Welcome to The Private Equity Podcast, by Raw Selection. Host Alex Rawlings interviews Randy Cohen, a lecturer at Harvard Business School, and Jean-Louis Lelogeais, co-founders of PEO Partners. Together, they dive into liquid private equity, its uses, and how it complements traditional private equity.
Breakdown:
[00:00] Introduction to Randy Cohen and Jean-Louis Lelogeais, founders of PEO Partners, and their experience in private equity and distressed debt
[00:30] Randy introduces the concept of liquid private equity, its performance profile, and accessibility benefits
[01:00] Jean-Louis highlights his background at SVP Global and their goal to create a liquid private equity solution
[01:29] Explaining liquid private equity and how it aims to replicate the benefits of private equity in a liquid vehicle
[02:26] Historical private equity performance and its outperformance compared to public markets with less volatility
[04:20] Use cases for liquid private equity as a funding asset for capital calls and an accessible option for retail investors
[06:16] Liquidity challenges for institutional investors and how liquid PE solves them
[08:29] Challenges in achieving buy-in from institutional investors due to AUM requirements and consultant blessings
[11:49] Retail investor access and diversification from traditional 60-40 portfolios with liquid PE
[12:47] The rise of liquid private equity and why the concept is gaining traction
[13:45] BlackRock's acquisition of Preqin and the growing focus on liquid market versions of private equity
[16:07] Liquid PE strategy: mimicking leveraged buyouts through public companies, leveraging data, and hedging to reduce volatility
[18:25] Steps to replicating PE returns: matching industry tilts, choosing LBOable companies, and implementing derivatives for downside protection
[22:39] Challenges and limitations of liquid PE compared to traditional PE, including the inability to perform operational improvements
[27:17] How liquid PE matches average private equity returns while offering lower fees and liquidity advantages
[32:13] Broad sector diversification versus specialized vehicles in liquid PE portfolios
[34:35] Trends in private equity sectors and the dominance of software and services in PE portfolios
[37:01] Researching top quartile funds and leveraging insights for better industry selection
[39:49] The importance of copying PE's strategic sector allocations instead of predicting trends
[41:00] Closing thoughts on liquid private equity and its potential to complement traditional private equity
[43:48] Jean-Louis reflects on founding SVP Global and managing $26 billion in assets
[47:26] Randy shares his experience teaching at Harvard Business School and learning from PE professionals
[49:05] Randy recommends the blog Marginal Revolution for insights on finance, economics, and culture
[50:57] Jean-Louis highlights the entrepreneurial journey in Shoe Dog by Phil Knight and insights into building businesses
To be added to the book waitlist, you can email alex.offer@raw-selection.com
Thank you for tuning in!
Connect with Randy or Jean-Louis, click here.
To get the newest Private Equity episodes, you can subscribe on iTunes or Spotify here.
Lastly, if you have any feedback on the podcast or want to reach out to Alex with any questions, send an email to alex.rawlings@raw-selection.com