Institutional investors are not going away, but it’s critical for fund managers to constantly develop new relationships in order to ensure they can raise fresh capital. SFOs can be a good source of capital for funds. They are worth getting to know.
Who said it: Kevin Hudson, Grant Thornton LLP’s national Private Equity managing director.
In Context: The quote is inside a report entitled “Raising capital from single-family offices: Perspectives for private equity firms and investment bankers” issued by Grant Thornton (and digested in this week’s newsletter) He says that it is not new that SFOs invest in PE, rather what is new is that GPs and funds are seeing the benefits of raising capital via SFOs. For example, while the larger institutional investors have strict guidelines to follow, SFOs have more flexibility with their investment choices — making them all the more attractive as LPs. An institutional LP may have a mandate to invest in a fund that will purchase U.S.-based middle-market companies, while an SFO can decide to invest in a fund that will purchase U.S.-based middle-market companies as well as make growth or mezzanine investments.
Where we found it: Grant Thornton