Hands-on Value Creation | Portico Advisers

Blackstone is a principal beneficiary of the consolidation of alternatives / private markets. It stewards $649 billion in assets under management.

According to its 10-Q, Blackstone collected $1.18 billion in management and advisory fees (net of fee reductions and offsets) in the first quarter of 2021, with the Private Equity segment accounting for 35% of the total ($406M).

The firm generated $36 million in incentive fees in Q1.

Institutional investors (and their consultants) often say that they allocate to managers based on their prior performance and ability to drive operational value add.

When it comes to performance, some of Blackstone’s funds are publicly available on the CalPERS website:

You could also scroll through Washington SIB’s portfolio overview or CalSTRS’ to see whether and how the performance figures differ.

It’s hard (for me) to square the fees paid with the performance delivered … but I also don’t have the problem of finding a place to invest $500M.

(Though Portico happily accepts donations if you’d like to give us $500M to play with … you can check back in 10 years and see how we did).

Alternatively, maybe Blackstone employs its value-creation capabilities to build strong, sustainable businesses, thereby effectively de-risking each investment.

(The firm seems to be so great at this that it has confidence buying the same portfolio companies multiple times … sometimes after a bankruptcy, e.g., Extended Stay America).

This is how Blackstone markets itself:

Great leadership teams are critical for success. Blackstone’s operating partners and network of operating executives work directly with CEOs and their senior teams to improve operating performance, strategy and governance.

And:

Environmental, Social and Governance principles have been integral to Blackstone’s corporate strategy since our founding. We are committed to responsible investing practices and incorporate them into everything we do.

Comforting language befitting a “safe pair of hands.”

Which is why the F-1 prospectus of Oatly — a Swedish oat milk company that received a $200M investment from Blackstone, Oprah, et al — made me laugh out loud:

What a joke.

— Mike

Greg Bowes on The State of EM Private Markets

In the latest episode of the Portico Podcast, I speak with Greg Bowes, Co-Founder and Managing Principal of Albright Capital — a global investment firm with expertise in special situations, infrastructure, infrastructure services, and real assets — about the state of EM private markets.

The label ‘variant perception’ gets bandied about quite a lot, mostly as nonsense. But Greg has a different view on EM private markets than most of the managers I’ve met, and I thought he’d be a great guide to walk through where the industry is in the summer of 2021.

Check it out on Apple Podcasts | Google Podcasts | Spotify

Grab Bag

Fred Wilson on the globalization of venture capital investing (avc)
$900 billion in Chinese government guidance funds (FT)
Ludovic Phalippou interviews Simon Clark about The Key Man (link)
Golden Gate Ventures and INSEAD report on Southeast Asia exits (link)
Benedict Evans on e-commerce as logistics (link)
B3 (🇧🇷) tests crypto platform for startup funding (link)

From the Bookshelf

Has the world become so topsy-turvy that a living creature, whom the gift of reason makes divine, believes that his glory lies solely in possession of lifeless goods? Other creatures are content with what they have; but you, who are godlike with your gift of mind, seek to embellish your surpassing nature with the grubbiest of things, and in so doing you fail to appreciate what an insult you inflict on your Creator. He sought to make the race of men superior to all earthly things, but you have subordinated your dignity to the lowliest objects. For if every good belonging to an individual is truly more valuable than the person to whom it belongs, then on your own reckoning you men rank yourselves below the tawdriest things, when you pronounce them to be your goods. Such an outcome is fully deserved, for the status of man’s nature is this: it excels all other things only when aware of itself, but if it ceases to know itself, it falls below the level of the beasts. This is because lack of self-knowledge is natural in other living creatures, but in humans is a moral blemish.

— Boethius, The Consolation of Philosophy (Oxford World’s Classics: 2008)

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