Transcript
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Large cap funds are just getting larger.
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And what it means is that you still have that
very small number of companies where the amount
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of dollars chasing those companies just keeps
on getting bigger.
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And so what you have there is GPs who struggle
to differentiate versus each other and have to
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differentiate in pricing, which means that they
typically use more leverage.
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And you can argue that some of the quality or
the selectivity ratio is also diminishing.
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Because if you need to deploy capital as a
large cap fund, you have a 3 or 4 year
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investment period.
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You can't just sit around and wait for years to
come your way.
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So the combination of higher pricing, pressure
to deploy, higher leverage, we think is not
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necessarily the best place to be in for private
wealth investors.
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What are the characteristics across the 1.2 to
1.4 percent of bio managers buy list?
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What we try to look for is a clear focus in
terms of 4 key dimensions.
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Victor, I've been excited to chat since our
friend Mikhail Dankovich from Unicorn Strategic
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Capital introduced us.
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Welcome to 10x Capital podcast.
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Thank you, David.
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What is Pantheon?
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So Pantheon is a global integrated fund of
funds platform.
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We were set up in 1982 and a little bit more of
40 years.
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We have effectively created multiple franchises
within the firm across private equity,
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infrastructure, private debt, and real estate.
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And in every one of those franchises, we have
primary, secondary, and co investment
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capabilities.
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Today, we manage around a little bit look, very
close to 70,000,000,000 of capital.
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And all of that around 7,000,000,000 is
evergreen capital.
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Tell me about your evergreen fund franchise.
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Yeah.
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So Pentium, you know, was set up in 1982.
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And 5 years later, in 1987, we launched a
listed trust on the London Stock Exchange
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called, BIP, and that vehicle today has been
active for 37 years.
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It has a little bit shy of $3,000,000,000 of of
AUM and, you know, really acts as, you know,
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one of the first ever evergreen vehicles to be
launched in the industry.
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And then back in 2014, on the back of that
successful UK experience, we launched a 1940
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act fund in the US.
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Today, that fund is is one of the largest in
industries.
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It's focused on secondaries and coinvestments
in the small cap and mid cap segments of the
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industry and, you know, has been active for
around 10 years.
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And then after that, so from 2023 onwards, we
started working on international version of the
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the US semi liquid fund.
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What is the purpose of the Evergreen franchise?
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And tell me why it exists.
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Benton has always, you know, been at the
forefront of of innovation.
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And our our aim really was to bring that
institutional experience, you know, where we
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work with some of the largest allocators
globally to give them access to small cap and
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mid cap.
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And our our ambition was to provide that access
to the wealth community or maybe some of the
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smaller institutions so that they can also
benefit from what what we think are compelling
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returns.
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And then also, I think in evergreen format,
another feature of the Pentium DNA is creating
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long term returns, maybe for individuals or,
you know, wealth distributors or smaller
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institutions and all the way up to sovereign
funds.
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And so with those vehicles, we have the ability
to serve those investors in the format that
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makes sense to them.
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Break down the evergreen structure.
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How does it work?
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So evergreen means, first of all, that there is
no expiry date on the vehicle.
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So if you compare that to a closed end fund,
you would be looking at a vehicle that instead
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of distributing capital as in when assets are
sold, we'll effectively take those
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distributions and recycle them to the benefit
of investors.
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So that's one different, feature.
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The other one is on a closed end format, what
you get is an administrative burden can be
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quite okay.
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So in that arcane dimension, you have a
multiplication of capital goals, a
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multiplication of distribution notices.
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And, you know, I need to monitor and spend
resources, you know, human resources and time
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and money to effectively monitor your
portfolio.
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Not to mention that when you get those
distribution, you have to figure out what's
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best to allocate at that point.
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And so with that comes, I think, one of the key
barriers to entry for private equity, which is,
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you know, having a team in place that can take
care and look after your capital.
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And then even if you're successful in building
a closed end program, it's gonna take you years
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to achieve your target NAV.
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So if you have a target net asset value in your
strategic asset allocation, it's gonna take you
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years to effectively get to that level and then
significant additional commitments to maintain
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it.
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And so those evergreen funds effectively
achieve or, you know, solve all of those
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issues.
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Single cap to go on day 1, highly funded
portfolio, which is typically diversified in a
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bent and format, whereby you can achieve your
NAV target quickly.
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And then, finally, if you bring that to, you
know, the small cap and mid cap segments of
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private equity where Benton, we spend most of
our time, it is even more difficult to get
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access to that segment because the GPs are
smaller.
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They tend to be oversubscribed or at least the
good ones.
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And then you need to build relationships with
them over a long period of time even before you
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can access them.
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And so we bring on top of the ease of
execution, you know, user experience, which is
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a little bit easier.
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We also bring that differentiated exposure
that, you know, frankly, a lot of the wealth
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community hasn't been able to access
historically.
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When we last chatted, you mentioned that in 5
years or so, you expect most of the top GPs to
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have evergreen structures.
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Why is that?
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I think the the user experience of evergreen
farms is the few you know, is is going to be
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the future.
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If you are a top quartile small cap and mid cap
GP and you have generated consistent returns
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across a number of cycles and you operate in a
niche, you know, typically an intersection of
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of region, segment, and sector, and you can
provide your investors with both a closed end
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experience and an evergreen experience, it just
makes sense to, you know, at least explore that
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second option.
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Now to be honest, to build an evergreen
program, you need multiple years.
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It's it's nowhere near easy.
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You know, you need to start from the back
office all the way to the front office, build
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your distribution channel, you know, understand
how you service those clients, very different
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servicing between wealth and institutional
channels.
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And then, also, you need to understand that
compounding in an evergreen format is a very
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different sport to generating a good IR in a
closed end format.
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And so I think, you know, a lot of those
investors with top decide, top quartile track
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records will consider that option.
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I have no doubt.
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But the real question is, can they really
achieve it and what?
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Because it's a very different and a resource
heavy and complex undertaking.
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Are there tax consequences to evergreen funds
versus traditional closed end fund structures?
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In terms of how you're compounding those funds,
your unrealized capital gains will effectively
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be held at the vehicle level and the GP would
be recycling on your behalf.
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And so there is a scenario where if you don't
redeem from the funds, you know, you don't use
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the semi liquidity feature, you know, you may
not, crystallize any form of of capital tax
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events.
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And so to some extent, you know, that's
something that may be a little bit more
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efficient, but, again, you know, that really
depends on individual countries and
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jurisdictions.
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It's like a 10 year fund is a forced
distribution at year 10 is another way to think
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about it.
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Who is your target customer for a product like
this?
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We effectively want investors who have a
minimum wealth level, but equally have a
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minimum income level and a minimum knowledge
level.
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So we're looking at investors who understand,
you know, public markets and private markets
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have a certain amount of activity in terms of
investing their assets and understand the
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illiquidity that comes with, you know, this
this this type of exposure and the risks
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associated to the semi liquidity feature, you
know, in an evergreen format.
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Tier 1 would be your typical warehouse, you
know, UBS, JB, CT, HSBC, etcetera.
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Tier 2 would be smaller banks with tier half
scale or larger asset managers, and then tier 3
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would be your family offices, multifamily
offices, independent wealth advisors,
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registered independent agents.
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And so the the opportunity stand is huge.
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You can see that institutions typically would
have 10 to 20% of private markets allocations
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when the wealth community is more 2 to 4%.
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Now the premiums that you can potentially get
depending on your asset selection, you know,
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for the wealth community is significant.
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And so what we see is a real tailwind here, you
know, a a real trend of the wealth community
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accessing those funds directly and or through,
you know, the the tier 1 or tier 2 banks.
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When it comes to typical private equity funds,
there's a criticism in the industry that by the
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time they get into the large wire houses, all
the alpha has been has been absorbed, and
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institutional investors are getting the alpha,
and then the high net worth clients will get
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the fund 15, 16 in a franchise.
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How do high net worth individuals know that
they're not being adversely selected in an
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evergreen fund structure?
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Let's break it down.
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Right?
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I mean, what are the different dimensions of
adverse selection?
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I think the the main balance is that the larger
banks are incentivized to effectively raise
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more capital more efficiently.
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And so there's been, I think, that overwhelming
flavor of large cap, you know, in those kind of
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on those shelves.
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Historically, you know, bigger banks are, you
know, more comfortable.
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And I think, you know, quite rightly, you know,
raising more capital in one go with a large cap
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brand so that their marketing is a little bit
easier and, also, they can still generate very
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good returns.
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Now if you think about take a step back here,
the large cap universe is much smaller than the
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mid cap one.
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And so in terms of generating that, I think
banks a a number of banks are already
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distributing small cap and mid cap funds in
particular mid cap.
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But in terms of the evergreen wave, tier 1
landscape is dominated by those large cap,
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single GP branded evergreen funds.
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Now going forward, you know, those funds will
have significant deployment pressure because of
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the commercial success.
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And you may argue that some of them may
experience some lower risk no performance as a
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result.
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And so to your point, what's important there is
that the banks themselves start diversifying
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their shells to incorporate more of that mid
cap and lower mid cap alpha, and evergreen
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funds can play a key role there, because they
bring that, you know, you know, easy to sell,
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easy to understand, and easily manageable
format to do to the clients.
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If you look at, you know, the wealth community
is not only through Bex.
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It's not only intermediated.
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The large part of wealth is direct access.
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We know family offices, multifamily offices,
asset managers.
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We can be a little bit more entrepreneurial.
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They have less inertia maybe than a tier one
bank.
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And those groups are already all over small gap
and make up.
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That's what we've experienced.
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Now that's why our US fund has been scaling so
quickly, and our international fund is also on
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that same trajectory of scaling.
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And those investors who have more of that
entrepreneurial mindset and understand the
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benefits of going away from large cap, you
know, we'd really, I think, create momentum and
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scale those small cap and mid cap managers so
they become eligible, you know, in terms of
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scale for that tier one distribution.
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Now, David, the second point, which is very
important here beyond the potential selection
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bias, ease of distribution, etcetera, is really
the fees.
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And it's only natural that the more
intermediaries you have between a client and a
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product, perhaps the more, you know, layers of
fees you're gonna have.
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And Appentant, we've we've paid particular
attention to this and there are multiple models
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emerging in the evergreen space.
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And how does it functionally work?
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Generally, allocation policies are based on on
the pro rata approach.
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So let's say you invest into a GPs program,
you're gonna have an allocation waterfall as
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it's called, and more often than not, GPs would
have what is called a pro rata approach
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following a principle of fairness.
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And so you would effectively have a number of
clients potentially participating in every
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single deal in that waterfall, and every one of
those clients will have portfolio guidelines
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and concentration guidance.
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And so based on that, you can determine the
actual bite sizes per type of deal that you
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wanna bring to the to the to the vehicle or to
the client.
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And then if there is over allocation in one of
the deals and the capacity is constrained, at
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that point, you prorate everyone back based on
their bite sizes.
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I mean, Benton is is, is, you know, you you
have to also keep in mind that most GPs are,
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you know, regulated.
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So there is a duty of fairness to you know,
transparency, fairness, and, you know,
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following that that pro pro rata approach that
the most GPs would effectively be implementing.
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Tell me about Pantheon's thesis on small and
middle market bio funds.
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The small cap and mid cap market is very
compelling for a number of reasons.
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First of all, the universe of companies in the
mid cap and small cap segments is way bigger
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than large cap.
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So you have more potential companies companies
to look at and buy and grow and, you know, in
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different sectors.
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And that typically really represents the the
the the reality of the economy.
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Right?
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I mean, large cap and mid cap is the economy.
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Now in the large cap space, the number of
companies is much lower.
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00:12:19,879 --> 00:12:22,664
They are worth a lot more, but you have less of
them.
220
00:12:23,144 --> 00:12:24,424
So that's the the supply part.
221
00:12:24,424 --> 00:12:29,384
In terms of demand, what we also like is that,
you know, large cap funds are just getting
222
00:12:29,384 --> 00:12:29,704
larger.
223
00:12:29,704 --> 00:12:33,644
I think it's a feature of of private markets
these days and for the last 5 years really.
224
00:12:33,784 --> 00:12:37,544
And what it means is that you still have the
very small number of companies where the number
225
00:12:37,544 --> 00:12:40,940
of dollars or the amount of dollars chasing
those companies just keeps on getting bigger.
226
00:12:41,399 --> 00:12:46,440
And so what you have there is GPs who struggle
to differentiate versus each other and have to
227
00:12:46,440 --> 00:12:49,875
differentiate on pricing, which means that they
typically use more leverage.
228
00:12:50,274 --> 00:12:54,294
And you can argue that some of the quality or
the selectivity ratio is also diminishing
229
00:12:54,355 --> 00:12:58,115
because if you need to deploy capital as a
large cap fund, you have, you know, 3, 4 year
230
00:12:58,115 --> 00:12:58,754
investment power.
231
00:12:58,754 --> 00:13:01,654
You can't just sit sit around and wait for for
years to come your way.
232
00:13:01,715 --> 00:13:07,299
So the combination of higher pricing, pressure
to deploy, higher leverage, we think is not
233
00:13:07,299 --> 00:13:09,959
necessarily the best place to be in for for
private wealth investors.
234
00:13:10,500 --> 00:13:11,700
So that's the first part.
235
00:13:11,700 --> 00:13:16,580
The second part is, you know, we've looked at,
a number of companies that we have invested in
236
00:13:16,580 --> 00:13:18,440
over a little bit more than 20 years.
237
00:13:18,934 --> 00:13:21,595
And what we have seen is a few key metrics.
238
00:13:21,975 --> 00:13:27,115
The first one is that in the small cap and mid
cap segment of that population of companies,
239
00:13:27,815 --> 00:13:32,129
the top line growth on an annualized basis is a
little bit higher every year.
240
00:13:32,129 --> 00:13:33,909
It's a little bit higher, but every year.
241
00:13:34,049 --> 00:13:38,049
So over time, that compounding power of
annualized top line growth is actually quite
242
00:13:38,049 --> 00:13:38,549
powerful.
243
00:13:39,009 --> 00:13:44,209
2nd, on the earning side, EBITDA EBITDA side,
what we've seen is that the actual delta
244
00:13:44,209 --> 00:13:48,774
between mid cap and large cap is also higher,
but a little bit more than the top line.
245
00:13:49,075 --> 00:13:54,355
And so what you see there is effectively some
form of compelling signs that as we buy those
246
00:13:54,355 --> 00:13:58,695
smaller businesses, they can grow faster, but
most importantly, they can grow profitably.
247
00:13:59,279 --> 00:14:04,339
You know, you have 10,000 GPs globally that we
track, and we only invest with a 120 to a 140
248
00:14:04,399 --> 00:14:04,879
of them.
249
00:14:04,879 --> 00:14:06,259
We call that the buy list.
250
00:14:06,720 --> 00:14:12,399
So that's 1.2 to 1.4 percent of the private
markets universe, and these GPs tend tend to
251
00:14:12,399 --> 00:14:14,235
have an intersection of factors that we like.
252
00:14:14,235 --> 00:14:18,575
So segment focus, sector focus, regional focus.
253
00:14:19,115 --> 00:14:24,154
What are the characteristics across the 1.2 to
1.4% of buyout managers that are on your buy
254
00:14:24,154 --> 00:14:24,654
list?
255
00:14:24,794 --> 00:14:28,919
In private equity, in the mid cap segment, you
wanna be a local speaking to locals.
256
00:14:28,919 --> 00:14:33,259
And so that balance would be split between the
US, Europe, and and Asia.
257
00:14:34,120 --> 00:14:39,419
And what we try to look for is a clear focus in
terms of 4 key dimensions.
258
00:14:40,440 --> 00:14:45,565
A stable partnership in team where the culture
is healthy, there's no succession issue, and
259
00:14:45,565 --> 00:14:49,725
we're looking for, you know, also a team that
has a a culture of grooming and developing the
260
00:14:49,725 --> 00:14:50,524
younger professionals.
261
00:14:50,524 --> 00:14:52,865
That's quite key to everything we're on the
right.
262
00:14:52,924 --> 00:14:58,029
2nd performance, we we aim for 1st and second
quarter GPs who have a proven track record.
263
00:14:58,029 --> 00:15:03,490
So, you know, typically, 2nd generation funds
at the very least and where we can track to
264
00:15:03,490 --> 00:15:05,809
some depth in terms of realized track record.
265
00:15:05,809 --> 00:15:09,410
So we wanna make sure that those GPs have
demonstrated that they can exit companies
266
00:15:09,410 --> 00:15:10,769
because buying them is the easy part.
267
00:15:10,769 --> 00:15:13,565
Selling them is the hard part with a
controllable downside risk.
268
00:15:13,565 --> 00:15:15,804
So a lower loss rate than the industry.
269
00:15:15,804 --> 00:15:18,464
Well, that's all the way down to the GPs we
work with.
270
00:15:18,845 --> 00:15:23,084
And then you have the process part where a lot
of the value creation in private equity is
271
00:15:23,084 --> 00:15:23,985
about the process.
272
00:15:24,204 --> 00:15:28,690
So having operating team that can implement a
repeatable playbook to effectively take those
273
00:15:28,690 --> 00:15:33,490
smaller businesses and, you know, build them up
on the way to the large cap exit through
274
00:15:33,490 --> 00:15:38,049
operational improvement, you know, improving
the processes, supply chain management, CRM,
275
00:15:38,049 --> 00:15:42,195
digitalization, go to market, you know, the
technology stack.
276
00:15:42,195 --> 00:15:46,115
So, you know, really kind of bringing that
value to, you know, entrepreneurs who don't
277
00:15:46,115 --> 00:15:50,434
necessarily have that that muscle memory or the
time, to be honest, to be the kind of building
278
00:15:50,434 --> 00:15:51,975
institutionalization of their platforms.
279
00:15:52,914 --> 00:15:54,455
And then, finally, the philosophy.
280
00:15:54,509 --> 00:15:57,490
And that's where, you know, small cap and mid
cap is very important to us.
281
00:15:57,870 --> 00:16:02,990
So the way we think about this is our sweet
spot fund size range on the pilot list is half
282
00:16:02,990 --> 00:16:04,129
a 1000000000 to 2,500,000,000.
283
00:16:05,309 --> 00:16:08,370
And then we spend most of our time at half a
1000000000 to 1,500,000,000.
284
00:16:08,910 --> 00:16:12,894
So in terms of enterprise value range, you're
gonna be looking at 50,000,000 to 400,000,000
285
00:16:13,835 --> 00:16:14,575
or thereabout.
286
00:16:15,195 --> 00:16:17,115
And those companies are real small cap and mid
cap.
287
00:16:17,115 --> 00:16:22,095
And, David, to be honest, the the pilot is, is
is always work in progress.
288
00:16:22,409 --> 00:16:23,370
We have churn.
289
00:16:23,370 --> 00:16:28,169
We let some funds go, you know, for a variety
of reasons, but mostly performance related or
290
00:16:28,169 --> 00:16:33,690
fund size getting too big or team issues, you
know, like, strategy drift where, you know, we
291
00:16:33,690 --> 00:16:37,504
feel that this is not called to depend on DNA
and, you know, the the GP is effectively moving
292
00:16:37,504 --> 00:16:39,985
into those large cut segments where we spend
less over time.
293
00:16:39,985 --> 00:16:43,764
How do you construct a portfolio of small to
middle market buyout?
294
00:16:43,985 --> 00:16:47,284
The strategy is driven by a few key
requirements.
295
00:16:47,929 --> 00:16:50,829
First of all, building the diversification of
the portfolio is key.
296
00:16:51,049 --> 00:16:56,250
2nd, the maturity profile because with that
maturity comes sometimes a better forecasting
297
00:16:56,250 --> 00:17:00,329
ability for distributions, which should which
can then be recycled into that evergreen
298
00:17:00,329 --> 00:17:03,585
program and create a certain form of
predictability of compounding.
299
00:17:04,125 --> 00:17:07,484
And then you have, obviously, the unfunded
capital core portion, so making sure your
300
00:17:07,484 --> 00:17:08,545
deployment is efficient.
301
00:17:09,244 --> 00:17:12,525
And with that, you really have the trifecta of,
you know, what makes an efficient compounding
302
00:17:12,525 --> 00:17:13,025
engine.
303
00:17:13,669 --> 00:17:18,950
Now in terms of general house view on the
market, what we have is 70% of our deployment
304
00:17:18,950 --> 00:17:20,730
into small cap and mid cap in growth.
305
00:17:21,349 --> 00:17:25,509
And then we inevitably pick up some of that
large cap exposure as well because the LP
306
00:17:25,509 --> 00:17:28,869
diversified trades that we buy, you know, big
portfolios coming to market on the secondary
307
00:17:28,869 --> 00:17:29,325
market.
308
00:17:30,044 --> 00:17:33,884
What we have is sometimes we can just handpick
the assets that we want, but most of the time,
309
00:17:33,884 --> 00:17:36,464
we have to buy, you know, a number of funds.
310
00:17:36,524 --> 00:17:38,524
And some of those, we'll have some large cap
exposure.
311
00:17:38,524 --> 00:17:41,884
So we always have that friction amount, you
know, typically a quarter or maybe a third of
312
00:17:41,884 --> 00:17:42,944
that large cap exposure.
313
00:17:43,099 --> 00:17:47,359
You mentioned GP led continuation vehicles,
secondaries, coinvest.
314
00:17:47,500 --> 00:17:52,240
Talk to me about the fees on those and also the
blended fees for Pantheon's funds.
315
00:17:52,460 --> 00:17:58,845
So if you look at this from, kind of the most
expensive to the cheapest, the most expensive
316
00:17:58,845 --> 00:18:01,244
way to access private markets is a primary
program.
317
00:18:01,404 --> 00:18:06,525
You you're gonna pay full stack to to the GP,
so typically 1.5 to 2% management fee based on
318
00:18:06,525 --> 00:18:10,765
commitments for 5 years and then stepping down
as the fund comes out of each investment
319
00:18:10,765 --> 00:18:11,220
period.
320
00:18:11,380 --> 00:18:15,380
And then you're gonna have a 20% over 8% hurdle
on an IRR basis.
321
00:18:15,380 --> 00:18:20,279
So that's always the most expensive way to to
to attest, you know, private markets.
322
00:18:20,819 --> 00:18:25,619
Now what we do is we effectively buy
diversified portfolios of those primary
323
00:18:25,619 --> 00:18:28,335
commitments 4 to 7 years into their life cycle.
324
00:18:28,335 --> 00:18:30,195
So they are deployed.
325
00:18:30,575 --> 00:18:32,815
You know, we have a high level of visibility on
the assets.
326
00:18:32,815 --> 00:18:34,355
The funded ratio is high.
327
00:18:34,654 --> 00:18:38,974
And, most importantly, we have a good ability
to forecast distributions and buy them at a
328
00:18:38,974 --> 00:18:39,474
discount.
329
00:18:39,535 --> 00:18:43,869
So with that discount, I think comes an ability
for Pantheon and, typically, the secondary
330
00:18:43,869 --> 00:18:49,789
market to price in the fee load of those
primary commitments in the future, but into
331
00:18:49,789 --> 00:18:51,250
your purchase price on day 1.
332
00:18:51,710 --> 00:18:55,525
And so although you keep on paying those fees,
you can effectively price them in into your
333
00:18:55,525 --> 00:18:56,005
purchase price.
334
00:18:56,005 --> 00:18:59,605
And so that benefits our clients in terms of,
you know, you're still paying the fees, but you
335
00:18:59,605 --> 00:19:02,505
get an immediate capital gain on on your on
your discount.
336
00:19:02,644 --> 00:19:04,265
So that's the second most expensive.
337
00:19:04,964 --> 00:19:08,585
The third one is, continuation vehicle already
way more cheaper.
338
00:19:08,644 --> 00:19:14,600
So on these funds, you typically have a
management fee, which is 50 to 75 pips of the,
339
00:19:14,600 --> 00:19:19,019
you know, assets in that continuation vehicle,
and then your carried interest would be tiered.
340
00:19:19,160 --> 00:19:23,820
And so the way it works is you would have a
combination of IR hurdles, sometimes TVPI
341
00:19:23,880 --> 00:19:26,494
hurdle, you know, in 1 or 2 or 3 tiers.
342
00:19:26,715 --> 00:19:30,875
And depending on the final performance of the
asset, you pay less or more performance fee
343
00:19:30,875 --> 00:19:32,715
depending on the TVPI or the IR.
344
00:19:32,715 --> 00:19:36,394
And so that protects your downside and
alignment of interest, and we like that.
345
00:19:36,394 --> 00:19:39,275
And then finally, you have the co investment
piece.
346
00:19:39,275 --> 00:19:44,049
And co investment is really a function of the
strength of your primary platform where you
347
00:19:44,049 --> 00:19:50,049
have, you know, those 120, 140 relationships
globally and you commit the vast majority of
348
00:19:50,049 --> 00:19:51,830
your primary capital with them.
349
00:19:51,890 --> 00:19:56,375
Those GPs effectively will come to you and
treat you as a partner because primary capital
350
00:19:56,375 --> 00:19:58,694
is the life and blood of a relationship in the
private markets.
351
00:19:58,694 --> 00:20:00,615
I mean, GPs need to raise every 3 to 4 years.
352
00:20:00,615 --> 00:20:04,295
And so if you're a predictable source of
commitments, you know, they would be working
353
00:20:04,295 --> 00:20:05,755
with you in between fundraisings.
354
00:20:06,134 --> 00:20:08,610
Do you track the co investments that you get
per manager?
355
00:20:08,610 --> 00:20:11,750
Is that a part of your selection criteria for
future commitments?
356
00:20:12,210 --> 00:20:14,690
Our priority always is to back the best
managers.
357
00:20:14,690 --> 00:20:16,369
I mean, that comes always first.
358
00:20:16,369 --> 00:20:21,009
Now it happens to us that a lot of the the best
managers in market are also some of our longest
359
00:20:21,009 --> 00:20:21,830
standing relationships.
360
00:20:22,210 --> 00:20:26,195
And as part of building those relationships
over a number of years and committing time and
361
00:20:26,195 --> 00:20:30,835
time again to their primary funds, we've built
those pretty accretive, no co investment
362
00:20:30,835 --> 00:20:35,555
relationships with them where they see the
benefit on their end of having access to a pool
363
00:20:35,555 --> 00:20:39,019
of capital, which is sophisticated and It can
help them close deals.
364
00:20:39,240 --> 00:20:44,380
And on our end, we can then get access to those
damn deals typically with no fee and no carry.
365
00:20:44,759 --> 00:20:48,440
So what it means is that, you know, we are in a
position where we generate the net performance,
366
00:20:48,440 --> 00:20:50,220
which is almost equal to gross performance.
367
00:20:51,045 --> 00:20:55,845
And on the topic of, you know, we discussed
earlier how, you know, the comes from,
368
00:20:55,845 --> 00:21:00,485
obviously, the upside, but also the fees,
having a a quarter or a third of your evergreen
369
00:21:00,485 --> 00:21:06,549
program allocated to assets with no fees or
almost zero fees is extremely powerful over the
370
00:21:06,549 --> 00:21:07,269
long term.
371
00:21:07,269 --> 00:21:08,149
So double click on that.
372
00:21:08,149 --> 00:21:10,789
You said that your gross and your net
performance is essentially the same.
373
00:21:10,789 --> 00:21:12,009
What did you mean by that?
374
00:21:12,149 --> 00:21:19,095
So if you coin best with the GP, let's say, GPA
brings you a co investment opportunity, GPA
375
00:21:19,095 --> 00:21:23,654
will invest a 100,000,000 from their flagship
fund, but, that's the maximum they can invest
376
00:21:23,654 --> 00:21:26,154
into that asset according to their
concentration guidelines.
377
00:21:26,375 --> 00:21:27,674
But the deal is a 150,000,000.
378
00:21:27,894 --> 00:21:30,714
So they have 50,000,000 of extra capacity that
they need to syndicate.
379
00:21:31,559 --> 00:21:35,960
At this stage, a GP will call our co investment
or primary team and say, you know, I have that
380
00:21:35,960 --> 00:21:37,099
50,000,000 stop.
381
00:21:37,240 --> 00:21:39,079
Would you like to participate into it?
382
00:21:39,079 --> 00:21:43,640
And in exchange for getting access to your co
investment capital, we won't charge you any
383
00:21:43,640 --> 00:21:45,419
management fee or any carried interest.
384
00:21:46,154 --> 00:21:47,595
That's what I mean by it's almost the same.
385
00:21:47,595 --> 00:21:50,555
The only difference between the gross and net
is really the expenses of the co investment
386
00:21:50,555 --> 00:21:51,455
vehicle itself.
387
00:21:51,755 --> 00:21:55,035
That would be, you know, the ongoing expenses
of the vehicle, admin, custodian, you know,
388
00:21:55,035 --> 00:21:56,174
ongoing expenses.
389
00:21:56,715 --> 00:22:01,730
But it's much lower than you would get from
paying a full stack 2% and twenty over 8 on the
390
00:22:01,730 --> 00:22:02,549
primary fund.
391
00:22:03,009 --> 00:22:07,090
And so that's why, you know, it's it's quite
powerful for us in an evergreen format to bring
392
00:22:07,090 --> 00:22:11,110
those deals to the wealth community in a format
where they pay no fees.
393
00:22:11,755 --> 00:22:15,434
So for every dollar that you invest in that co
investment bucket, you effectively write off a
394
00:22:15,434 --> 00:22:17,595
dollar of full fees that you would pay
somewhere else.
395
00:22:17,595 --> 00:22:18,954
Or, you know, you at least balance it out.
396
00:22:18,954 --> 00:22:23,934
And so, overall, your total expense ratio is,
you know, a little bit more more compelling.
397
00:22:24,109 --> 00:22:26,109
Talk to me on your co invest strategy.
398
00:22:26,109 --> 00:22:31,789
So if one of these 120 managers bring to you a
fully aligned co invest so you mentioned they
399
00:22:31,789 --> 00:22:32,769
invested a 100,000,000.
400
00:22:32,830 --> 00:22:35,549
They're offering 50,000,000 co invest, then
automatic yes.
401
00:22:35,549 --> 00:22:36,849
Talk to me about the process.
402
00:22:37,224 --> 00:22:42,044
Typically, we would close one deal out of 7
that we receive on the co investment side.
403
00:22:42,424 --> 00:22:47,304
The way it works is we have, obviously, the
primary knowledge of the GP, so we know exactly
404
00:22:47,304 --> 00:22:47,944
what they're good at.
405
00:22:47,944 --> 00:22:50,200
So we have that notion of GP fit.
406
00:22:50,200 --> 00:22:53,659
So instead of that fits the GP, it's kind of
strength and, you know, positioning.
407
00:22:54,200 --> 00:22:57,799
So that's always the, you know, the first step
is, are they within scope of their, you know,
408
00:22:57,799 --> 00:23:00,139
strategy and process and, you know, what
they're good at?
409
00:23:00,519 --> 00:23:03,559
And then we can also effectively underwrite the
asset directly.
410
00:23:03,559 --> 00:23:08,054
So we have a team internally of dedicated co
investment professionals who typically would
411
00:23:08,054 --> 00:23:11,674
have m and a backgrounds or direct investing
backgrounds.
412
00:23:12,294 --> 00:23:15,335
You know, most of them would have been with the
firm for a long time, so they have deep track
413
00:23:15,335 --> 00:23:15,835
records.
414
00:23:16,309 --> 00:23:20,869
And they've been working with the spectrum of
GPs, so they have effectively refined and
415
00:23:20,869 --> 00:23:25,829
finessed, you know, their deal selection skills
looking at different underwriting bags.
416
00:23:25,829 --> 00:23:25,990
Right?
417
00:23:25,990 --> 00:23:27,769
Because every GP will underwrite differently.
418
00:23:28,150 --> 00:23:32,615
And so that's really where, you know, we have
access to the GP track record, the sector
419
00:23:32,615 --> 00:23:32,934
dynamics.
420
00:23:32,934 --> 00:23:36,315
We have a whole database internally of deals
that we track on a quarterly basis.
421
00:23:36,855 --> 00:23:41,095
And so that really informs beyond the actual
underwriting of the GP, that really informs our
422
00:23:41,095 --> 00:23:43,994
views on, you know, that particular industry or
sector or asset.
423
00:23:44,149 --> 00:23:48,649
Just to play devil's advocate, you've already
underwritten these managers to be your top 1%.
424
00:23:49,269 --> 00:23:51,529
In essence, you're trying to outsmart the
managers.
425
00:23:52,069 --> 00:23:52,789
Why is that?
426
00:23:52,789 --> 00:23:55,750
And just talk talk to me about that.
427
00:23:55,750 --> 00:23:56,924
Why is it 1 in 7?
428
00:23:57,085 --> 00:24:01,105
Intuitively, it would seem like maybe you do
half the deals or 75% of the deals.
429
00:24:01,164 --> 00:24:04,684
Well, I think the the first thing is that we
have our own portfolio construction guidelines
430
00:24:04,684 --> 00:24:08,144
on the co investment program, and so we look to
be diversified as well.
431
00:24:08,445 --> 00:24:13,559
And so depending on the available capital for
any type of deals at any given time, there are
432
00:24:13,559 --> 00:24:17,159
deals that we just can't do or, you know, we
think is not the right fit, you know, for any
433
00:24:17,159 --> 00:24:17,980
given vehicle.
434
00:24:19,240 --> 00:24:25,319
Now you also need to think about the fact that
some GPs are maybe less experienced or we have
435
00:24:25,319 --> 00:24:30,985
a more nascent relationship with, and so our
comfort around, you know, their level of
436
00:24:30,985 --> 00:24:35,565
underwriting and the depth of our actual
investment record with them, including exits,
437
00:24:35,945 --> 00:24:39,865
is necessarily more shallow because we we
haven't been with them for the same amount of
438
00:24:39,865 --> 00:24:40,345
time.
439
00:24:40,345 --> 00:24:44,970
And so these GPEs, the underwriting bar is
naturally higher because we wanna make sure
440
00:24:44,970 --> 00:24:50,090
that as we build that investment relationship
with them, you know, it is middle of the
441
00:24:50,090 --> 00:24:51,869
fairway, no losses and, you know, compelling.
442
00:24:52,410 --> 00:24:53,549
You mentioned diversification.
443
00:24:53,850 --> 00:24:56,269
Across what vectors are you trying to
diversify?
444
00:24:56,984 --> 00:24:59,625
First of all, geography, very important.
445
00:24:59,625 --> 00:25:04,525
Our view at Penton and, you know, one of the
benefits of being a global integrated platform
446
00:25:04,664 --> 00:25:07,625
is that we follow global deployment patterns.
447
00:25:08,184 --> 00:25:11,704
And so the bulk of our deployment is in the US,
followed by Europe, followed by Asia.
448
00:25:11,704 --> 00:25:15,240
So, you know, we have some concentration in
your portfolio guidelines from a geographic
449
00:25:15,240 --> 00:25:15,740
perspective.
450
00:25:15,799 --> 00:25:23,559
2nd, we look at, effectively, concentration per
sector, stage, and we also pay particular
451
00:25:23,559 --> 00:25:25,980
attention to levels of leverage and entry
evaluations.
452
00:25:26,119 --> 00:25:30,634
So we don't wanna build a co investment program
where we just accumulate a deployment at the
453
00:25:30,634 --> 00:25:33,775
the peak of a cycle with unsustainable levels
of leverage.
454
00:25:34,154 --> 00:25:38,315
So we pay attention to, you know, a different a
number of vectors, you know, across, you know,
455
00:25:38,315 --> 00:25:43,960
geographies, sectors, vintage as well, GPs, and
all the way down to the actual idiosyncratic
456
00:25:44,100 --> 00:25:44,900
factors of the deals.
457
00:25:44,900 --> 00:25:48,019
And I can tell you that some GPs have better
track record than others on the investment
458
00:25:48,019 --> 00:25:48,259
side.
459
00:25:48,259 --> 00:25:51,860
And so when those come through, you know, the
the bar is still really high, but we know that
460
00:25:51,860 --> 00:25:53,539
we've had so much success with them.
461
00:25:53,539 --> 00:25:56,325
You know, some GPs, we've never lost a cent
with on the investment side.
462
00:25:56,404 --> 00:25:58,345
You know, it's been just a very smooth run.
463
00:25:58,565 --> 00:26:03,284
And so when those deals come through, there is
that embedded muscle memory in the firm where
464
00:26:03,284 --> 00:26:06,404
perhaps, you know, we can we can effectively
have more conviction from the onset of the
465
00:26:06,404 --> 00:26:06,904
process.
466
00:26:07,204 --> 00:26:10,984
But if it's a more nascent relationship, we
would be looking at effectively reunderwriting
467
00:26:11,599 --> 00:26:15,680
quite substantially and forming a view on, you
know, is that really what we think is a is a
468
00:26:15,680 --> 00:26:16,320
good deal?
469
00:26:16,320 --> 00:26:20,339
Do you expect the evergreen structure to make
its way into the venture capital ecosystem?
470
00:26:20,559 --> 00:26:22,720
I think it will, over time.
471
00:26:22,720 --> 00:26:24,799
I mean, venture is, is a very different animal.
472
00:26:24,799 --> 00:26:29,375
If you compare it to small cap, mid cap, and
growth, no, late stage growth, I would say,
473
00:26:29,375 --> 00:26:31,295
because venture can go all the way to early
stage growth.
474
00:26:31,295 --> 00:26:35,855
You know, what really differentiates it is
venture can be a little bit, you know, of a
475
00:26:35,855 --> 00:26:37,315
black box in terms of valuations.
476
00:26:37,775 --> 00:26:42,049
So although you may have momentum and, you
know, some some pretty significant unrealized
477
00:26:42,190 --> 00:26:46,029
gains, you never quite know what's the process
that got you to that valuation.
478
00:26:46,029 --> 00:26:50,769
And and the most successful venture GPs
wouldn't be sharing any form of significant
479
00:26:50,830 --> 00:26:54,404
details on on the valuation methodology because
it's it's quite private for the right reasons.
480
00:26:54,484 --> 00:26:57,365
And you sometimes don't even know what the
performance level of the asset is.
481
00:26:57,365 --> 00:27:00,505
You know, you don't know what the revenues are,
you know, the the top line or the breakeven
482
00:27:00,565 --> 00:27:05,845
expectations or, you know, the the
profitability pathway, and you don't know the
483
00:27:05,845 --> 00:27:06,484
the burn rate.
484
00:27:06,484 --> 00:27:08,965
I mean, all of this is quite confidential in a
lot of situations.
485
00:27:08,965 --> 00:27:13,650
And so, you know, you have to think that, you
know, that's one key difference versus small
486
00:27:13,650 --> 00:27:17,890
cap, mid cap, and growth where you have a great
level of transparency and if you if you've been
487
00:27:17,890 --> 00:27:19,250
in those segments for quite some time.
488
00:27:19,250 --> 00:27:24,744
Now the second part is that evergreen funds
need some form of predictable distributions so
489
00:27:24,744 --> 00:27:28,444
that you can recycle those distributions and
compound them to the benefit of your investors.
490
00:27:29,384 --> 00:27:33,784
And venture, effectively, can be if you're very
successful in venture, you're gonna end up
491
00:27:33,784 --> 00:27:37,910
probably having a a fairly large number of IPOs
at exit.
492
00:27:37,910 --> 00:27:41,029
You know, that's typically what, you know,
where, you know, the the venture managers
493
00:27:41,029 --> 00:27:44,009
generate a lot of their advice for listed,
like, public listings.
494
00:27:44,789 --> 00:27:49,269
When you do that, you're effectively, you know,
transferring your shares in public markets, and
495
00:27:49,269 --> 00:27:51,049
you typically have locked locked barriers.
496
00:27:51,565 --> 00:27:55,164
Not only are you locked, but you also have a
more valuation daily, you know, profile where
497
00:27:55,164 --> 00:27:56,705
your share price can go up and down.
498
00:27:57,164 --> 00:27:59,965
And, honestly, you have no control over this,
so you can hedge it, but, you know, it's
499
00:27:59,965 --> 00:28:00,465
expensive.
500
00:28:00,605 --> 00:28:04,365
So that's always a bit of a you know, you never
know where you're gonna get your liquidity and
501
00:28:04,365 --> 00:28:05,105
what valuation.
502
00:28:05,890 --> 00:28:09,670
And then the last thing is the venture
portfolio DPNIs.
503
00:28:09,890 --> 00:28:14,769
So, you know, the actual distributed to paid in
ratios, you know, for the 1st few years, you
504
00:28:14,769 --> 00:28:15,910
typically get nothing.
505
00:28:16,609 --> 00:28:20,794
And when you get something that's after
crystallizing a large amount of losses, I've
506
00:28:20,794 --> 00:28:24,815
heard multiple times that a good venture fund
should lose 40 to 50% of its capital.
507
00:28:25,595 --> 00:28:28,335
I mean, that's a staggering loss rate if you
think about it.
508
00:28:28,634 --> 00:28:32,954
You know, if you lose $1 out of 2 over a period
of time, you know, you need to make sure that
509
00:28:32,954 --> 00:28:36,119
whatever you have left in your book is gonna
generate at least 2 times and you only return
510
00:28:36,119 --> 00:28:37,099
cost at that point.
511
00:28:37,480 --> 00:28:42,039
And so, you know, there's that kind of
volatility in that behavior combined with lack
512
00:28:42,039 --> 00:28:47,019
of forecasting ability on distributions and
that back ended public exposure valuation
513
00:28:47,160 --> 00:28:52,005
volatility that may actually lead you to have
one of the most volatile evergreen valuation
514
00:28:52,065 --> 00:28:53,605
environments ever created.
515
00:28:54,305 --> 00:28:59,125
Small buyout competes with venture capital and
institutional, portfolios.
516
00:28:59,664 --> 00:29:04,920
Why should an LP put their incremental dollar
into small buyout versus venture capital?
517
00:29:05,080 --> 00:29:10,759
In venture, my opinion is that you really wanna
go with those top tier groups, and, you know,
518
00:29:10,759 --> 00:29:14,539
those top tier groups are heavily
oversubscribed.
519
00:29:14,759 --> 00:29:19,345
So what that means is that, you know, your
potential deployment budget, if you're a large
520
00:29:19,345 --> 00:29:23,744
institution or even an institution, you know,
you're gonna be capped in terms of what you can
521
00:29:23,744 --> 00:29:27,105
deploy if you wanna maintain that, you know,
top quartile or, you know, top tier, you know,
522
00:29:27,105 --> 00:29:28,005
venture focus.
523
00:29:28,944 --> 00:29:32,384
2nd, you know, if you wanna do venture and you
want the risk reward to look like small cap,
524
00:29:32,384 --> 00:29:36,840
you need to diversify your venture bucket
extensively Because if you start taking GP risk
525
00:29:36,840 --> 00:29:41,400
or sector risk or, you know, idiosyncratic risk
with your venture allocation, this won't end
526
00:29:41,400 --> 00:29:41,900
well.
527
00:29:42,360 --> 00:29:45,320
And that diversification applies for GP but
also for vintage.
528
00:29:45,320 --> 00:29:47,815
There's no I mean, it's very important.
529
00:29:47,815 --> 00:29:49,974
It's crucial actually to participate in the
venture.
530
00:29:49,974 --> 00:29:54,375
If you come into venture, you need to come in
for a number of years every year so that, you
531
00:29:54,375 --> 00:29:57,335
know, you can participate in multiple vintages
because in venture, you have good and bad
532
00:29:57,335 --> 00:29:57,835
vintages.
533
00:29:58,375 --> 00:30:01,914
For example, trains coming out of COVID, the
valuations went through the roof.
534
00:30:02,380 --> 00:30:05,900
You know, venture service b, c, d, you were
looking at the significant increase in
535
00:30:05,900 --> 00:30:06,880
valuation trends.
536
00:30:07,259 --> 00:30:10,380
And so if you only came into those 2 or 3
vintages, you would be probably looking at
537
00:30:10,380 --> 00:30:12,619
losses or, you know, some form of volatility
today.
538
00:30:12,619 --> 00:30:16,394
And so you really wanna make sure that you
commit to, like, a 5 to 10 year program.
539
00:30:16,714 --> 00:30:20,894
Now I think there's that myth, David, that, you
know, small cap is more is volatile.
540
00:30:21,195 --> 00:30:22,015
It's a myth.
541
00:30:22,714 --> 00:30:26,315
If you look as I've explained earlier, you
know, the only thing that doesn't matter in
542
00:30:26,315 --> 00:30:27,695
private equity is size.
543
00:30:28,234 --> 00:30:30,095
Scale matters, but size doesn't.
544
00:30:30,234 --> 00:30:35,690
So if you go into small cap and mid cap GPs or
small cap GPs, you're gonna be you're gonna be
545
00:30:35,690 --> 00:30:36,490
buying smaller assets.
546
00:30:36,490 --> 00:30:36,730
Yes.
547
00:30:36,730 --> 00:30:40,029
So potentially a little bit more volatile, but
better alignment as we discussed.
548
00:30:40,809 --> 00:30:42,009
You're investing with the principal.
549
00:30:42,009 --> 00:30:44,170
You're probably one of the first institutional
investors in.
550
00:30:44,170 --> 00:30:48,595
You can bring your playbook, sector specialty,
regional specialty, you know, your track record
551
00:30:48,595 --> 00:30:51,315
and process and philosophy to really help the
entrepreneur grow.
552
00:30:51,315 --> 00:30:52,355
And in that, there is magic.
553
00:30:52,355 --> 00:30:56,994
The alignment between a GP that is very focused
and an entrepreneur that wants to scale is
554
00:30:56,994 --> 00:30:57,734
really powerful.
555
00:30:58,035 --> 00:31:02,930
Now those assets also tend to be profitable and
growing quickly, and you buy them in a fraction
556
00:31:02,930 --> 00:31:06,230
of what you pay you would pay for a large cap
asset with a fraction of the leverage.
557
00:31:06,930 --> 00:31:08,769
And so what matters here is the risk spectrum.
558
00:31:08,769 --> 00:31:09,570
It's not size.
559
00:31:09,570 --> 00:31:13,750
It's actually how much you pay, what's the
leverage, and how much the asset will grow.
560
00:31:14,695 --> 00:31:16,634
And so I think that myth needs to be debunked.
561
00:31:16,695 --> 00:31:21,174
Is that myth there because small cap public
companies are much more volatile than mid and
562
00:31:21,174 --> 00:31:22,555
large public companies?
563
00:31:22,855 --> 00:31:28,119
Small cap companies, you know, would not have
the same features than small cap private
564
00:31:28,119 --> 00:31:28,519
companies.
565
00:31:28,519 --> 00:31:30,140
So the public companies are different.
566
00:31:30,519 --> 00:31:33,240
And on the small cap private side, as I
mentioned, you know, you're looking at I can't
567
00:31:33,240 --> 00:31:34,440
comment on public companies.
568
00:31:34,440 --> 00:31:35,400
It's not my specialty.
569
00:31:35,400 --> 00:31:37,240
But on the on the private side, I can comment.
570
00:31:37,240 --> 00:31:42,105
And you're looking at great alignment, cheaper
valuation, lower leverage, and potentially
571
00:31:42,105 --> 00:31:45,244
asymmetric growth in terms of top line EBITDA
margins.
572
00:31:45,865 --> 00:31:51,784
And then, David, the best part about this is on
the private side, large cap funds are getting
573
00:31:51,784 --> 00:31:52,284
larger.
574
00:31:52,650 --> 00:31:56,109
This I mean, this is a key part of the
investment thesis here.
575
00:31:56,970 --> 00:31:58,590
These funds have pressure to deploy.
576
00:31:58,890 --> 00:32:03,369
And because they have that pressure, they
typically would come for you know, to buy
577
00:32:03,369 --> 00:32:07,049
tokens, small add on acquisitions from small
cap funds or maybe platforms from mid cap
578
00:32:07,049 --> 00:32:09,865
funds, and that is gonna be a once in a
lifetime opportunity.
579
00:32:09,865 --> 00:32:11,805
The large cap segment has never been larger.
580
00:32:12,345 --> 00:32:14,125
It's never been tested at that scale.
581
00:32:14,424 --> 00:32:17,625
And if you look at the availability of
leverage, the cost of leverage, you know,
582
00:32:17,625 --> 00:32:22,120
following the Fed pivot, There's opportunity
here where, you know, leverage will remain
583
00:32:22,120 --> 00:32:25,000
expensive, but will become a little bit cheaper
versus the last, you know, few years.
584
00:32:25,000 --> 00:32:29,240
So that may reopen the flood case in terms of,
you know, those large cap GPs being able to
585
00:32:29,240 --> 00:32:31,320
effectively start investing at some more scale.
586
00:32:31,320 --> 00:32:34,600
And if they don't have access to that leverage,
what they were gonna they're gonna have to do
587
00:32:34,600 --> 00:32:39,204
is focus on m and a integration, small add ons,
stock ins, and that also works in no favor
588
00:32:39,204 --> 00:32:42,724
because they're gonna be leaning into those
small cap GPs to effectively buy assets that
589
00:32:42,724 --> 00:32:43,464
have been created.
590
00:32:44,005 --> 00:32:47,284
What would you like our audience to know about
you, about Pantheon, or anything else you'd
591
00:32:47,284 --> 00:32:48,390
like to shine a light on?
592
00:32:48,450 --> 00:32:55,569
Pantheon is really a firm that has the interest
of the clients at heart, and that's something
593
00:32:55,569 --> 00:33:00,049
that we spend so much time on, you know,
building over 4 decades with the institutional
594
00:33:00,049 --> 00:33:00,549
community.
595
00:33:01,144 --> 00:33:05,384
And the brand there has been well established
in terms of, you know, being great stewards of
596
00:33:05,384 --> 00:33:08,825
capital and working with our institutional
investors to deliver access to small cap and
597
00:33:08,825 --> 00:33:09,484
mid cap.
598
00:33:10,024 --> 00:33:14,184
And so that gateway positioning or, you know,
being a point of access for larger
599
00:33:14,184 --> 00:33:19,580
institutions, I think, is what we're bringing
now to the wealth community and maybe smaller
600
00:33:19,580 --> 00:33:22,080
institutions or, you know, family offices,
multifamily offices.
601
00:33:22,940 --> 00:33:26,640
And over the last 10 years, we've brought that
in a very innovative format.
602
00:33:26,860 --> 00:33:27,180
Right?
603
00:33:27,180 --> 00:33:32,734
So we were first movers or early movers into
that semi liquid kind of story journey, and,
604
00:33:32,734 --> 00:33:37,615
you know, we look to effectively launch new
products as we scale, and we're gonna be
605
00:33:37,615 --> 00:33:41,634
bringing very differentiated risk rewards in
terms of, you know, instead of being large cap,
606
00:33:41,775 --> 00:33:46,710
you know, levered risk reward, we're gonna be
looking at providing that gateway access,
607
00:33:46,710 --> 00:33:50,470
single access, core access, diversified access
to to the wealth community.
608
00:33:50,470 --> 00:33:55,829
And so in that, I think there is a, you know, a
great kind of cost assessment and cost to, you
609
00:33:55,829 --> 00:33:57,269
know, cost to return analysis.
610
00:33:57,269 --> 00:34:01,214
We are great stewards, cost focused, making
sure that our solutions are cost efficient.
611
00:34:01,595 --> 00:34:05,434
But with that small cap and mid cap focus, we
think we can generate compelling return in
612
00:34:05,434 --> 00:34:05,934
some.
613
00:34:06,315 --> 00:34:10,894
And so the the ratio of, you know, cost to to
potential would be compelling as a result.
614
00:34:11,275 --> 00:34:15,730
And that's really where I think the Pentium DNA
shines through is we've been so diligent with
615
00:34:15,869 --> 00:34:18,909
that, you know, kind of focus on, you know,
making sure we provide the best products.
616
00:34:18,909 --> 00:34:22,590
And for me, personally, David, I'm incredibly
excited to be a pull for the manager on the
617
00:34:22,590 --> 00:34:23,309
evergreen side.
618
00:34:23,309 --> 00:34:25,789
Well, Victor, you've been a trailblazer in the
evergreen space.
619
00:34:25,789 --> 00:34:29,105
Thank you for sharing your story and Pantheon
story, and look forward to sitting down soon.
620
00:34:29,105 --> 00:34:30,224
Thank you for having us, David.
621
00:34:30,224 --> 00:34:31,684
Look forward to staying in touch.
622
00:34:31,905 --> 00:34:33,045
Thank you for listening.
623
00:34:33,184 --> 00:34:38,164
The 10x Capital podcast now receives more than
a 170,000 downloads per month.
624
00:34:38,370 --> 00:34:41,590
If you are interested in sponsoring, please
email me at david@10xcapital.com.
