E282: Why LPs are Investing into Independent Sponsors
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What role does TIFF play in the independent sponsor market?
Give me a sense for where TIFF is today as a business. To give you a sense of where TIFF is as a business today, David, I really do think it's impactful to start with a little refresher of where we came from and what we do to give your listeners a better idea of the value add that we bring to the table here at TIFF. TIFF was founded over 30 years ago. really to provide investment solutions primarily to nonprofit institutions at the time where we specialized in outsourced CIO solutions and private market solutions. We have two distinct business lines. We have our OCIO or Outsourced Chief Investment Officer business that manages the full wallet share of our client portfolios. That's what we've been doing since inception, since 1991.
always had a strong focus on alternatives and private markets. And then that second business line that we have since 1997, we've been offering standalone private equity and venture capital strategies, which is where I focus today. And those strategies combined, we've grown to a roughly $9 billion organization with over $3 billion of that in privates, where we continue to serve our historic nonprofit ENF base and also expanding our footprint into the wealth management and family office community, where we've seen a lot of demand for the types of strategies and customization that we can bring to the marketplace. deliver what we view as high quality investment returns consistently and over long periods of time for them.
So many of these large institutions, they're just overpowered with so many resources and so many people on staff that these smaller and mid-sized firms just don't have. And they viewed that as such an inequality and wanted to help out any ways they could to that community.
We were just chatting offline and you mentioned that you were at the McGuire Woods Conference and there was over a thousand independent sponsors at this conference. Tell me about that conference and what does that tell you about the space today?
How has the independent sponsor landscape evolved in recent years?
Yeah. So TIFF has really several avenues of sourcing great sponsors and making sure we consistently fill our pipeline of top investors to keep that deal funnel full of new ideas. One of those sourcing advantages or avenues is through industry events and conferences like McGuire Woods, which we've been attending for several years now. And for anyone who hasn't been there before, really picture a giant conference hall full of a few thousand people at an individual tables, essentially speed dating with a 30 minute timer. Then you move on to your next table and so on and so forth for two to three straight days. Uh, David, I lost my voice within the first three minutes, which, which was fun to battle through.
Um, And it's important to note this event has grown drastically over the last five, 10 years since we've been going, in part because McGuire Woods as a firm has really done a terrific job, but also because this segment of the market has been experiencing really massive increase in size.
So give me some numbers. How big has this independent sponsor market gotten in the last few years?
The independent sponsor model has existed in various forms for decades. Its success over the past several years, both in terms of deal by deal returns and in serving as a pathway to raising a committed fund. it is starting to attract more seasoned investors who have left established PE firms to launch their own independent platforms or hang a shingle, as we like to say. This shift has really raised the overall quality of professionals in the market that was previously populated largely by younger investors without an attributable track record or
What are the sourcing advantages for independent sponsors?
Ex-bankers or consultants who are seeking to transition into investing or even operators pursuing deals in their niche areas of focus. Even as recently as a decade ago, when we started in this segment of the market, David, we started back in 2014 at TIFF. encountering an independent sponsor at the time was a relatively rare occurrence. But today, this universe has grown. It encompasses a huge, wide range of independent sponsor types and profiles.
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Chapters
8 chapters
1
What role does TIFF play in the independent sponsor market?
0:00–2:02
2
How has the independent sponsor landscape evolved in recent years?
2:02–3:47
3
What are the sourcing advantages for independent sponsors?
3:47–4:56
4
What defines a high-quality independent sponsor?
4:56–6:34
5
How do independent sponsors structure their fees and economics?
6:34–8:17
6
What are the benefits of deal-by-deal investing for independent sponsors?
8:17–10:23
7
How does TIFF assess the quality of independent sponsors?
10:23–12:10
8
What future trends are expected in the independent sponsor market?
12:10–24:20
Speakers
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