Capital Allocators – Inside the Institutional Investment Industry Michael Rees – Inside GP Stakes at Dyal Capital (Capital Allocators, EP.278)
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Oct 31, 2022 Michael Rees, Founder and Head of Dyal Capital Partners and Co-President of Blue Owl, shares his journey from mechanical engineering to investment strategy. He discusses the changing landscape of General Partner stakes, seller motivations, and market perceptions. Rees emphasizes the importance of relationship-driven sourcing and the strategic shift toward permanent capital. He also addresses critiques of Dyal's approach and highlights the evolving expectations from private equity, showcasing a blend of innovation and humility as essential for success in investment.
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Dot-Com Boom Opens Doors
- In 1999, many "smart kids" pursued dot-com opportunities, leaving other fields open.
- This allowed Michael Rees, an engineer, to secure interviews with Goldman Sachs and McKinsey, ultimately changing his career path.
Lehman's Early Foray into Alternatives
- Lehman Brothers initially aimed to enter the alternatives space through fund of hedge funds.
- They explored acquisitions of firms like K2, Miserow, and Grosvenor, ultimately forming a joint venture.
Genesis of GP Stakes
- Early minority stake investments in hedge funds yielded high cash returns with minimal effort.
- This sparked the idea of profiting from the hedge fund industry without direct ownership.