
Discover our curated Index, tracking public alternative asset managers, illuminating market sentiments, investor engagement, and capital allocation.
Join the Alt Goes Mainstream conversation with recent podcasts, industry insights, roles across top private markets firms, and our collaborative exploration at AGM Studio, incubating and scaling companies or funds in private markets.
Thank you for tuning in to Alt Goes Mainstream. If you enjoyed this issue, share it with peers interested in navigating the private markets landscape. Subscribe for more insights and follow me on LinkedIn or Twitter for updates. If you’ve content suggestions or guest recommendations, shoot a message—I’m eager to incorporate them into future discussions or podcasts.
Special acknowledgments to Michael Rutter and Nick Owens for their contributions to this newsletter.
