Welcome back to The Private Equity Podcast, by Raw Selection. In this week's episode, Alex Rawlings speaks with Cari Lodge, a seasoned investor with 25 years in private equity secondaries. They explore the market’s rapid growth from $2 billion to $160 billion, the increasing need for liquidity, and how secondaries optimize portfolio management. Cari discusses GP-led secondaries, continuation funds, and the market’s evolution, offering key insights into future opportunities in this space.
Breakdown:
[00:00] Introduction to the episode and guest, Cari Lodge, Managing Director and Head of Secondaries at CF Private Equity.
[00:28] Cari’s background, her start in secondaries, and how the market has expanded from $2 billion to $160 billion.
[01:45] Common mistake in private equity: Holding assets too long. How increasing holding periods from 5.7 years to 6.7 years impacts returns.
[03:34] Why firms miss exit opportunities. The importance of DPI and how delaying exits can lead to the same returns years later.
[04:29] Explanation of secondaries for newcomers. The role of LP secondaries, GP-led solutions, and the growing demand for liquidity.
[06:53] The benefits of secondaries for investors, including diversification, shorter duration, and strong IRRs and ROIs.
[08:49] Demand for GP-led secondaries, continuation funds, and LP transactions. How secondaries are now part of active portfolio management.
[10:42] The future of secondaries. Market expected to grow from $160 billion to $200–220 billion in 2024, but constrained by capital and human resources.
[12:33] Challenges holding the market back. Capital constraints, lack of resources, and evolving perceptions of secondaries.
[14:21] Why Cari loves the secondaries market. Exposure to 1,200+ private equity funds, constant evolution, and a collaborative industry.
[17:12] Key trends in private equity. The impact of higher interest rates, valuations, and the growing focus on liquidity solutions.
[20:32] Secondaries' role in providing liquidity. Now contributing 15–20% of total private equity liquidity.
[22:28] How secondaries adapt to market cycles. Benefits in both up and down markets, shifting from a distress play to a mainstream strategy.
[23:22] Cari’s recommended reads: The Economist, Private Equity Analyst, and What It Takes by Steve Schwarzman.
[25:14] How to reach Cari Lodge. Best contact method: LinkedIn.
[25:45] Closing thoughts. Recap of insights and encouragement to subscribe to The Private Equity Podcast.
Thank you for tuning in!
Connect with Cari here.
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