Displaying items by tag: private equity

In this episode, Marty Nesbitt joins Melissa Francis and Magnifi by TIFIN to share his views on Private Equity and how the asset class is poised for periods of rising prices.

To watch the full interview with Marty Nesbitt, in addition to interviews with Anthony Scaramucci, Kyle Bass and Jeffrey Gundlach, check out Magnifi by TIFIN.

Melissa Francis: We have a very special guest to talk about private equity investments, Marty Nesbitt. He is co-CEO of The Vistria Group, which is a Chicago based private equity firm. 

He is also on the board of directors of publicly traded companies like CenterPoint Energy, Norfolk Southern Corporation, and American Airlines group. Marty, thank you so much for being here. 

First of all, tell us a little bit about Vistria, some of your founding principles and maybe some of your current assets or maybe the deals you like the most.

Marty Nesbitt: Yeah, sure. I'm happy to do so. Vistria was birthed from a set of personal experience by my co- founder Kip Kirkpatrick and I, who had both been in the investment world, in public service and obviously operated as entrepreneurs. 

And we thought, as we harvested our experiences, that at the intersection of public and private interest, there was a value proposition that we felt hadn't been recognized in the marketplace. 

And so we thought if we invested at the intersection of what was important to the public and what was important to the private sector, we could figure out how to harvest value. 

We thought about the three industries where that opportunity set was greatest and settled in on healthcare, education and financial services, where we thought the value or the opportunity set was greatest. 

And so, Vistria is a name that we made up because that's one of the hardest things there is to do when you start any business, that's find a name, but it means the power of three. 

And it's the power of investing with the requisite amount of investment experience and expertise, the requisite amount of operating expertise, but then also a long term policy perspective so that you can be invested in places that are not only good for the businesses, good for employees, customers, and investors, but also good for the broader public. 

That policy perspective is the third dimension that we invest behind. 

Watch the full episode with Marty Nesbitt HERE

Melissa Francis: Yeah, I know, that brings up so many questions. Let me start with just a few. Private equity in general, you see really great out sized returns. How do you keep that up when stocks and bonds are having such a rough time like they are right now? 

Marty Nesbitt: Well, look, one of the beautiful things about building a private equity platform is the opportunity to be really focused in an industry or a sub- sector of an industry where you can develop real expertise. 

And so we spend a lot of time developing themes that we want to invest behind and then going very, very deep so that we know the levers to create value what the long term proposition is. 

And so even in an environment where we see prices rising, as there's so much capital competing for these opportunities, we have confidence about the value creation plan we can put in place and the way that we can generate our return objectives in a very difficult, challenging pricing environment. 

So being focused is a way to mitigate some of that risk. 

Watch the full episode with Marty Nesbitt HERE

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Private equity set many records for itself in 2021 with gigantic inflows and huge market outperformance, but could that all be slowed in 2022 by an escalating Russia-Ukraine conflict and inflation? Bain & Co said that steeper capital costs driven from these two scenarios will undercut PE as an asset class in 2022. Inflation will hurt growing PE investments and the cheap flow of capital is being reduced by the conflict. There are huge risks that valuations will be much flatter from this point out. This means that the huge inflows and record-setting outperformance might not hold up in 2022.

Finsum: 2021 inflows were already higher than market expectations a natural correction could have been in place, but this could be more severe than just a standard correction.

Private equity set many records for itself in 2021 with gigantic inflows and huge market outperformance, but could that all be slowed in 2022 by an escalating Russia-Ukraine conflict and inflation? Bain & Co said that steeper capital costs driven from these two scenarios will undercut PE as an asset class in 2022. Inflation will hurt growing PE investments and the cheap flow of capital is being reduced by the conflict. There are huge risks that valuations will be much flatter from this point out. This means that the huge inflows and record-setting outperformance might not hold up in 2022.

Finsum: 2021 inflows were already higher than market expectations a natural correction could have been in place, but this could be more severe than just a standard correction.

The hedge fund universe is getting a facelift. It appears the old days of strategic macro or a single quant visionary are a distant memory. Most funds are pouring money into swathes of teams throwing new money at multistrategy. Moreover, it appears clients are increasingly okay with higher fees in exchange for access to a wider range of investments particularly those in more unconventional areas: currency trading, precious metals, and private equity. Funds like Citadel have seen their multi-strategy departments multiply, and it's one of the fastest and near only ways for hedge funds to grow. Multi-strategy has grown 50 percentage points faster than the rest of the industry since 2014Q1.

FINSUM: Diversity is the name of the game and it appears investors are turning to hedge funds to channel funds into a wider net than ever before.

Bridgewater is the world’s largest hedge fund and their current CEO stepped down in a recent memo. Former CEO David McCormick is planning on running for a US Senate seat. Stepping into the leadership role will be Nir Bar Dea and Mark Bertolini in a shared leadership role. Bridgewater has had three different CEOs since Ray Dalio stepped down in his capacity as chief executive. Bridgewater gained a cult-like following for its radical transparency in the financial world where individuals rate and score their co-workers. Bar Dea is a relatively young executive in the hedge fund industry, but the pairing is seen as complementary in their shared CEO role. Bridgewater manages over $150 billion in pensions.

FINSUM: Hedge funds made a huge splash in 2021 by avoiding a lot of public turmoil and investing privately, we’ll see if that trend and those returns continue in 2022.