Capital Markets Observations…
Most recent article in the NY Times really exhibits the problems and the shift of power going on in Alternatives as an asset class. We are going through a fundamental change in the PE/VC space right now. A few key things I notice:
-Unprecedented GP/LP conflict has shifted the balance of power and capital back to the LP
-Significant pressure on 2/20 economics
-Blind capital pools are being drained [Permira is just the beginning]
-LPs who have capital available are leaning toward direct deals [advantage for them in terms of economics, control, duration, fees]
-“LP Direct” is the new “Gulf” [e.g. “we’ll go the Gulf and raise” is now “we’ll go to the family office and raise”]
