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Sachin Khajuria’s Followers (9)
Sachin Khajuria
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Two and Twenty: How the Masters of Private Equity Always Win
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Two and Twenty
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* Note: these are all the books on Goodreads for this author. To add more, click here.
“After twelve months of going nowhere, the investment committee loses patience and takes over the deal more directly. Organic is sold to a special-purpose acquisition company (or SPAC) listed on local stock exchanges. A SPAC is a cash box with a blank check raised from investors to buy a business within a set timeframe as determined by the executives who run the vehicle. Often, as the vehicle is publicly listed, a SPAC can strike a deal at a higher purchase price than a private equity firm would be willing to pay. Its investors will accept a lower return than they would from a private equity fund, often because the investment is marketed to them as a safer or more straightforward bet. In this case, the SPAC is run by a former senior executive of a French food retail chain and a major hedge fund seeking to expand into the private equity industry. Their joint sector and finance experience is convincing enough for the SPAC’s investors to agree that the transaction is likely to be worthwhile. The”
― Two and Twenty: How the Masters of Private Equity Always Win
― Two and Twenty: How the Masters of Private Equity Always Win
“The underpinning of their interest is the macro backdrop. The financial crisis is likely to be shorter-lived than the financial markets expect, they believe, because the Federal Reserve is poised to unleash powerful weapons of monetary policy on an unprecedented scale—in coordination with its counterparts overseas. The credit crunch will be overwhelmed by a sea of liquidity. This gift of almost a trillion dollars of freshly printed cash from the Fed alone will lift stock and debt markets to the point that investors will forget the jagged falls and crashes that have been torturing them in recent months. To be blunt, things will not stay cheap for long. It is an excellent time to buy a good business.”
― Two and Twenty: How the Masters of Private Equity Always Win
― Two and Twenty: How the Masters of Private Equity Always Win
“Since the Firm’s IPO, the Founder and the partners have realized that the listed market seems to value more highly the stable, recurring management fees that the Firm brings in, come rain or shine—the two percent—over the larger, supposedly more volatile performance fees that crystallize when investment gains are monetized—the twenty percent. The stock price is largely driven by a regular stream of management fees under long-term contracts, and as assets under management grow for the Firm, the stock’s attractiveness to public market investors increases because this fee pile grows alongside the assets. Of course, there is a strong track record of delivering performance fees on top, because the funds perform well, but these are incremental to the equity story; they do not underpin it. For the stock market, the Two is mission-critical. The Twenty is important, but it is not taken for granted.”
― Two and Twenty: How the Masters of Private Equity Always Win
― Two and Twenty: How the Masters of Private Equity Always Win
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