Spotlight on Marc Pillemer, Managing Director, Blue Owl Capital
Global Thought Leader Spotlight
Marc Pillemer, Managing Director, Blue Owl Capital
In my role as a Managing Director on the Blue Owl GP Strategic Capital platform, I am responsible for sourcing and evaluating minority investments in private markets focused General Partners (GP).
Unlike investing in the funds as a Limited Partner (LP), we buy equity in the firm itself, owning a portion of the management company and general partnership alongside the other equity owners and sharing in their fee streams: the management fee profits, the firm’s balance sheet returns on their GP commitments, and the carried interest.
We take a partnership approach to our investments and our team often gets to know GPs over several years before making an investment. I work closely with our approximately 30-person GP Strategic Capital Investment Team across our New York, London, West Coast and UAE offices. I also spend time with our institutional and private wealth clients in the US, Asia and Australia.
The Evolving GP Stakes Market
The GP Stakes market is continuing to institutionalise and is becoming more prevalent across the alternatives industry. As the private markets segment continues to expand, GPs need capital to grow their firms and strategic partnerships to remain competitive.
At the same time, established GPs are planning for succession and generational transfer of equity, diversifying their product offering and adding resources to optimise their businesses. GPs looking for a minority equity investment will prefer partners that can provide strategic value in addition to a financial investment. A strategic partner brings valuable resources and experience to support GPs as they think through the next phase of their business.
Over the next ten years, we think GPs who wish to continue their historic growth trajectory will need to give equal focus to their distribution and business development capabilities, as to their investment performance.
Our proprietary analysis suggests that a total of US$14 trillion could flow into private markets by 2033 because of the potential increase in target allocations, predominantly from three newer adopters of alternatives: wealth channels, insurance companies and sovereign wealth funds.
We believe GPs will need to invest in their distribution channels, particularly in the wealth space, to capitalise on these increased flows to private markets and differentiate themselves, to remain leaders in the space.
We think that GP Stakes are a great way to capture the growth of the most successful managers, through a diversified, cash-flow oriented strategy, with solid downside protection. Blue Owl’s GP Strategic Capital platform continues to be a partner of choice for GPs.
The Implications For Sophisticated Investors
The growing GP Stakes industry offers an attractive proposition for the sophisticated investor. By investing in a fund that acquires a minority stake in GPs, investors are participating in the economics of the firms in the portfolio, alongside the owners of these underlying firms.
We anticipate investors will benefit from three streams of income: predictable cash flows from management fee profits, carried interest, and balance sheet investment returns (via the firm’s commitments into its own funds).
In our view, GP Stakes can provide investors a level of diversification – by strategy, asset class, geography, size and vintage – that would be difficult and, perhaps impossible, to match through any other single investment. The diversified, cash-flow oriented strategy with downside protection can be complementary to other private market investments.
Marc will be presenting at Global Investment Institute’s upcoming Family Office Investment Forum - Sydney, taking place on Tuesday, 15 October 2024 in Sydney CBD, New South Wales and the Family Office Investment Forum - Melbourne, taking place on Thursday, 17 October 2024 in Melbourne CBD, Victoria.
To register your interest in attending, click here or for more information email zelda@globalii.com.au.
Marc Pillemer, Managing Director, Blue Owl Capital
Marc is a Managing Director at Blue Owl and member of the GP Strategic Capital Investment Team. In his role, Marc focuses on sourcing and underwriting minority equity investments and financing transactions and strategic initiatives across the GP Strategic Capital platform.
Before joining Blue Owl, Marc was a Managing Director at Blackstone where he had a senior role on the Investment Team of Blackstone's GP Stakes Platform, based in New York. In this role, his responsibilities included sourcing, negotiating, and executing transactions and managing relationships with partner GPs. Marc also led the GP Strategic Support Team, which provides strategic benefits to partner GPs. Prior to that, he was a Managing Director in the Financial Institutions Group within the Investment Banking Division at Goldman, Sachs & Co., advising alternative asset managers on M&A and capital raising transactions, and on strategic initiatives. Marc began his career serving in various roles in the Securities Division and the Investment Management Division at Goldman, Sachs & Co.
Marc received his BCom in Actuarial Studies and Finance from Macquarie University in Sydney.
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