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Private Equity Analyst Note: Staking Claims in PE?uq=UG6efJS6

3Q 2017

Private Equity Analyst Note: Staking Claims in PE

September 22, 2017

Private Equity Analyst Note: Staking Claims in PE?uq=UG6efJS6
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PitchBook's latest analyst note devoted to PE focuses on the growing trend of limited partners and other investors taking stakes in PE general partner management companies.

Key takeaways:

  • GP stake deals are quickly gaining attention as a new investment strategy, with major players such as Goldman Sachs, Dyal Capital Partners, and Blackstone, among others, all raising funds to acquire minority equity positions in the management companies of alternative asset firms.
  • Hedge funds were once the primary target of such investments, but PE firms are now accounting for more than half of all GP stake deals; this trend is likely to continue as more capital is dedicated to strategies that explicitly target PE firms, many of which are using GP stake investments to facilitate succession plans.
  • Because GP stake deals introduce a new participant into the traditional LP-GP relationship, these deals can alter the value proposition and alignment of incentives because GPs now must consider the interests of the minority investor as well as the LPs in their funds.