Goldman Sachs Petershill's Robert Hamilton Kelly - riding the waves of change in GP stakes

Welcome back to the Alt Goes Mainstream podcast.

Today’s conversation dives into the current state of private markets through the lens of one of the leading GP stakes firms in the industry.

We sat down with Partner and Global Co-Head of the Petershill Group at Goldman Sachs Robert Hamilton Kelly. Petershill takes minority equity stakes in established and newly-established alternative asset managers. Across its different investment vehicles, Petershill participates in the fee income from over 200 underlying funds from alternative asset management firms that are diversified across asset class, investment strategy, and investment lifecycle.

Petershill’s Partner firms have well in excess of $340B in aggregate AUM and they’ve partnered with a number of the top firms and some of the industry's most recognizable names in the middle market and upper end of the market, including Clearlake, Francisco Partners, Permira, Accel-KKR, General Catalyst, Kayne Anderson Real Estate, Kennedy Lewis, and more.

Rob and I had a fascinating conversation on GP stakes and the evolution of alternative asset management. We discussed:

• The what, why, and how of GP stakes.
• The benefits and drawbacks of GP stakes investing for GPs and LPs.
• What makes a great GP.
• The question of liquidity in GP stakes.
• Why Petershill has generally focused on middle-market alternative asset managers.
• How private markets will continue to evolve and the growing importance of the wealth channel in the evolution of asset management.

Thanks Rob for coming on the show to share your wisdom and expertise in private markets and GP stakes. We hope you enjoy.

A word from AGM podcast sponsor, Ultimus Fund Solutions

This episode of Alt Goes Mainstream is brought to you by Ultimus Fund Solutions, a leading full-service fund administrator for asset managers in private and public markets. As private markets continue to move into the mainstream, the industry requires infrastructure solutions that help funds and investors keep pace. In an increasingly sophisticated financial marketplace, investment managers must navigate a growing array of challenges: elaborate fund structures, specialized strategies, evolving compliance requirements, a growing need for sophisticated reporting, and intensifying demands for transparency.

To assist with these challenging opportunities, more and more fund sponsors and asset managers are turning to Ultimus, a leading service provider that blends high tech and high touch in unique and customized fund administration and middle office solutions for a diverse and growing universe of over 450 clients and 1,800 funds, representing $500 billion assets under administration, all handled by a team of over 1,000 professionals. Ultimus offers a wide range of capabilities across registered funds, private funds and public plans, as well as outsourced middle office services. Delivering operational excellence, Ultimus helps firms manage the ever-changing regulatory environment while meeting the needs of their institutional and retail investors. Ultimus provides comprehensive operational support and fund governance services to help managers successfully launch retail alternative products.

Visit www.ultimusfundsolutions.com to learn more about Ultimus’ technology enhanced services and solutions or contact Ultimus Executive Vice President of Business Development Gary Harris on email at gharris@ultimusfundsolutions.com.

We thank Ultimus for their support of alts going mainstream.

Show Notes
00:00 Introduction and Sponsor Message

01:18 Podcast Opening and Theme

02:06 Guest Introduction: Robert Hamilton Kelly

03:32 Rob's Boat Racing Experience

03:45 Parallels Between Boat Racing and Private Markets

04:57 Current State of Private Markets

05:14 Impact of Policy Changes on Private Markets

06:53 Growth of the Private Markets Industry

07:09 Early Days of Petershill

07:26 Goldman's Role in Alternative Asset Management

09:26 Valuing GP Stakes and Alternative Asset Managers

10:01 Insights on Alternative Asset Managers

12:36 Valuing GP Stakes

13:22 Data-Driven Investment Strategies

15:34 Management Fees and Performance Fees

16:28 Growth and Evolution of Firms

23:16 Strategic Imperatives for Growth

26:15 Managerial Skills and Industry Dynamics

30:55 Commercialization in Platform Management

31:07 Challenges and Opportunities in Capital Raising

31:53 Industry Consolidation Predictions

32:29 Growth and Consolidation in Private Markets

33:31 The Role of Mid-Market Firms

34:15 GP Stakes and Wealth Channel Access

36:12 Goldman's Unique Platform and Services

37:57 The Importance of Strategic Advice

39:39 Common Challenges for GPs

40:33 Evolving LP and GP Stakes Dynamics

40:44 Why LPs Invest in GP Stakes

42:00 Income Generation and Capital Growth

42:49 Diversification in GP Stakes

43:05 Private Markets Exposure

44:01 Entry Points into Private Markets

45:07 Long-Term Exposure and Portfolio Construction

47:00 Investing in Private Credit

48:10 Evaluating GP Stakes Investments

49:38 Data and Performance in GP Stakes

52:04 Growth Path of Private Markets

52:23 Valuing Alternative Asset Managers

55:41 Liquidity in GP Stakes

57:09 Structural Changes in GP Stakes

57:35 The Evolution of Private Markets

58:11 Future of Venture and Growth Sectors

58:56 Private Credit Products and Market Share

59:29 Maturation of Private Markets

59:52 Conclusion and Final Thoughts