Your skills as an asset manager may be just the ticket to a private equity job if a current trend continues.
Bloomberg reports that several giant private equity firms famous for mega-sized buyout deals are slowly morphing into asset managers that now operate hedge funds and strip malls as well.
The Blackstone Group LP (BX), for example, the biggest private-equity firm, is now earning twice as much from owning office buildings in India and senior communities, as they are from buyouts. Even New York-based KKR, whose co- founders Henry R. Kravis and George R. Roberts pioneered leveraged buyouts in the 1980s, is now part owner of a 5,500-mile U.S. pipeline.
The driving forces behind the trend include the weakest fundraising environment since 2003, fewer big takeover candidates, and dwindling commitments from such traditional backers as pension funds.
In the future, private- equity firms may look more like large money-management enterprises, with a bigger emphasis on managing assets, according to Colin Blaydon, director of the Center for Private Equity and Entrepreneurship at Dartmouth College’s Tuck School of Business.
Carlyle Group has ventured into the fund-of-funds business, taking over AlpInvest, a Dutch asset manager that distributes money for investors among other buyout funds. KKR, famous for their $30 billion takeover of RJR Nabisco in 1989, has diversified into underwriting stock and bond offerings, investing in infrastructure deals and operating hedge funds.
Many of the larger PE firms are also issuing stock through IPOs, creating more liquidity for the founders who may want to sell off part of their ownership stakes as they get closer to retirement.
This diversification may be a key to private equity firms seeking more revenues, with less exposure to the cyclical nature of a pure buyout firm, according to Anthony Tutrone, head of the alternatives unit at New York-based Neuberger Berman Group LLC.
And it may open up new pathways for those of you seeking to break into a private equity job, especially if you have asset management experience. Agree or disagree? Add your comments below.
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