Capital Formation Headwinds but Tailwinds for the Select Few
After two straight years of nonstop fundraising, the last few months have been something of a rude awakening for many alternative asset management marketing professionals. Capital formation has shifted gears to the negative and many are finding the environment extremely tough.
This should, perhaps, not come as much of a surprise given recent headlines around high inflation, rising interest rates and continued fears about a forthcoming recession. It was only a matter of time before these macroeconomic headwinds would surface in the alts space and create what is an increasingly difficult fundraising environment.
What We're Hearing: Trepidation & A Fear of Commitment
The challenges around the current fundraising environment have come up in almost every one of my conversations with professionals across the industry. There is a sense of trepidation and uncertainty that I haven’t seen since the 2008 - 2009 financial crisis. Part of the issue seems to be that there are so many active private funds already out in the market, approximately 11,707 in North America and Europe alone according to data from Preqin. Many LPs are understandably hesitant to commit to new capital allocations when there is so much dry powder and unrealized value. (See our recent newsletter on the secondaries market for a more detailed explanation of the “denominator effect” that has led to many LPs decreasing their allocations to private markets.) This has left marketers, especially those responsible for raising capital for new funds, chasing a shrinking pile of cash.
I’ve heard some marketers say that this is, “the most complex, complicated and tricky fundraising market” they have seen since 2008. Other insiders claim that marketers must, “dial twice as hard for dollars.” Even those marketers who had a successful time raising capital during the pandemic are saying “Investors are reluctant to see marketers at the same speed and intensity,” and that they will only meet if they really want to invest, or if there is a long-term relationship in place that will deliver even in these tight market conditions.
What Lies Ahead: Challenges, Trends & Opportunities
Together, these sound bites paint a picture of a fundraising environment that could easily go from bad to worse. Already, some GPs are quietly laying off as much as 5 - 15% of their entire staff globally. More layoffs could be on the way if major Western economies do indeed slide into a recession.
But despite all these challenges, there are some rays of opportunity for experienced and forward-thinking marketers. The role of the technical marketer, the product specialist turned marketer, marketers that maintain the Middle East as geographic focus, and - last but not least - the long tenured capital formation professionals who have expertise in structuring, will step into the limelight in this current climate.
One new trend we’re keeping an eye on is the growing influence of the Middle East as a source of capital for alternative investment firms. We’ve heard from many marketers who have recently visited cities in Saudi Arabia, UAE and Qatar to meet with investors and attend conferences. A growing number of GPs are building out their teams in the region to ensure they have coverage, especially given the importance of having boots on the ground for personal relationship-building. For instance, Brevan Howard recently added 100 people to focus on the Middle East. Millennium is also building out their Middle East office, as are many other hedge funds and credit firms.
We are seeing a similar trend play out in Singapore, which has emerged as the dominant financial capital center in the Asia-Pacific region. Singapore is now home to thousands of family offices, many of which are new to alternative investing and open to exploring opportunities. But just like in the Middle East, those in Singapore prioritize being able to meet with GPs face-to-face, reinforcing the importance of alts firms having a local presence.
Another trend we’re seeing in the market is growing interest in a multi-PM model where LPs can invest in multiple GPs simultaneously via a fund of funds or similar strategy. Firms like Dyal Capital Partners and Blackstone BAAM are among the biggest players in this area of the market, which is becoming more popular among LPs because it offers strong diversification via smaller allocations in multiple managers. It will be interesting to see if more GPs forgo their own fundraising by partnering up with one of these multi-PM specialists.
These areas of opportunity represent big focus for Jensen Partners this year. We have already had over 100 client meetings this year with GPs who are figuring out how to add business development professionals to their teams with specificity around LP channels such as insurance and focus on private wealth.
The good news is that the distribution hiring stats for Q1 were on par with the highest ever on record, and we have a long list of active searches, on par with what we’ve seen in previous quarters. Fundraising figures may be down, but opportunities are always there for the specific fund raising talent - if you know where to look. So please continue to reach out to us to discuss all your hiring and recruitment needs.
Q1 Data Highlights
Selected data points from Q1 2023:
❖ In Q1 2023, we tracked 1,010 moves, a 0.30% decrease from Q1 2022 and a 42.45% increase from the 710 moves in Q4 2022. This is the now 13th straight quarter that hiring activity has surpassed 400 moves and the 2nd time that we recorded more than 1,000 moves.
❖ The biggest movers and shakers for Q1 included: Private Equity (258 moves), Multi-Asset (198 moves), Credit (151 moves), Private Funds Groups (106 moved), and Wealth Management (105 moves).
❖ Unlike in Q4 2022, we observed that the majority of the firms saw an increase in hires in Q1 2023 when compared to Q4: Secondaries 40 moves (or +17 moves from Q4, a 73.91% increase), Infrastructure 41 moves (+17 moves, a 70.83% increase), Private Fund Group 106 moves (+43 moves, 68.25%), Multi-Asset 198 moves (+76 moves, a 62.30% increase), Private Equity 258 moves (or +82 moves from Q4, a 46.59% increase), and Credit 151 moves (or +36 moves, 31.30% increase). Of the two more niche sectors, FinTech/Venture Capital had not experienced a change in hiring since Q4, whereas Fund of Funds experienced an increase of 4 new hires, compared to no hires in Q4 2022.
❖ When compared to Q1 2022, the following sectors experienced a boon in hiring – Infrastructure is leading the way with a 105.00% increase (or +21 moves from Q1 2022), followed by Wealth Management +75.00% (or +45 moves), Private Funds Groups +41.33% (or +31 moves), Private Equity +7.05% (or +17 moves). According to our data, the following sectors witnessed a slump compared when to Q1 2022 – Hedge Funds -47.10% (-65 moves), Real Estate -29.79% (-14 moves), Credit -10.12% (-17 moves), and Multi-Asset -7.48% (-16 moves).
❖ As with previous quarters, we continue to track hiring activity in more niche sectors of the alternative investment space. In this category, when compared to Q1 2022, the number of hires decreased for FinTech/Venture Capital by -75.00% (-3 moves) and increased for Secondaries by +5.26% (or +2 moves).
❖ In Q1 2023, hiring activity increased across all regions, except for APAC, when compared to Q4 2022. Specifically, in the first quarter of 2023, NORAM had 656 moves (+212 moves, a 48% increase), the UK had 178 moves (+54 moves, a 44.00% increase), the rest of Europe had 92 moves (+31 moves, a 51.00% increase), and MENA had 6 moves, the same as Q4 2022. On the other hand, APAC had 73 moves (or -1 moves, a 1.00% decrease).
Data on Diversity
With diversity continuing to be a top-of-mind issue for alternative investment firms, we take a deep dive using Jensen Partners’ Jensen DiversityMetrics™ data visualization technology to see how well the alternative investment industry is improving diversity among the ranks of marketers.
❖ In Q1 2023, we tracked 545 diverse moves (447, or 44.26%, female candidates and 98, or 9.70%, male BIPOC candidates), representing 53.96% of all marketing moves in the quarter, a 44.18% increase from Q4 2022 and a 2.64% increase from Q1 2022 for which we tracked 531 diverse moves (439 female candidates and 92 male BIPOC candidates), representing 52.42% of all marketing moves in the quarter.
❖ In terms of gender by asset classes, we observed that total female moves in Private Funds Groups increased by 115.79% compared to Q4 2022 and by 95.24% compared to Q1 2023. We further noted that female Credit moves in the quarter were more diverse than male Credit moves, similar to Q4 2022. While female and male Credit moves have a similar percentage of non-white individuals (23.46% and 22.86%, respectively), female moves (19 vs. 16 male moves) account for more diverse candidates within that bubble. Unlike Q4 2022, however, females dominate Credit, accounting for 81 or 53.64% of all Credit moves in Q1 2023, compared to 68 or 59.13% of male Credit moves in Q4 2022. Similarly, white females account for 58 or 38.41% of all Credit moves in Q1 2023, compared to 54 or 35.76% of white male Credit moves in Q1 2023, and 53 or 46.09% of white male Credit moves in Q4 2022.
❖ In the first quarter of 2023, Caucasians continued to account for the vast bulk of all marketing moves (78.51%). This is an increase from the 73.80% ratio reported in Q4 2022 and a slight decrease from the 79.96% ratio in Q1 2022. The one ethnic group that continues to make inroads in its representation across the alternative investment industry is East Asian, with 94 moves in Q1 (9.31% of the quarterly total), compared to 100 moves in Q4 2022 (14.08% of the quarterly total) and 359 moves in 2022 (10.69% of the yearly total). No other ethnic group has eclipsed 90 moves in the quarter, with South Asian (48 moves), Black (25 moves), and Hispanic (23 moves) coming closest. However, these figures are still higher than what we saw at this same point last year, suggesting a positive trend.
Jensen Partners' New Product Offering: DEI Market Mapping
We work directly with senior investment professionals and senior marketers to identify, attract, and hire the industry’s most accomplished diverse professionals.
Over the last decade, we have built a dataset that includes verified demographic data for more than 25,000 investment and distribution professionals from across the industry, including 8,000 who self-identify as having a diverse background across more than 100,000 positions.
We harness that data to support the build-out of diverse investment and marketing teams.
See below for a partial selection of current mandates. Contact us at email@example.com to learn more about each search.
HIRING: $20B AUM Global Credit Platform
Role: Mid-Senior level, Business Development
LOCATION: New York
Our client is a global alternative credit platform, with products spanning opportunistic alternative credit, CLO management, and real assets. Our client is seeking a mid to senior-level business development professional focused on fundraising from LPs across the institutional spectrum. This individual will be a generalist, working across the firm’s full suite of products and collaborating closely with senior team members to support the growth of the platform from an AUM and product development perspective. The ideal candidate will have a strong track record raising assets for public and private credit products and strong knowledge of the North American institutional LP landscape.
HIRING: $21B AUM Credit Investment Manager
Role: Vice President, Business Development
LOCATION: New York
Our client is hiring for a Vice President of Business Development to support the growth of the platform across their direct lending and tradeable credit strategies. The successful candidate will have directly applicable fundraising and business development experience as well as a strong knowledge of the institutional investor, alternative investment, and credit market (private and public) landscapes. The Vice President of Business Development will work as part of a small, focused four-person team on fundraising, cultivating, and managing client relationships, developing, and crafting new product launches, and executing existing, live fund-raising campaigns.
HIRING: $40B AUM Alternative Credit Firm
Role: Senior Level Fundraiser
LOCATION: New York
Our client is an established alternative credit firm with 40B AUM and a primary focus on below-investment-grade corporate credit and complementary strategies. With five offices globally, our client is seeking a senior-level fundraiser to join their New York office and work closely with the Global Head of Investor Solutions and ISG team at large. This individual will work to grow assets through investment results and new relationships, as well as retain current investment relationships on the platform. The right candidate will have proven relationships and a track record raising within the credit space from institutional clients and consultants/advisors. This person will have strong experience in managing the full lifecycle of the marketing process from the identification of potential clients through the close of the asset transfer. This person will be a motivated self-starter who thrives in an entrepreneurial environment and has a client-minded focus.
HIRING: $370B AUM Global Alternative Investment Firm
Role: Senior Level Investor Relations, Infrastructure
LOCATION: New York
Our client is a top-tier global alternative investment firm with 370B AUM, seeking a senior level Investor Relations professional to focus on the firm’s Infrastructure strategies. This individual will be responsible for the full Infrastructure IR lifecycle from developing a strategy around fund formation, pre-marketing, prospecting, and fundraising, as well as non-fundraising client engagement, serving the firm’s institutional client base externally and acting as the go-to internal resource for the Global Infrastructure investment leadership team. This role is a fast-paced, team-oriented position requiring coordination across multiple internal teams, senior investment professionals, and other stakeholders, requiring strong product knowledge and a track record of raising assets from institutional investors within the infrastructure/real assets space. The right candidate will contribute to the growth of the business from both an AUM and product development perspective, building relationships with prospective clients as well as expanding relationships with existing clients. This individual will work closely with the co-heads of the infrastructure business, and oversee all IR functions on the platform, including the firm’s diversified infrastructure fund, renewables fund, and core infrastructure fund – aligning with the firm’s strategic goal of scaling the infrastructure strategy and building a more content-driven IR function.
HIRING: $7B AUM Private Investments Firm
Role: Mid-Senior level, Head of Fundraising
Our client is a leading private investment firm that specializes in distressed and event-driven investments. They are seeking a mid-senior level capital raiser to head up their international fundraising efforts. The successful candidate will work for an established, well-known private credit or private equity firm. They should have a strong capital raising track record as well as established international institutional relationships with strong preference for targeting pension fund and SWF investors. This individual is the first dedicated fundraiser that the firm has hired. They will work alongside senior management and act as the key point of contact for investors.
HIRING: $150B AUM Alternative Asset Firm
Role: Sales Director, Vice President – Client Group
LOCATION: New York
A global alternative asset management firm with over 150B AUM is seeking a Vice President-level business development professional in New York who will be responsible for driving business development efforts and managing relationships with institutional investors in the Midwest and Texas. The Vice President will work closely with senior management to develop and implement strategies to grow the firm's assets under management and build long-term partnerships with the firm’s clients. The successful candidate will have at least 5 years of experience in alternative asset management.
HIRING: $20B AUM Alternative Asset Firm
Role: Mid-Senior Level Fundraiser
LOCATION: New York
Our client is a global alternative investment firm with approximately 20B AUM focused on asset-rich and cash-flowing investments in undercapitalized, inefficient private markets. Our client is looking to hire a mid to senior-level fundraiser to market across the firm’s core investment strategies: real assets, specialty finance, and aviation. This person will participate as an integral member of the Capital Formation team, representing the firm to external investors in the marketing, reporting, and raising of funds and new product initiatives. Based in North America, he/she will be accountable for developing business with new investors, consultants, and other potentially relevant parties in the region. The mission of this position is to build strong limited partner relationships aligned with the firm’s brand.
Here is a curated selection of recent marketing moves across the following strategies: Credit, Fund of Funds, Hedge Funds, Infrastructure, Multi-Asset, Private Fund Groups, Private Equity, Real Estate, Secondaries, and Wealth Management.
Jonathan Harari joined Crescent Capital Group in February 2023 as Managing Director, Global Head of Investor Relations Solutions Group. Previously, he was Executive Vice President at PIMCO. He is based in New York.
Curtis Johnson is joining CFI Partners as Head of Institutional Business Development in January 2023. Previously, he was at Carlyle as Managing Director, Investor Relations. He is based in New York.
Yishi Lian joined Brevan Howard in March 2023 as Head of Asia Business Development from SouthernRidges Capital where she served as Head of Investor Relations & Business Development for four years. She is based in Singapore.
Catherine Vaughn joined Tilden Park Capital Management in March 2023 as Head of Business Development & Investor Relations. Previously, she was at Varadero Capital as Partner, Head of Business Development & Investor Relations. She is based in New York.
INFRASTRUCTURE, REAL ASSETS & REAL ESTATE
Tami Chuang joined Ardian in February 2023 as a Managing Director, Real Estate Investor Relations. She joined from Heimstaden where she was a Managing Director, Equity Capital Marketing & Partners. She is based in London.
Chris Tehranian joined First Sentier Investors in April 2021 as Senior Director of Distribution. He left First Avenue Partners as Partner, Head of U.S. Project Management after 10 years with the firm. He is based in New York.
Jennifer Ryan joined Lazard Asset Management in January 2023 as Head of North American Distribution. She joined from BlackRock where she was most recently Head of UK Institutional Sales in London. She is now based in New York.
Colin Fitzgerald joined Manulife Investment Management in April 2023 as Global Head of Institutional. Previously, he was at Credit Suisse as Global Head of Distribution. He is based in London.
Michael Murphy joined CapVest in April 2023 as Partner, Head of Investor Relations and Fundraising. Previously, he was Global Co-Head, Private Fund Group at Credit Suisse. He is based in London.
Lindsey Press joined HGGC in March 2023 as Global Head of Investor Relations from Silver Lake as Senior Vice President, Marketing & Investor Relations.
PRIVATE FUNDS GROUP
Michael Verano joined Artist Capital in April 2023 as Managing Director, Private Fund Group. Previously, he was at Crescent Capital Group as Managing Director, Investor Relations. He is based in Charlotte.
Matthew Brewer joined Banner Ridge Partners as Head of Capital Formation in March 2023. Previously, Brewer was Head of Global Distribution at Siguler Guff & Company. He is based in New York.
Nick Hatch joined Probitas Partners in February 2023 as Managing Director and Global Head of Secondaries. He joined from Harken Capital after a decade with the firm, most recently as a Managing Director. He is based in Park City. UT.
Chris Miller joined Whitehorse Liquidity Partners in January 2023 as Head of EMEA Fundraising from Rede Partners. He is based in London.
Sabinna Sammartino joined DC Advisory in February 2023 as Managing Director, GP Secondaries. Previously, she was Partner, Head of Secondary Advisory at Mercury Capital Advisors. She is based in London.
Pamela Brylski joined Shenkman Capital in April 2023 as Head of Family Offices, Endowments, and Foundations. Previously, she was at BlackRock as Director, Senior Fundraiser & Investor Relations. She is based in Miami.
John Tierney joined TPG as Managing Director and Global Head of Private Wealth in February 2023. He joined from Blue Owl Capital where he was a Managing Director for three years with their Dyal platform. He is based in New York.