It should be borne in mind that if you really want to invest in the private equity asset class, you should not invest in the listed management vehicles, but in the respective funds (possibly via feeder vehicles). The listed management company lives primarily from the management fee and only to a small extent, if at all, from the success of the individual fund investments, so you are more likely to invest in an asset manager. It is similar to investing in Blackrock rather than any particular Blackrock fund. The funds from Blackstone and Blackrock, at least the PE vehicles, are simply not listed as a rule because it can make sense not to have open-end vehicles for reasons of alignment of interest (between investment teams and investors). Alternatively, there are now more and more of these Eltif constellations to make private equity even more accessible to small investors.
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@Investorentagebuch Don't understand your point.
KKR and Blackstone are not mere fee earners. These companies rely on direct, active participation in companies to make them successful. It is inaccurate to compare them with funds that live mainly from management fees. Through strategic management and expertise, they bring about a real increase in the value of their portfolio companies. In this sense, their income lies essentially in the performance of these companies, not in the layers of fee structures that characterize some other investment vehicles. 🤨
KKR and Blackstone are not mere fee earners. These companies rely on direct, active participation in companies to make them successful. It is inaccurate to compare them with funds that live mainly from management fees. Through strategic management and expertise, they bring about a real increase in the value of their portfolio companies. In this sense, their income lies essentially in the performance of these companies, not in the layers of fee structures that characterize some other investment vehicles. 🤨
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@robinwdm the point is that the majority of the performance fee, which depends on how the respective investments perform, does not end up in the listed management company. Typically, only the management fee ends up in the management company and the capital gains (the profits from the investments) usually end up 80% with the LPs (the limited partners, i.e. the fund investors) and 20% with the investment team of the respective fund. In the case of some listed private equity companies, a relatively small proportion also ends up in the management company. You have to bear in mind that the companies do not invest from the balance sheet of the management company, but from the respective closed-end funds, which usually run for 10 years. You can also see this if you take a close look at the income statements of the funds, which show the breakdown of income.
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For example, look at this simplified chart, if you want to participate directly in the portfolio companies, you have to invest in the fund, like the LPs on the right. If you invest in the listed vehicle, you are at the top left of the manager: https://swiler.me/wp-content/uploads/2023/10/private-equity-fund-structure-1024x817.jpg
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@robinwdm But Gerd Kommer also makes the same mistake, always comparing the performance of private equity with that of listed PE companies instead of the underlying funds. You can either invest directly in the funds, usually only from approx. 10 million, below which they do not accept investors, or via feeder vehicles such as Moonfare, Finvia, Liquid or some banks that offer this via their wealth management. Tickets there start at around 100k. Smaller tickets are also available via all these Eltifs that are now springing up like mushrooms, but these are usually structured somewhat differently. All.not an investment recommendation, just a bit of info from someone who has worked in the industry.
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•@Investorentagebuch So you invest in the funds and not in KKR, etc.? I'm a bit suspicious of the Etlifs.
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@stock_strategist_86 yes, so at least to really invest in the private equity asset class (I used to have Blackstone as a share in my portfolio, but then I see it as a share of an asset manager)... if I want to be directly involved in the success of the portfolio companies, I invest in the respective fund, whereby I tend to leave out large cap (Blackstone, KKR etc), as the returns are usually better in the small & midcap area. But here, for example, to get another impression: https://www.handelsblatt.com/finanzen/banken-versicherungen/banken/private-equity-kkr-legt-fonds-mit-europa-fokus-auf-groesstes-vehikel-dieser-art/29075172.html Here you can read about a KKR fund with a European focus, which they have raised, with which they then make about 10 investments in Europe, usually the fund runs for 10 years, in the first 5 they invest, then sell. It is a closed-end fund, i.e. you cannot invest in shares. And KKR as a management company has several funds running at the same time, there's a management fee from all of them and sometimes a small part of the profits also goes there, but not to the same extent as in the respective fund... As a rule, 80% of the profits go back to the investors and 20% as carry to the respective investment team of the fund or to other key people of the management company. In the case of some listed companies, a small portion sometimes goes to the shareholders. Therefore, the often quoted private equity returns have nothing in common with the returns of the listed vehicles. And there are only a small number of companies listed anyway, mostly with a focus on large caps.
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