PitchBook Analyst Note: GP Stakes

The general partner (GP) stakes investment strategy continues to draw the attention of more and more players in the private capital markets. Will we see more GP stakes investors partner with each other on deals going forward? This analyst note unpacks the potential benefits and drawbacks of this intriguing development in dealmaking.

Key takeaways:

• GP stakes dealmaking in 2018 has already matched the prior annual record. With more than a quarter left, investors have already completed 14 GP stakes deals. Transactions are increasingly targeted toward GPs with closed-end fund strategies, with 10 such deals so far in 2018.
• Managers receiving GP stakes investments boast industry-leading performance. Of the 250+ closed-end funds raised by managers with GP stakes backing analyzed in this note, 35% were in the top quartile of their peer group in PitchBook Benchmarks. Furthermore, only 19% of those funds were in the bottom quartile.
• GP stakes investors tend to target managers with above-average fund size step-ups. However, we have yet to see evidence that managers alter their fundraising tendencies in response to a GP stakes investment.