It’s been an extraordinary week in private markets.
For one thing we have seen the birth of a new listed alternatives superpower in the form of Brookfield Asset Management’s acquisition of 62 percent of Oaktree Capital Management. Brookfield won’t own 100 percent of Oaktree for at least 10 years, but on today’s numbers the combined entity has an AUM figure to rival Blackstone’s (most of which is in real estate) and offer a full suite of private markets products.
Elsewhere, we have witnessed criminal allegations against senior industry figures.
Among 33 parents charged for alleged roles in a college admissions bribery and money laundering scam uncovered by the FBI, there were a handful of senior private markets execs. One of these was Bill McGlashan, managing partner and founder of TPG’s impact vehicle, The Rise Fund. He has been accused of agreeing to a $50,000 donation to a non-profit with the understanding that his son’s test answers would be corrected after the entrance exam. He’s also accused of conspiring to bribe an athletic director at the University of Southern California to facilitate his son’s admission as a recruited athlete – in this case as a football punter. The kicker? His son’s high school doesn’t even have a football team.
What can we learn from this tawdry case, beyond the obvious fact that senior figures in private equity would do well to act within the law?
There are certainly some crisis management takeaways. TPG acted quickly in response to the McGlashan allegations, placing him on indefinite administrative leave the same day and installing TPG co-chief executive Jim Coulter as interim managing partner of TPG Growth and The Rise Fund – not a bad replacement to have on hand to reassure investors.
TPG was already in the process of raising the next Rise Fund and had held a first close in February. McGlashan’s departure did not trigger a key person event but TPG has smartly given investors the chance to reaffirm their commitments. With the bench that TPG has, I would be surprised if many investors decide to rescind their commitments.
Reporting on this story, one can’t help but wonder whether there are other parents out there – maybe other PE folk – who have participated in the college admission scam but have so far escaped the FBI’s grasp. Hopefully there is not one at your firm; it may be worth revisiting the crisis management manual just in case.
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