The acceleration in trading and fundraising this year, coupled with the recent increase in favored liquidity solutions such as blank check companies and sponsor-led continuation funds, posed new challenges. for private equity funders even as it has opened up new opportunities. As part of our series on The State of Private Equity Midway to 2021, WSJ Pro Private Equity sat down with John Bradley, Senior Investment Officer, Private Equity at the Florida State Board of Administration to learn more about the how the roughly $ 194.7 billion retirement system positions its private equity portfolio. Answers have been edited for clarity and style.
WSJ Pro: What are the emerging trends in private equity that you follow?
Mr. Bradley: Some past trends have reappeared in recent years: larger funds, faster investment pace, shorter fundraising cycles, higher leverage multiples, and valuation multiples reaching highs. historic peaks. To us, this looks like end-of-cycle indicators. Here are some new trends that stand out: [Fund general partners] raise single asset vehicles to buy a big winner from an older fund that they wish to hold for longer, GPs raising funds to invest in single asset vehicles from other GPs [special-purpose acquisition companies] invest outside of their core strategy.
WSJ Pro: How have you changed your thesis and your private equity investing sub-strategies, if any, this year?
Mr. Bradley: We seem to be a little more bearish overall, but it has not had a significant impact on our sub-strategies. Geographically, adding exposure to China and Europe has become more difficult due to travel restrictions. We are still very optimistic about the technology in the long term. However, in the short term, adding additional exposure has become difficult as it represents almost 50% of our portfolio and valuation multiples are at historic highs. We have spent a lot of time looking at the energy sector (traditional oil and gas) and have developed a lot of conviction. We believe the current downturn is cyclical (not secular) and we are trying to take advantage of it.