GP Stakes at a glance
A general partner (“GP”) stake investment represents a direct ownership share in a private market sponsor, allowing to get economically entitled to the cash flow of the GP, which is composed of management fees, carried interests and balance sheet income from existing and future products. This ownership interest is a perpetual and transferable security that can be financed, recapitalized, or sold. There are various approaches to gaining an economic stake in a GP at different stages of its development, underlying strategic focus and the like.
Record Financial Group
The share of private markets in investment portfolios continues to expand. Investments managers specialising in private real estate, credit, equity and infrastructure observe not only an increasing set of opportunities but also play a vital role in society by enabling the energy transition, building (social) housing and providing a liquidity alternative to banks to name a few. As managers grow and launch new dedicated funds, part of their own capital is co-invested as “skin in the game” alongside investors. To spur growth, unlock new markets and provide working capital for General Partners, a minority equity stake is sold to external parties through an IPO or private placement to specialised firms. The opportunity set for GP Stakes is set to grow as the share of private capital is increasing, the number of GPs maturing and becoming investable rises, while diversification across strategies, sectors, geographies and economic cycles gain in importance.
Record Financial Group
Record GP Stakes is exposed to minority equity stakes in over 60 established private market asset managers with AuM ranging from $1bn to $193bn, and an average AUM of $32bn. The stability of recurring revenues combined with strong growth in private markets provides investors with robust cash flows (dividends) and returns. Being part of a $2.5bn GP Stakes investment programme that launched in 2016, investors in the Record GP Stakes fund benefit from economies of scale and co-investment prospects by lower fees and additional allocation opportunities. The large existing portfolio is accessible through an evergreen structure, meaning that investors benefit from existing allocations across vintages and economic/interest rate cycles. Furthermore, the low minimum investment of EUR 125k alongside quarterly liquidity provisions after three years, opens the investment class to a variety of investors considering entering the private market.
Record Financial Group
Diversification is a key differentiator of our GP Stakes strategy. As well as offering diversification across manager capitalisation, the fund is further diversified as the 60+ underlying managers the fund holds stakes in are active across private real estate, credit, equity and infrastructure. Moreover, they deploy various investment styles across different regions globally and their revenue streams stem from multiple vintages. This granular level of diversification plus the multiple sources of return of managers, including the long-term contractual nature of fees and the firm’s growth, provides investors with stable returns and limited downside. Record GP Stakes captures opportunities presented by ever-changing trends in private markets by allocating to a broad spectrum of leading private managers with strong funds, vintages and underlying revenue streams.
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