0:00

Hello, I'm Ted Sides, and this

0:02

is Capital Allocators. This

0:10

show is an open exploration of

0:13

the people and process behind capital

0:15

allocation. Through conversations with

0:17

leaders in the money game, we learn

0:19

how these holders of the keys to

0:21

the kingdom allocate their time

0:23

and their capital. You

0:25

can join our mailing list

0:27

and access premium content at

0:30

capitalallocators.com. All

0:32

opinions expressed by Ted and podcast guests

0:34

are solely their own opinions and do

0:36

not reflect the opinion of capital allocators

0:38

or their firms. This podcast is for

0:41

informational purposes only and should not be

0:43

relied upon as a basis for investment

0:45

decisions. Clients of capital allocators or podcast

0:47

guests may maintain positions in securities discussed

0:49

on this podcast. My

0:52

guest on today's show is

0:54

Jan Robark, founder of Dawson

0:56

Partners, a leading global

0:58

alternative asset manager overseeing $20

1:00

billion that provides innovative structured

1:02

solutions to the private markets.

1:06

Formed initially as Whitehorse Liquidity Partners

1:08

and rebranded as Dawson, both

1:10

names are inspired by Jan's 1,000

1:13

kilometer bicycle journey in the Canadian

1:15

Arctic that led to his becoming

1:17

a trailblazer in the market. The

1:20

conversation covers Jan's entrepreneurial path,

1:22

including 14 years in

1:24

the formative stages of Canadian pension

1:26

CPPIB. We discuss

1:28

the success of the private equity industry, valuations,

1:31

liquidity, the necessity of

1:34

scale, and creating solutions

1:36

that balance the needs of GPs

1:38

and LPs. We turn

1:40

to the process and culture at Dawson and

1:43

the exciting future of the secondary

1:45

market. Before we

1:47

get going, here's a shout out to

1:50

all the investor relations and business

1:52

development professionals. Your

1:54

role is one of the toughest in the industry,

1:57

because unlike in many other industries, the functions

2:00

of marketing, sales, and customer

2:02

relations rarely drive purchase decisions

2:04

in investing. It's often

2:06

hard to know how to move the

2:09

ball forward when allocators are busy and

2:11

opaque about their process. So

2:14

we decided to create a Capital

2:16

Allocators University Experience just for you.

2:19

On December 3rd and 4th in

2:21

New York City, I'll be joined

2:23

by your peer and superstar Rahul

2:25

Mudgal, Branding Expert Gen ProSec,

2:28

Founder of ProSec Partners, Conference

2:30

Wizard Ron Biscardi, Founder of

2:32

iConnections, and Investment Leader

2:35

Sarah Samuels from NEPC, Dave

2:37

Morehead from Baylor, and Shannon O'Leary

2:40

from St. Paul Minnesota Foundation. To

2:43

help you learn best practices

2:45

for understanding allocators, developing relationships

2:47

with investors, and building

2:49

a brand through workshops and peer

2:51

discussions. You can learn

2:53

more and sign up to join us at

2:57

capitalallocators.com/University. Thanks

3:00

so much for spreading the word about

3:02

our newest Capital Allocators University course for

3:05

investor relations and business development

3:07

professionals. Please enjoy my

3:09

conversation with Jan. Hello, Mark.

3:13

Jan, great to see you. Hello, Ted. Why

3:17

don't you take me all the way back

3:19

to your upbringing? Well, my

3:21

upbringing is probably a little bit different than

3:23

most finance peoples in the fact that I

3:25

grew up in a family that was very

3:27

left leaning to say the least. And

3:30

so as I was growing up, the narrative is

3:32

that the 1% were not necessarily

3:34

the best type of people. And

3:37

through all of that somehow or another, I

3:40

stumbled into finance and here I am 48

3:42

years later. So what was that

3:44

like with the 1% not

3:46

being the best people, whatever that

3:48

meant in your family? Well, the

3:50

question was whether or not you could be

3:53

successful and be a good person. And

3:56

so it was a narrative that

3:58

was less than a good person. the

4:00

money and more about taking care

4:02

of a

4:07

co-op term that I

4:09

had where I ended up

4:13

with the investment banking. I showed up the first day with an earring in

4:15

my ear. I had khaki pants on

4:17

and a sailor jacket which is basically a

4:20

suit jacket with gold buttons. The

4:22

individual that I first saw brought me

4:24

into the office and they basically said,

4:27

you're going to have to take that hearing off to work in

4:29

investment banking. I said really? I've had that for

4:31

a couple years and this is late 90s. So this

4:33

was a very different era. He said, yeah I don't know what

4:35

to tell you, you got to take that hearing off to work in investment banking. So

4:37

I took the hearing off. Two, three days later, brings

4:40

me back into the office and he's like, just

4:42

so you know, you're wearing khakis and a sailor

4:44

jacket with gold buttons. I think you think you're

4:46

wearing a suit but you're not wearing a suit

4:48

and everybody's noticing so you should go buy yourself

4:50

a suit. And I was like, I don't have the money to

4:52

buy a suit and he's like, here's 200 bucks,

4:55

go buy yourself a suit and come

4:57

back to the office. So off I

4:59

went and that was my investment banking

5:02

opportunity which was a very eye-opening experience.

5:05

So outside of your clothing style, what

5:07

did you learn in those early years?

5:10

I learned how to work hard.

5:13

I learned a lot about finance.

5:15

Finance was a bit mystical

5:17

for me because I hadn't grown up

5:19

in a world where finance was really

5:21

discussed. So it was a different world

5:23

for me that I was navigating and

5:25

I was growing quite significantly during that

5:27

period of time. Learning lots, working

5:30

hard. Where'd you go from there? Somehow

5:32

or another, I got a full-time offer

5:34

to go back to this investment banking

5:37

firm and in my

5:39

third year university, I went to Sweden for

5:41

six months. I met three Mexicans there. I

5:44

went to Mexico during spring break of

5:46

my fourth year and I realized, hey,

5:48

there's an opportunity here to import Mexican

5:50

furniture from Guadalajara to Toronto and I

5:53

came back and I thought that was

5:55

a much better idea than taking the

5:57

investment banking offer. So when the person

5:59

calls, and said, hey, I got good news.

6:01

He worked hard to get the sailor jacket guy

6:03

a full-time offer. It was not obvious at the

6:06

end of the day. But he came back and

6:08

he's like, I've got great news. I've got an

6:10

offer for you. And I said, I'm not going

6:12

to take it. And he's like, well, what did

6:14

I lose out to? Is it another firm? I

6:16

was like, no, I'm going to start a Mexican

6:18

furniture store. And he's like, sorry, we lost the

6:20

sailor jacket guy to a Mexican furniture store. I

6:23

did that for about two to three years. And

6:25

you know, in a funny kind of way, it

6:27

was both the best and the worst thing I

6:29

ever did, mostly the best thing. I really learned how

6:31

to take idea in your head and make it happen and

6:33

how to make decisions at a young age. Nobody was telling

6:35

you what to do. You really didn't have any bosses. You

6:38

were the boss. So you just had to make best

6:40

decision with available information. And that's something

6:42

I've taken through my whole career with

6:45

that. What's your favorite example of

6:47

that in the Mexican furniture store? Oh, boy,

6:49

there's so many. I mean, we're going to

6:51

have to go through and have a beer over

6:53

this one at some point we essentially

6:55

had wine racks that was going in the

6:57

wrong direction, because we literally had no idea

7:00

what furniture was or how to go about

7:02

doing it. So we were learning lots. And

7:04

I did this with a partner of mine

7:06

and we were 22 and 24. And

7:09

lots of big lessons learned, including

7:12

resilience. I think that's probably

7:14

the one that I learned the most is

7:16

how to just lean into yourself

7:19

and create conviction around an idea

7:21

that you had and that with

7:23

grit and patience and passion and

7:25

persistence, humans can do a lot

7:28

more than they think they can. What

7:30

happened after those couple of years? So

7:34

it was now 01 and

7:36

the tech bubble was bursting and decided that probably not

7:38

the best thing to do was be

7:40

in the Mexican furniture store despite all the

7:42

great experiences. So somehow

7:44

I got a job at JP

7:47

Morgan. So I got back into

7:49

investment banking. And

7:51

nine months later, I

7:53

decided to leave because I got a

7:55

call from the Canada Pension Plan Investment

7:57

Board in December 2001. asking

8:00

whether I wanted to be part of a team that was

8:02

building a private equity portfolio. I didn't know what private equity

8:04

was at that point in time but it sounded great. So

8:07

I chose to leave JP Morgan and

8:10

people looked at me and they were

8:12

like, your ability to make career decision

8:14

is zero. You chose a

8:16

Mexican furniture store over investment banking, you got

8:18

back into investment banking and now you're leaving

8:20

to what at that point in time was

8:23

the government essentially. But I thought

8:25

to myself, look, whether or not this works,

8:27

I'm going to learn a lot. They had a big vision in

8:29

terms of what they were going to do with their private

8:31

equity program. So I leaned in, take

8:33

me through your path at CPBIB. When

8:36

I joined in 2001, there was 24 people, I left it was 1200. We

8:40

went from 7 billion to 285 billion from 2001 to 2015. It

8:45

was an entrepreneurial adventure of watching an institution

8:47

come to be and what they did was

8:49

they fed my entrepreneurial spirit by allowing me

8:51

to go build businesses along the way. So

8:54

at the beginning, I started with building a funds

8:56

business and I was involved in opening the London

8:59

office. And then in 2007, they

9:01

gave me the mandate to build a secondary's program.

9:03

So we went from doing funds

9:05

and co-investments to essentially building a direct

9:07

team. We built a team of

9:09

15 people that went and built a direct

9:12

program and secondaries out in the marketplace. I

9:14

guess the last chapter, they gave me the

9:16

ability to launch a co-investment program as well.

9:19

So four different chapters along the way

9:21

and it was an entrepreneurial experience with

9:23

institutional support. If you look

9:25

at that window of time and those four

9:27

businesses in particular, each one was you could

9:29

say relatively early compared to the scale that

9:32

they're all deploying capital today.

9:35

What was it like to be at the

9:37

forefront of a bunch of these different sub-sectors

9:39

within private equity? Fascinating. I

9:42

think the one thing about all of this

9:44

is that I've been in this industry for

9:46

a really long period of time. So I

9:48

developed a good understanding of the ecosystem and

9:50

a deep understanding of private equity during that

9:52

period of time. But what it did do

9:55

was enable me to give me the skills

9:57

to really understand how to Again,

9:59

take an idea. And make it

10:01

happen. So at beginning it was funds and it's

10:03

opening up London than it was a secondaries and

10:05

so. Always. Kind of leaning

10:07

back into that entrepreneurial flair to

10:09

really kind of build businesses from

10:11

scratch. And. Then enable

10:14

them to scale successfully.

10:16

Would. You think ready to those experiences

10:18

winner The commonalities. That.

10:21

You had to go through and taking the Id

10:23

and turning it into a business. He.

10:25

Just needed to have conviction in your

10:27

idea. Slinky spot an opportunity and you

10:29

have to. Really? Go after it

10:31

and that takes past and persistence

10:33

and patience. Something I learnt during

10:35

the Mexican furniture store days and

10:37

that has been essentially my whole

10:39

career path is just leaning into

10:42

not with arrogance but with confidence

10:44

and conviction round an idea. And

10:46

when people tell you that is

10:48

not gonna happen now listen to

10:50

them to school after the idea

10:52

if you believe in it authentically

10:54

and genuinely. To individuals in humans

10:56

and so much more capable than they think they're.

10:59

And I think there's a lot of self limiting

11:01

beliefs out there and it is a lot of

11:03

the time chatter around other people that are telling

11:05

you not gonna happen when he can. Summit

11:08

of that shatter in the seat you

11:10

were in was internal Me: think about

11:12

a Pension Sunday Don't always think of

11:14

these types of entrepreneurial endeavors. My.

11:16

Was really interesting to that period of time.

11:18

Certainly in that era, Cpp was buildings and

11:21

it was very thoughtful in the way that

11:23

he was about allowing. Them. To

11:25

go into different products and they were

11:27

an innovator and that Mark and I

11:30

got lucky. In hindsight, the everything I've

11:32

done in my career has always been

11:34

about intellectual compensation over financial compensation. In

11:36

I was lucky to be in the

11:38

right seat of the right time with

11:41

that organization that was enabling us to

11:43

go to pursue ideas. During. A

11:45

period of time with a farm was

11:47

growing and scaling really large and trying

11:49

to find ways and unique ways to

11:51

deploy capital where they can generate good,

11:53

brisk, untested returns. Now. Did

11:55

I wish at the time when I was going

11:57

through that they would go quicker than it did?

11:59

Absolutely. Was a young whippersnappers That really

12:01

was. In. Peace in the Times. But.

12:04

In hindsight, looking back, it was just this

12:06

incredible experience and actually those moments when they

12:08

held me back a little bits and I

12:11

thought I could do more. The was actually

12:13

keeping me on the playing field so that

12:15

I could really recognize patterns and behaviors and

12:17

really understand the art and the craft of

12:19

the so that's it. Made me a better

12:22

person. As I grew up, he went from

12:24

like being a player to player coach to

12:26

coach but you need to be on the

12:28

seal for a while to be able to

12:31

be a good player coach and coats. So

12:33

I'm very fortunate. For my mentors. Have.

12:36

You look at that fourteen

12:38

year window Or one the

12:40

Sistine First Funds investing in

12:42

international in London. Secondary

12:44

School invests all early. Over

12:47

summers the signposts that you

12:49

saw. To. Said they gave you

12:51

convictions. In those particular

12:53

opportunities. He. Had. The interesting thing about

12:55

these markets is that you need to be half a

12:58

step ahead. The market be can be full step ahead.

13:00

The market was really interesting. Markets. Need

13:02

Evolutions not revolutions. So one of things

13:04

that I learnt was the Cpp ideas

13:06

so many times where it it can

13:08

be a good idea but it's a

13:10

market not ready for it. You can

13:12

bang the head against a wall unless

13:14

you pivot and adapt. To. Make

13:16

the strategy consistent with what the market

13:19

is ready for. And I

13:21

think. Dow. Was a huge lesson from me

13:23

a long way in all of the different businesses of

13:25

their in terms of being able to release the people

13:27

bang that has against a wall and then if you

13:29

look right there's a door right there. just go through

13:31

the door. One of things that

13:33

were Dawson that I'm the most proud

13:36

of. It's how he pivoted how we've

13:38

adapted, how we listen to the market

13:40

the other day, and be able to

13:42

continuously innovate based off the feedback we're

13:44

getting from the market. To. Be

13:47

able to provide interesting solutions to

13:49

both are counterparties in our ancestors.

13:52

This. Has been a journey of innovation. Mean.

13:54

Sometimes we call us as a google of private equity.

13:56

Because. We're all was coming up with new

13:59

ideas. New financial fraud. the new financial technology

14:01

said the other day been innovation needs to

14:03

be done in a way where the market

14:05

is ready. How did

14:08

you decide that you are ready? To

14:10

leave Cp Vip and start. Awesome. It's.

14:13

Been fourteen years I've had great run.

14:15

I was trying forty I was getting.

14:18

I. Think it a point in time. Where is

14:20

it increasingly less inspired? Not because the organizations,

14:22

because they always have a special place in

14:24

my her? I just needed change. And

14:27

so it took two to three years for

14:29

me to Canada. Just go to the gestation

14:31

period because he can have good days and

14:33

bad. When you go through period of

14:35

time like okay, that three months wasn't as

14:37

fun as the last three months, but once

14:39

you start getting to a point where you're

14:41

just like home, it's been six and nine

14:43

months and I'm feeling lesson spared and then

14:45

you have to take a year or year

14:47

and a half to actually build the convicts

14:49

and to go to do it. And

14:51

where it really came to be was

14:54

this infamous bike ride that I took

14:56

from White Horse Yukon to Fairbanks, Alaska.

14:59

And the midpoint of the jury was dust

15:01

and so on. The sense in his bike

15:03

rides about a thousand miles I was sleeping

15:05

on the side the road. The Arctic has

15:07

a special place in my heart, and essentially

15:09

that's where the idea came to be. And

15:11

on his bike ride you can imagine a

15:13

lotta time to think, maybe a bit too

15:16

much time to think. But. I

15:18

was thinking about like okay, I actually

15:20

love what I do, I just need

15:22

scenes and is there a market opportunity

15:24

out there where I can really tell?

15:26

lean into it and provide a new

15:28

tool in the tool set? For.

15:30

Private equity investors and as I thought

15:32

about it this album maybe we can

15:35

be somewhere between the debt. And.

15:37

The equity and provide preferred equity

15:39

are structured equity. For. Private

15:41

equity investors. Can we enable them to

15:43

accelerate liquidity on their private equity? Prefers

15:45

the keep, The upside, the flexibility. To.

15:48

we give more tools for people to be more

15:50

active than the way that they manage their private

15:52

equity progress and loan behold was less than this

15:55

bike ride works i came back and i went

15:57

to my boss and my boss said you're having

15:59

a middle prices, go think about it." I came back

16:01

a second time. He's like, you haven't thought about this, this,

16:03

and this. I came back a third time. I told him,

16:05

look, this is not about you. This is about me. I

16:07

need to go do this. So it took me three attempts.

16:10

It was like Hotel California. I could check in, but I could

16:12

never check out. But eventually, I got to

16:14

a point where it was go

16:16

time and that was June of 2015

16:18

on my birthday. I

16:21

want to break down a couple of pieces

16:23

of that. The first is this thousand mile

16:25

bike ride. So you're working,

16:27

you just randomly hop on a bike for

16:29

a thousand miles. This is something that you've

16:32

done in different iterations repeatedly. I'd

16:34

love to hear about that part of

16:36

your journey. Yeah. So

16:38

nature soothes my soul. I

16:41

have spent a lot of time in nature to just

16:44

kind of recharge and some of my

16:46

best ideas have always been in

16:48

nature. So I've had

16:50

a history of spending time

16:53

and I've gone through different chapters. I had a

16:55

hiking chapter, then I had a biking chapter. I'm

16:57

in my canoeing chapter. But it always, I think

16:59

in my 20s, I was exploring the world, but

17:01

probably in my mid 30s, I was like, well,

17:03

wait a second time. There's a lot to see

17:06

and do in Canada. And I

17:08

started going to the Arctic, which is the

17:10

territories in Canada, and started spending

17:12

time doing week-long canoes. This particular trip

17:14

was two and a half weeks of

17:17

biking, just to really kind of clear

17:19

my head. And particularly, some of the

17:21

best ideas I've gotten for Dawson has

17:23

always happened in these trips where on

17:26

day one, two, and three, your brain rests.

17:28

Not much goes on in there. On

17:31

day four, it's now rested. And it's

17:33

just like, there's such clarity of thought.

17:35

And you're like, oh, well, that's what I have to do. And

17:38

so that's what I use nature for, over

17:40

and above just being out there. And I'm

17:42

a bit of a social introvert. So

17:45

I need time on my own to recharge. And

17:47

that's what nature and that's what the Arctic actually

17:49

provides me with all these great ideas. So in

17:52

these trips, how do you think about balancing planning

17:56

and serendipity, and

17:58

also being... out in

18:00

nature with safety. From my

18:02

perspective, you got to be safe and

18:05

you figure a way to go about being safe

18:07

to people that you bring with you, obviously lots

18:09

of safety. I don't know

18:11

you balance the serendipitous part of it. Like I

18:13

think for me it has become like this incredible

18:16

release where my life

18:18

is chaotic at times

18:20

and these points and

18:22

times are so special where you can put

18:24

your phone down for a while and just

18:26

really take care of yourself, take care of

18:29

your mind, have kind of a

18:31

rest and recharge and safety comes

18:33

with just preparation at the end of the day and

18:35

knowing what you're doing and knowing your limits. So

18:38

in that context, you had this middle

18:40

road idea that inequity and

18:42

as you said earlier, anytime you're trying to

18:44

innovate, you have to pair it with where the market

18:47

is. So I'd love to get your perspective on

18:50

after spending those 14 years in private

18:52

equity, how you thought

18:54

about a private equity market in

18:57

the context of what you were looking to do at

18:59

Dawson. So deep appreciation for

19:01

private equity and I will put on the

19:03

table that I am biased on private equity

19:05

having watched it over the last 25 years.

19:08

I think that I am a big

19:11

believer that private equity does outperform public

19:13

markets and we

19:15

have spent a lot of time trying to

19:17

look at the data in so many different

19:19

ways and over the long term or

19:22

at least any kind of 5, 10, 15, 20 years, I

19:24

don't see a time period where

19:28

private equity has an outperformed public

19:30

markets at the end of the day. And

19:32

so what I recognize through that experience is that

19:34

this is a market that I want to lean

19:36

into. This is a

19:38

market that I really believe and I

19:40

think that from my perspective, spending a

19:43

lot of time understanding why is it

19:45

that private equity has outperformed

19:47

public markets? And

19:49

what are those key things? The answer for

19:51

me is that I do believe public markets

19:54

has its set of issues. 70%

19:56

of public markets trade automatically,

19:58

ETFs, pass. So you got

20:00

30% of the market that's actually active. Of

20:03

that 30%, what percentage are actually active?

20:06

And by the way, when you are

20:08

a public company, those people that are

20:10

stewarding that company are usually stewarding towards

20:12

quarterly earnings. Is that the

20:14

best way of managing a company to

20:17

long-term value by making them focus on

20:19

quarterly earnings versus a long-term success of

20:21

this business? So what

20:23

private equity has brought is this

20:25

model where there is probably more

20:27

alignment with the managers, with the

20:29

shareholders, with the ultimate beneficiaries of

20:31

it because usually more often than

20:33

not, the people investing in private

20:35

equities are pension plans, insurance companies

20:38

and if they outperform,

20:40

the net beneficiaries are the underlying

20:42

individuals. But with that alignment

20:44

and with that patient capital, what

20:47

private equity can do is actually

20:49

focus on providing the time

20:51

necessary to build the business over

20:53

the long-term. And sometimes it takes

20:55

investments in the business where it

20:57

might impact quarterly earnings to do

20:59

best for the company over time.

21:02

And I'm not saying that private equity doesn't have

21:04

its flaws. It goes through cycles

21:06

as well. People will do things from

21:08

time to time. But generally speaking,

21:10

on average and over the long-term, private equity

21:13

has been better than public markets. We

21:15

call this the alternative investments. I'm not

21:17

sure it's so alternative. And if you

21:19

think about how many public companies have

21:21

stopped being public companies over the last

21:23

10 years, about half as many, you

21:25

got to ask yourself, the capital is

21:27

flowing to private equity for a reason.

21:29

Companies are choosing not to be public

21:31

for a reason. I find

21:34

it really interesting because there's the age-old debate as

21:36

to whether private equity has outperformed public markets. I

21:38

think the answer for me is clear. Yes, it

21:40

has. So you've had this

21:42

environment with rates dropping

21:44

from sky high in the 80s

21:47

to until recently next to nothing

21:49

and that has that benefit of

21:51

valuations rising. How do

21:54

you respond to that critique of,

21:56

well, private equity smooths their marks,

21:58

their marks are too high? there's

22:00

not much happening in deal volume

22:02

because of that. So I think

22:04

there's one narrative that I

22:07

hear a lot in private equity

22:10

that I struggle with and

22:12

that is that private equity valuations

22:15

are opaque, they're irrational and

22:17

particularly in times of public markets

22:19

decline and private equity doesn't fall.

22:22

So we spent a lot of time on this. What we did was

22:24

we went back to 2005 to 2022

22:27

and we looked at over a thousand

22:29

companies and we asked ourselves when

22:31

a private equity company exit, what

22:34

does it exit at relative to what it was

22:36

carried at two quarters per year? And

22:38

the answer is it pops 28%. So there is

22:40

a 28% gain at exit which suggests that private

22:42

equity is

22:48

undervalued not overvalued. So

22:51

people have said okay that's on average

22:53

for 15 years but what

22:55

does it mean like year over year because there's

22:58

got to be good years and bad years and

23:00

actually if you disaggregate it by vintage year, what

23:02

you're seeing is that it's incredibly consistent between 20%

23:04

and 30% from 2010

23:06

to 2022. Then people

23:09

are like yeah but maybe the winners

23:11

get a big pop but the lagers

23:13

they must be sold at a discount or

23:15

less in value and actually we disaggregated

23:17

it and yes, there is a success

23:19

bias for companies that have been held

23:21

less than particularly two years but less

23:23

than four years because GPs haven't been

23:25

able to value the company

23:27

at the pace in which the value was

23:29

increasing otherwise LPs and maybe the market would

23:32

be skeptical. But even the

23:34

lagers, one that's been held for eight

23:36

years or more are popping at anywhere

23:38

between high single digits to double digits.

23:41

So the winners and the lagers actually

23:44

exit at pops to their

23:46

valuation. So when we look at that,

23:49

private equity is actually undervalued

23:51

not overvalued based off that

23:53

information and you can

23:55

find examples for sure where there's a

23:58

company that may have been overvalued. and

24:00

will be sold at a discount but on the

24:05

other thing that we looked at was

24:07

what are private equity multiples versus public

24:09

market multiples and what you see and

24:11

certainly over this crisis or this time

24:13

period since 2021, public markets have gone

24:15

from 13 and a half times to 21

24:17

and a half times LTM Ybde. Private

24:20

equity has stayed consistently between 13 and

24:22

a half to 14 and a half

24:24

times. So you asked me

24:26

which one is rational. Is it

24:28

the public markets that are moving from 13 and a half

24:31

to 21 and a half times was a private equity that

24:33

stayed at a band of 13 and a half to 14

24:37

and a half times. On exit,

24:40

M&A on average is 25% and IPOs are 42% pops which would

24:46

suggest the public markets pays more for

24:48

assets on the exits than

24:51

M&A does corporates. So

24:54

it's another tidbit around whether

24:56

public markets may be

24:58

paying up for assets that are exiting from

25:00

private equity versus a corporate world. We

25:02

believe that we've got a paper

25:05

out on this that private equity is a rational

25:07

one. So it's interesting is

25:10

if the data is showing that private equity

25:12

exits to the public markets have a pop,

25:14

we also know that on the

25:17

entry there's a pop from the public markets

25:19

and they take private. What happens in

25:21

the middle? It depends on what time

25:23

period that you're talking about. I would say from

25:25

a good part of the

25:27

time and from the last 20 years,

25:29

what has happened is that private equity

25:31

has bought well, has then added

25:34

value during their

25:36

whole period and then essentially been

25:38

able to sell at a better multiple

25:40

because the business was in better condition,

25:43

maybe because the owners of the assets

25:45

weren't focused on quarterly earnings but they

25:47

were focused more on the three to

25:49

five year and how to make that

25:51

company better. So on exit, they

25:54

got a better relative multiple than

25:56

They did at entry. All of that is going

25:58

to be debatable. The find examples

26:00

where that's not the case, but generally

26:03

speaking on average if you got a

26:05

better governance model where private equity can

26:07

add operational value to these underlying trump

26:09

is where there's more alignment between the

26:12

the management team, the shareholders and the

26:14

underlying beneficiaries. Them what you have

26:16

as you have a situation where businesses can

26:18

get better on exit and if they're better on

26:20

exit the my get a better multiple. So

26:23

we tie this back into your founding of

26:25

Dawson. The. Other piece that comes

26:27

up and private equity is just illiquidity

26:29

and whether it's the reason you're getting

26:31

higher returns as you're getting paid and

26:33

illiquidity premium. How did you think about.

26:36

That dynamics in the context of what

26:38

you wanted to do. It doesn't. Look

26:41

Amina, think from my perspective. So basically

26:43

if you ask me will, what's the

26:45

problem with private equity? To that said,

26:47

okay, better returns, okay better governance model

26:49

the age old question a private equity

26:51

as illiquidity and that's where the secondary

26:54

market comes in to help and enable

26:56

liquidity to otherwise you liquid asset class.

26:58

In what it actually does

27:01

is that. It. Kind

27:03

of enables. The. Industry

27:05

and the Gps and the L peace to

27:07

have what they need. On

27:10

the left side he has Gps and need

27:12

peace and capital. They need three to five

27:14

years to make sure that the company goes

27:16

through the evolution it needs to actually add

27:19

the value that it needs. On

27:21

the right side you've got Lps that

27:23

had built their private equity portfolios in

27:25

different times in different markets. And

27:28

has reacted to the markets in different ways.

27:30

The. Secondary Market sits between the two.

27:33

And essentially provides. Both.

27:36

And doesn't disrupt the ecosystem. The

27:38

Gps get that pacing capital. The

27:40

Lp get to tactically reallocate their

27:42

portfolios when they need. And. When

27:45

you really think about what's the secondary role,

27:48

It's don't sound like a public market

27:50

when you start selling a share of

27:52

Google or Walmart as the other day

27:54

that's a secondary. and so

27:56

this is what the secondary market has

27:59

been doing slowly It seems like

28:01

exponential growth but the secondary market

28:03

has gone to $135 billion at its biggest year

28:06

in 2021 and that represents 1% of private capital. So

28:11

if you think about it, imagine a

28:13

world where a public market

28:16

investor would buy into the public markets

28:18

and do nothing with it for 10

28:20

years. You would say

28:22

that that's probably fiduciarily irresponsible. Well,

28:25

that's what's happening in private equity. People

28:27

commit to funds and they hope

28:30

and they don't tactically reallocate in good times

28:32

and bad. The secondary market isn't there just

28:34

in bad times. In 2021,

28:36

it was private equity done too well. They

28:38

were over allocated for the right reasons. Should

28:41

you tactically reallocate at that point in time? So

28:44

that's what's happening. There's a shift in

28:46

the sophistication that's happening in private equity

28:49

which keeps the model intact which

28:51

is what has made private equity

28:53

in my mind special given

28:55

that patient capital so people can do

28:57

the right things to the businesses and

29:00

give the LPs what they need which is

29:02

any way of being able to essentially manage

29:05

in a more sophisticated way their private equity

29:07

portfolio. So when you had that

29:09

vision of being in between, how did you go about

29:12

attacking it as a business? On

29:14

the bike ride, it was if you want to generate

29:16

liquidity on your private equity portfolio, you really have two

29:18

options. You can either leverage it up which

29:20

in this day and age, you could get 25% to 35% LTV. Before

29:25

all of this, you could get 35% to 45% or you could go and sell. And

29:30

if you go and sell, you're probably selling it

29:32

in those days 90 to par

29:35

in today's environment probably more like 85 to

29:37

95 give or take. And

29:41

so the concept was can we sit in

29:43

the middle and provide LPs with the opportunity

29:46

to accelerate liquidity on their private equity portfolios

29:48

and keep the F5. What we

29:50

do is that we give 60 to 70% of

29:52

the value of the portfolio. We'll take 100%

29:54

of the cash flows from that portfolio until

29:56

we get to. Let's call it a minimum

29:59

return of multiple. Three, one, four or

30:01

eight to ten percent and I will split castles

30:03

be present to you and twenty percent to us.

30:05

So. We're not here to replace debt. When.

30:08

I hear to replace selling. We're.

30:10

Here to give another tuna toolset. But.

30:12

If you lever you encumber your assets

30:15

if you sell you crystallize the last

30:17

you for of officer proceeds detained the

30:19

market. With. Us where you can

30:21

do as you can accelerate. Look lady on

30:23

your private equity portfolio your had to time

30:25

the market. Your. Had to crystallize a

30:27

loss. And. You have exposure to

30:29

the future upset. That.

30:31

We see as a win win because

30:34

actually when we outperform. That's a

30:36

good thing for us in our counterparts. If

30:38

they would have sold. Than. They

30:40

would have less that upside to the buyer

30:42

with us we can win together. How

30:45

did you. Go. About. Finding

30:47

the opportunities to provide that

30:50

capital. Of we did. Twenty

30:52

four hundred meals and twenty four months I've restarted. We

30:54

just pounding the pavement. We just went out there. we

30:56

talked about it like gone back to pass of patience

30:58

and process and like we had a lot. A conviction

31:00

in what we're doing says we just thoughts. There's a

31:02

place in the market for this. We. Just

31:04

had a lot of Kazakhstan and we

31:06

started talking to the market. The concept

31:09

of all time of pivoting in adapting.

31:11

We had to hear what the Martha

31:13

was ready for and we had to

31:15

send silly. Take. That pivot adapt

31:17

and then fried structures were the market

31:20

was ready for it. We probably came

31:22

out and we're one step ahead too

31:24

far the market and we just slowly

31:26

but surely took see back in.to. appoint

31:28

works for one hundred and seventy five

31:31

people. I mean, I'm pinching myself. This

31:33

is please beyond my wildest expectations. I'm.

31:35

So grateful of everything that we've

31:37

been able to cheese and assistant.

31:40

An incredible ride and would just

31:42

beginning. The thing is, I look

31:44

at them like Wow! We stumbled

31:46

upon something that is limitless. To.

31:48

think about sixteen trillion dollar

31:51

private capital markets us going

31:53

to go to thirty trillion

31:55

by twenty thirty or opportunity

31:57

syntactically into that market How

32:00

do you think about scaling alongside

32:02

of that industry growth? I

32:05

am a big believer in scale. I

32:08

say scale matters. Big

32:10

is beautiful. Growth is good. We,

32:12

over time, have become bigger,

32:15

better, faster, stronger. We've become

32:17

more resourced, more informed, more

32:19

sophisticated. We have been able

32:21

to invest in our team. We've been able to

32:23

invest in our technology. In the

32:25

whole journey of this, what we have been able

32:28

to do is show up in the market with

32:30

a product in which we can execute

32:33

with speed, with scale, and

32:35

with certainty. All because

32:37

of scale. It's interesting in

32:39

the secondary market because as big as

32:41

it's gotten, it's actually not that

32:43

many players that can show up with

32:46

a billion dollar check to provide liquidity

32:48

to a counterparty, certainly in speed and

32:50

scale. So we're sitting there

32:53

saying, that's our opportunity. We say

32:55

that we are unapologetic about our

32:57

growth. We think that at

32:59

the end of the day, growth is an important

33:02

way that we differentiate ourselves in the market. And

33:04

as I said, we're just getting started. And

33:07

growth and scale allows us and positions

33:09

us to come through for investors. And

33:11

that's ultimately what it comes down to. Is

33:14

being able to differentiate yourself in the

33:16

market and being able to move at that

33:18

speed and scale. But it's not

33:20

the only thing. We say scale

33:22

matters because actually what's really

33:25

interesting and what I've learned along the way

33:27

is that a growing firm allows

33:29

you to attract really interesting talent.

33:32

Because the problem is that if you're

33:34

a firm that is stagnant, what happens

33:37

is that you have glass ceilings. There's

33:40

not as many opportunities. I grew up at

33:42

CPP going from 24 to 1200. The

33:45

world was my oyster. That's the

33:47

opportunity. We're growing and that

33:49

enables us to really attract

33:51

some incredible talent.

33:54

Entrepreneurial. Hungry but

33:56

humble. In it together. Stronger together.

33:59

That's our mantra. We

34:01

approach this in a way where we save

34:03

when you give you get when you do

34:05

good. Good. Things happen and we're

34:07

not a rip your face of people we

34:09

are. How do we treat the when when

34:11

when in everything that we do. How do

34:14

we create partnerships called the Canadian Way of

34:16

doing business But at the end the day

34:18

it's not just what we do with how

34:20

we do it that gives us great price.

34:23

We understand that without investors there would be

34:25

no Dasa. We understand that of the other

34:27

day we should be so thankful. So grateful

34:29

for the conference in conviction that earns as

34:32

his provide us and trust us with her

34:34

capital and that's what drives us. Every

34:36

day I always picked intellectual

34:38

compensation over financial compensation. And.

34:41

That's the monster. The we have a

34:43

dos. We love what we do, we're

34:45

really passion of will we do and

34:47

so the types of people we attract

34:50

just are so intellectually curious and intellectually

34:52

stimulated. Six young. They're. Hungry.

34:54

I. Am so proud of the team

34:56

that we've been able to bring. That's

34:58

what's his me the woman places. Once

35:00

I see the team getting empowered enabled,

35:03

I could talk about this for hours.

35:05

Not doing this for the money. What am I doing

35:07

this for his And the word that I always use

35:10

which is over uses impact. But.

35:12

Impact can be on the employees, how

35:14

you enable in empower them and if

35:16

you can give them limitless opportunities within

35:18

the organization and they say hey that's

35:20

really interesting. One of my go spend

35:22

some time over there Go for it.

35:25

We think about Impact our ancestors because

35:27

if we can actually differentiate ourselves in

35:29

the markets with speed uncertainty then we

35:31

can come through for them. We

35:33

think about impact on communities because one percent of

35:35

or of his goes back to charity and that's

35:38

something that's near and dear to my heart. And

35:40

if he talked to me about like why am

35:42

I doing all this is really about scale enables

35:44

us to give back more. Than. The other

35:46

thing that we have taught them. As. impact on

35:48

ourselves i don't know what i'm doing

35:50

i've never done this before and so

35:53

i'm learning and i'm growing and the

35:55

reality at the on the days you

35:57

need to be so humble and this

35:59

journey he needs be so grateful. I

36:01

pinch myself every day I'm

36:05

so lucky. And so you gotta

36:09

recognize that as

36:11

scale, as success comes, how do you

36:13

stay grounded? How do you stay grateful?

36:16

How do you realize and recognize how lucky you are to

36:18

be in the seats that you're in? And

36:20

yet, we're just getting started. The

36:23

vision is so clear for me in terms of

36:25

what we can do with this. If

36:27

we approach it with the right mindset, if we approach

36:29

it with when you give, you get, when you do

36:31

good things happen, if you can come through for your

36:33

investors and we're not perfect, we're going to make mistakes

36:35

along the way. But if you're not making

36:37

mistakes, you're not learning. If you can't be humble

36:39

enough to appreciate the mistakes that you've made and

36:41

be honest with yourself and honest with others as

36:44

to what did you get right, what did you

36:46

get wrong and what can we learn from that?

36:48

If you get to a point where you

36:51

really believe that you are flawless and like,

36:53

wow, you're heading in the

36:55

wrong direction. I am a work

36:57

in progress and I'm

36:59

always constantly trying to surround myself with

37:02

people that are better than

37:04

me, that have done this before and

37:07

just open and curious as to the feedback

37:09

they give me because I'm grown. How

37:12

do you maintain that culture as you

37:14

grow? That's my passion. How

37:16

do we make sure that we keep that? Adhaas

37:19

and our performance reviews are a combination

37:21

of the what and the how. If

37:24

you don't have both, you cannot succeed

37:27

a dozen. We measure out of

37:29

five. The what is one, two, three.

37:32

The how is zero, one, two. So

37:34

if you're great at what you do, three and

37:37

you're culturally consistent, one, that's the four you

37:39

move forward. If you

37:41

are a culture carrier and you're

37:43

good at what you do, that's a four you move forward. But

37:46

if you're great at what you do, three, but

37:48

you're culturally inconsistent, that's the three you're not

37:50

moving forward. If you're culturally carrier but you're

37:52

not good at what you do, that's the

37:54

three you're not moving forward. It's that simple.

37:57

So we are always focused as

37:59

we bring. people in and we have so much

38:01

that we do to really enable

38:03

and empower employees to just

38:05

allow them to grow but it

38:07

always comes down to the how as

38:09

much as the what. How have you

38:11

organized your team to cover what's

38:14

become a increasingly large industry? We

38:16

got six pillars at Dawson.

38:19

Strategic management, capital management, asset

38:21

management, portfolio management, operations

38:23

management, firm management, new

38:26

products and partnership, strategic, capital

38:28

raising, capital, asset

38:30

deploy, portfolio management, portfolio management,

38:32

service our clients and then

38:35

operations. And then within

38:37

the asset management, we have folks that

38:39

are in sub teams GP coverage

38:42

that merely are the financial sponsors

38:44

but also focusing on both primary

38:46

investments and then also the deal

38:48

doing folks on the secondary side.

38:51

I spent a disproportionate amount of my

38:54

time thinking about organizational structure and making

38:56

sure that we align the organization to

38:58

how we do things and making sure

39:00

we have two offsights a year, one

39:02

in January, one in June. We set

39:05

KPIs in January. We keep ourselves accountable

39:07

in June and it's so important to

39:10

bring the firm together not just for

39:12

informal bonds and being able to build

39:14

relationships so that you essentially allow people

39:16

to get to know each other and

39:18

that breaks down silos but also

39:20

to just really keep the organization focused in

39:22

terms of what are the strategic initiatives, what

39:24

are we trying to achieve this year, what

39:27

are our priorities. The trick

39:29

is to simplify complexity and have

39:31

a clear vision so that people

39:33

walk away from these sessions knowing

39:36

the top three to five things that we need to do

39:39

for this half of the year for the full year

39:41

is this. So we spend

39:43

a lot of time on that. How did

39:45

you go about making your investment decisions?

39:48

We have two pipeline meetings a

39:51

week. We have investment committees available

39:53

on Monday, Wednesday, Friday. We want to move them

39:55

in nimbly. We want to move quickly but

39:57

it's actually pretty easy to parcel out our pipeline. line

40:00

because when you know what you want, the

40:03

deal comes through the transcript and you're just like

40:05

pass, pass, pass, pass, pass, go. From

40:08

an investment committee perspective, look, I think the

40:10

reality is that it's an open room. Everybody

40:12

can talk in the room, everybody's invited to

40:15

come in and so we think that's a

40:17

way to kind of teach the

40:19

young folks the nuances of how

40:22

people cut to the decisions and how to

40:24

go from an idea concept to a decision

40:27

and what are the questions and answers

40:29

in order to get there. And it just

40:32

feeds I think from our

40:35

perspective that culture of being

40:38

better investors. I'd love

40:40

to hear some of the examples of

40:43

what these transactions in between debt and equity

40:45

look like. Everything we

40:47

do, we focus on the win, win,

40:49

win. When we win, our counterparty wins.

40:52

All our focus is how do we

40:54

provide customized bespoke solutions where we sit

40:56

down and we really listen to what

40:58

are the counterparty looking to achieve and

41:00

how can we essentially enable them to

41:03

achieve that in an innovative way with

41:05

a customized solution. Drawing on

41:07

the 25 plus years of

41:09

experience in private equity and

41:11

understanding institutional objectives as they

41:13

try and manage a private

41:15

equity portfolio to allow

41:17

yourself to be open minded enough

41:19

to be able to really listen.

41:22

What are they trying to achieve? It's not

41:24

just a transaction, this is not just

41:26

bi-saying. We're thinking about new financial technology,

41:29

new financial products. Isn't

41:31

that LP financing example that I gave

41:33

that we're set between the debt and

41:35

the equity and we're providing them an

41:37

opportunity to accelerate liquidity on their private

41:39

equity portfolio. Many times people have

41:42

built these private equity portfolios over the last three to

41:44

four years. They're sitting there saying,

41:46

I love this portfolio. Don't make me sell

41:48

now. They're sitting there

41:50

as a team who's built that portfolio

41:52

saying, I understand we're over

41:54

allocated. It's a temporary phenomenon and

41:57

can we find a way that allows us

41:59

to... tactically reallocate but keep the upside and

42:01

in the process of doing that it's not

42:03

just keeping the upside they keep the relationships

42:06

They keep the co-investment flow. They

42:09

keep their advisory board if they want So

42:11

there's a lot of different ways that you

42:14

can talk to LPs But the first conversation

42:16

you have to do is what are you

42:18

looking to solve for? It's

42:20

not us with a cookie cutter.

42:23

Here's our product. Do you want to do

42:25

this deal? It's like let's listen. Oh Okay,

42:28

let us come back to you in a couple days and by

42:30

the way nimbleness We

42:33

come back so quickly

42:36

thoughtfully. That's how we're trying to

42:38

differentiate ourselves in this market How

42:40

do you think about the portfolio that

42:42

you put together for your LPs? diversification

42:45

diversification diversification So in

42:48

the objective of generating resilient

42:51

returns muted volatility consistent cash

42:53

flows First port

42:55

of call is diversity diversity by asset

42:57

by sector by geography by vintage by

42:59

duration by GP Then

43:02

the second port of call is

43:04

quality. We're really looking to

43:06

deal with quality GPs that have had

43:09

experienced through cycles It

43:12

generally puts us towards the larger end of

43:14

the market We can have a

43:16

debate as to whether or not they generate

43:18

the best returns I would suggest that they

43:21

have a good opportunity to do that either

43:23

way They're very consistent in the way that

43:25

they generate their returns And if

43:27

you think about what we're trying to do

43:29

and around consistent returns, that's our focus diversify

43:33

Portfolios so that we can provide that consistency with

43:35

muted volatility and then the last part is our

43:38

structure So what we do is you kind of

43:40

heard we essentially get 60 to 70 percent of

43:42

the value of portfolio taking a hundred percent Of

43:44

cash flows, so we're one and a half times

43:46

asset coverage a one from our

43:49

perspective We've got the combination of

43:51

diversity high quality Structure

43:53

and the combination of those three things

43:55

provides us what we hope is portfolio

43:57

construction. Then we have a whole team

44:00

called portfolio construction that is looking at

44:03

our funds as they're

44:05

getting invested and they're saying, okay, well, we

44:07

have a bit too much exposure here or

44:09

too much of that sector exposure. So it's

44:11

a real time discussion between the total portfolio

44:13

management team and the asset management team that

44:16

deploys capital and they're talking to each other

44:18

saying, hey, the next deal we would like

44:20

it to look a little bit more like

44:22

this. You need to know

44:24

what you're looking for before it comes to

44:26

market. We've seen 670 billion dollars go through

44:29

our shop, we've done 22 billion of them.

44:31

So the trick in telling that portfolio is

44:33

being able to see these portfolios and be

44:35

like, that's the one we want and

44:37

that's how you dedicate resources effectively and

44:39

efficiently around that is being

44:42

able to know what you're looking for when you

44:44

see it pounce. What are

44:46

some of the characteristics of what

44:48

would cause you and your team to want to pounce on

44:50

a deal? I think

44:52

we're always looking at multiple carrying

44:55

value, leverage levels, operating momentum, quality

44:57

of the GPs. We

44:59

proactively price 75 funds a quarter,

45:01

we know what we're looking for,

45:03

we know the average valuations, leverage

45:05

levels and we have a view

45:07

as to the direction of

45:10

these underlying funds and unlike portfolios.

45:13

That then gets boiled into a quarterly investment

45:15

theme that's saying generally speaking, portfolio construction wise,

45:17

we're looking for a little bit more of

45:19

this, a little bit more of that. It's

45:22

an iterative process that

45:25

really allows us to essentially

45:27

be very focused. That's

45:30

the trick here. We have two

45:32

pipeline discussions a week, one on Monday, one on Friday.

45:34

We know what we want. Pipeline comes

45:36

in, it's just like, nope, nope, nope, nope,

45:39

nope, that's one and then you

45:41

run. So alongside of

45:43

providing these solutions for LPs seeking

45:45

liquidity, there's been a big and

45:47

growing market of GP stakes

45:50

and financing. Have you thought about

45:52

partnering with GPs? It's interesting

45:54

because in around 2019, we

45:56

were doing all of these things with LPs and we're like,

45:59

well, actually we could. probably do this with

46:01

GPs as well. Sit somewhere between

46:03

the debt and the equity and provide

46:05

structured equities for GPs, for management companies.

46:08

And essentially sitting between

46:10

the debt and the equity in GP

46:12

states and allowing GPs

46:15

to be thoughtful about their management

46:17

company and how they're

46:19

managing it. What I found

46:21

interesting is that for

46:23

the longest time, GPs were private

46:26

equity partnerships. And they

46:28

were spending so much time on their underlying companies

46:30

and how to add value to the underlying companies.

46:33

And then just recently they woke up and they're like, whoa, wait

46:35

a second, we're an asset management firm. And

46:37

we should be thoughtful in terms of how we're

46:40

managing our management company. So what

46:42

you're going to see over the next decade,

46:44

we believe, is this trend towards GPs being

46:46

a lot more thoughtful in terms of how

46:48

they're managing their management companies and

46:51

thinking about new products, thinking about

46:53

new geographies, thinking about balance sheets,

46:55

thinking about succession, thinking about all

46:57

of these things, which is

46:59

going to, I think, create an

47:01

opportunity with regards to the GP

47:03

states market. We're here to add

47:06

another tool in the toolset for GPs as they

47:08

think about their management company and how they want

47:10

to manage that to give them another tool for

47:12

liquidity. Where do you think

47:14

all this goes from here? I mean, I'm on

47:16

the record for saying that the secondary market is

47:18

going to get to a trillion dollars by 2031.

47:22

Whenever I say that, the first

47:24

reaction is you're crazy. And I've

47:26

heard that a few times, I guess,

47:28

in my career. But I have a

47:30

deep conviction around this prediction.

47:33

And I think you need to be

47:35

able to break it down into two parts. How's

47:38

the volume going to get there? And how's

47:40

the capitalization of the industry going to get there? Let's

47:43

talk about the volume. For me, the

47:45

volume is very simple. It comes down to three things.

47:48

How big private capital is going to get over

47:50

the next five to 10 years?

47:53

What's the churn rate? And as

47:55

sub-asset classes like real estate, private

47:57

credit matures, how much are there?

48:00

going to add to this market. Let's go

48:02

through each one. Private capital, it grew

48:04

from 5 trillion to 15 trillion from 2016 to 2023. That's

48:06

a tripling. Can it double by 2030? Think about private

48:13

wealth. Think how much how much capital is

48:15

coming from private wealth. I would say

48:17

that's a conservative assumption. So

48:19

if you believe that private capital can grow

48:21

to 30 trillion by 2030, the

48:24

1% that we're seeing right now in churn

48:26

rate and private capital needs to grow to just over

48:28

3% in order

48:30

for the secondary market to get to a

48:32

trillion dollars a year. And

48:35

so I think that from our

48:37

perspective, how do you get that churn rate up?

48:40

You think about private credit secondaries. You

48:42

think about real estate. You think about infrastructure

48:44

which are still in the early stages of

48:46

ramping up in terms of AUM and as

48:48

those portfolios get more mature, investors are going

48:51

to need more liquidity. But it's not just

48:53

that. In private equity itself, LPs are going

48:55

to become more sophisticated in how they manage

48:57

their private equity portfolio. Going back to this

48:59

theory around like, hey, if you haven't done

49:01

anything for 10 years in public markets, is

49:04

that fiduciary responsible? It's going to be the

49:06

same question. In 10 years, if you have

49:08

not done a secondary, people will

49:10

be looking at you saying, hmm, is that the

49:12

right thing to do? Once somebody

49:15

in an LP gets used to selling,

49:17

it goes back to the market repeatedly because

49:19

the first time is the hardest. So

49:22

watch this space, the maturation of private

49:24

credit, real estate infrastructure, the churn rates

49:26

going up and private capital going to

49:29

30 trillion by 2030, that should get

49:31

to a trillionth time. You've been at this

49:33

for a decade. What do you

49:35

think is the bottleneck in why the

49:37

secondary market is say only 1% of

49:39

private equity volume today? So

49:42

it's been capitalization and it's been resources.

49:45

Let's go through the history of the

49:47

secondary market. 2001 to

49:49

2011, the decade of institutionalization,

49:52

it went from 5 billion to 25 billion

49:54

during that decade. Most of it was just

49:56

LP secondaries. That was it. 2011 to 2020.

50:00

It went from 25 billion to 125 billion, 132 to

50:02

be exact. Another

50:05

five times growth. But during that

50:07

decade, it was a decade of innovation.

50:09

We went from just having LP secondaries

50:12

to having private credit secondaries, real

50:14

estate secondaries, infrastructure secondaries. You had

50:17

single asset continuation fund, multi-asset continuation fund,

50:20

you had preferred equity, you have NIAB

50:22

lending, all in one decade.

50:25

So we got to 125 billion but

50:27

what that has done is left the

50:29

secondary market long opportunity and short capital.

50:32

There is not enough capital to

50:34

absorb the pent up liquidity in this

50:36

market. So we see 21 to 31

50:39

as a decade of capitalization. Generally

50:42

speaking, what happens is that

50:44

capital lags opportunity. If

50:47

you're out in the market right now, there's

50:49

really two areas where LPs are looking to

50:51

allocate private credit and secondaries. It's the talk

50:53

of the town. So you

50:55

know that just institutional market,

50:58

it was 70 billion raised

51:00

in 2021. Can it grow seven

51:02

times to 490 by 2030? It

51:05

did. That gets you to 500 billion.

51:07

The second part of this is private wealth. There's

51:09

$150 trillion in private

51:11

wealth of assets under management.

51:14

Two percent of that gets allocated to private

51:16

equity or private capital. That's 3 trillion. It

51:18

should be 10 to 20% if

51:21

the youth follows institutional

51:23

capital models. That's

51:25

15 to 30 trillion dollars of

51:27

money flowing from private wealth into

51:29

private capital over how long? Let's

51:32

take the more conservative number. 10%

51:34

of 150 trillion is 15 trillion. Three

51:37

of that is allocated to private capitalists, 12

51:39

trillion coming in the next what, 5 to

51:42

10 years. What if secondaries would take a quarter of that?

51:45

You got 3 trillion coming in to

51:47

secondaries through private wealth. So I think

51:49

that's the combination of volume and capitalization

51:53

that gets us to that trillion dollar figure and

51:55

time will tell. Where do technology

51:57

tools come into play to be able

51:59

to? help manage the scale and what

52:01

historically has just been a deal by deal

52:03

business. It's really interesting.

52:06

We are a tech enabled asset management firm

52:08

and it's something that we focused on since

52:10

our early days was we knew technology essentially

52:12

was going to make a difference. And I

52:14

remember sitting down with one of my mentors

52:16

back in the day and I said, what

52:18

have you done differently if you would do

52:20

it again? He said technology. If you don't

52:22

get technology right, you're going

52:24

to have 25 software systems that won't talk to each

52:26

other. So we spent a lot

52:28

of time in our early days really trying

52:30

to figure out our tech stack and today,

52:33

wow, technology has enabled us. AI has enabled

52:35

us. Machine learning has enabled us. Scraping

52:37

data, turning that data into information

52:39

into insight. That data if transformed

52:41

into insight can be incredibly powerful.

52:45

So there is a shift going on in

52:47

this market right now. The people that are

52:49

leaning into technology are going to be able

52:51

to differentiate themselves. The people that are lagging

52:53

are going to be left behind in a

52:56

hurry. What are some of

52:58

the ways that you've used

53:00

these modern AI tools and machine

53:02

learning tools to improve your

53:04

process? We talk about

53:06

proactively pricing funds. We're using that AI

53:08

to scrape data and coming out of

53:11

PDFs into our models. And

53:13

that allows us to avoid

53:15

or at the place of using our

53:17

resources for manual input, you're using it

53:19

for actual analysis because the data is

53:21

already in. It also allows for a

53:24

greater accuracy of data because actually those

53:26

machine learnings are incredibly powerful.

53:28

The accuracy that we're seeing out of our

53:30

system, we're just seeing the benefits of

53:32

that right now. The white papers

53:34

that we're putting out as an example, these

53:36

are all because of the data that's available

53:38

to us that we can transform into insight.

53:40

And that's good for the white papers that

53:42

we put out but imagine what that can

53:45

do for our investment process when you've

53:47

got that much data and you know how to mine it. So

53:51

data is useless if it's not accurate and data

53:53

is useless if you don't mine it. So

53:56

you have to really build a

53:58

technology platform that enables you. to

54:00

do both and we feel really good about where we're at

54:02

right now. What are some

54:04

of the financial innovations that you're looking at

54:06

that you think the market might

54:08

now be ready for but might not have

54:10

five or ten years ago? Oh,

54:13

that's the secret sauce though. Am I allowed to say that?

54:15

I don't think I want to do the secret sauce. Let's

54:17

look into the future of where the success is going to

54:19

be. I do think the secondary market has

54:21

gone through a big period of innovation and anytime

54:24

you go through a period

54:26

of innovation, you essentially expand the market.

54:28

The market needs to catch up on

54:30

capitalization before it can get to the

54:32

next version of innovation, I would say.

54:35

The secondary market is setting itself up for

54:37

the next big wave of growth through all

54:39

of the innovation that's happened over the last

54:42

ten years. As

54:44

you look at all the transactional data

54:46

you've collected over the years and you're

54:48

looking at a new deal, I'm

54:50

curious what you found the

54:53

biggest drivers of success for private equity

54:55

firms in the business? I

54:57

really think it's culture. The

55:00

culture of these firms are so important in

55:02

terms of are people motivated?

55:04

Are they rowing in the same direction?

55:06

Are they well aligned? Are they in

55:08

a good place? Are they

55:11

stronger together or are they growing apart? So

55:14

I think that's one of the big

55:16

things in terms of continued success is

55:19

aligning your people with the success

55:21

of the organization and making sure

55:23

that the culture is one that

55:25

is set up for success. And

55:29

then it's hard. And the reason

55:31

I pause is because I don't think there's

55:33

one model in private equity. I

55:35

think there is so many different models that

55:37

can get you to success. And

55:40

it's different strokes for different folks and

55:42

that's okay. The culture in one

55:44

firm can be very different than the culture in

55:46

a different firm but have they attracted the right

55:48

people that thrive in that culture? Well,

55:51

yeah, before I let you go, I want to make sure I ask

55:53

you a couple of closing questions. What

55:55

is your favorite hobby or activity outside of work

55:57

and family? Canoeing the Arctic. What

56:00

is one fact that most

56:02

people don't know about you? I'm an

56:04

introvert. I may be a social introvert

56:06

but I'm an introvert. I need time on my

56:09

own to recharge. How has that played

56:11

out in leading a business like this? Just

56:13

got to be self-aware of where you are.

56:15

I have a cottage that's two hours north

56:17

of Toronto. I spend a lot of time

56:19

up there in nature at the cottage and

56:22

I know when I need it. How

56:25

do you communicate that to the people around you?

56:28

They've gotten to know. Don't

56:30

just tap me on the shoulder and say, I don't want to go

56:32

to the cottage for a couple of days. What's

56:34

your biggest pet peeve? I

56:37

would say problem binders versus

56:39

problem solvers. If

56:41

you just think outside the box, you

56:43

can solve anything. Self-limiting

56:45

beliefs, limited thinking. Which

56:48

two people have had the biggest impact on your

56:50

professional life? So I'll

56:52

go with David Denison who's the ex-CEO of

56:54

CPPIB. I talk to him probably every

56:56

couple of weeks and he's been just so good

56:58

to me in terms of just, he's not a

57:00

man of many words and hopefully he's okay with

57:02

me saying this but he has just got

57:05

an incredible north star and he just,

57:07

these are your blind spots. This is what you need to be

57:09

careful about. My mother,

57:11

for her good and her challenges, she's

57:13

been such an incredible supporter and

57:16

she's given me the conviction to go out there and

57:18

grow my wings. So I appreciate her. What's

57:21

the best advice you've ever received? You

57:23

can be a good person and win. I just

57:26

really believe that. I have to

57:28

look at myself in the mirror every day and just be

57:30

proud of not just what but how. And

57:33

I really believe you can do it. If it

57:36

doesn't feel right, don't do it.

57:38

Think about the long term. And again, I'm

57:41

not perfect. I will make mistakes.

57:44

But my intentions are good. Or so. I

57:48

believe. So just do the right thing. Which

57:51

is actually what's been interesting about the

57:53

secondary market is that the

57:55

leaders in this space have generally

57:57

speaking been very good people. There

58:00

is a camaraderie around the secondary

58:02

market which I think is unique. And

58:05

again, the market has done everything

58:07

right all the time now. It's learned along the

58:09

way. It's made its mistakes. But generally

58:11

speaking, you've got good people in this industry

58:13

trying to figure out the right way to do

58:15

things. Alright, Jan, last one. What

58:17

life lesson have you learned that you wish you knew

58:19

a lot earlier in life? I

58:22

would say find inner stillness

58:25

as quickly as possible. Unpack your

58:27

shit. Find calm in the

58:29

chaos. Make sure that

58:31

your drive comes from a healthy place,

58:33

not an unhealthy place. Be

58:36

very aware of what is driving

58:38

you. And there's

58:40

no destination on this journey.

58:43

So you've got to enjoy the ride. How

58:45

did that come to you in your past? I would

58:47

say I was pretty insecure in my 20s. I

58:50

was getting comfortable in my skin in my 30s. My

58:52

40s have been my best decade. I've

58:55

embraced who I am. And probably about

58:57

7-8 years ago, I just started getting

58:59

curious looking inside the outside

59:01

world. I mean, you can have check, check, check, check,

59:03

check everything. But if you haven't dealt with your shit,

59:06

it doesn't matter. So what's driving

59:08

you? We all have fears. We all

59:10

have patterns. So just be

59:13

curious and try and unpack the

59:16

fears that you inherited mostly from your parents, not because

59:18

they didn't love you, but just because it's

59:20

generational. What are the ones

59:22

that you discovered that you feel

59:25

like you've best improved upon? Probably

59:27

the fear of not being good enough. I

59:31

definitely was driven by fears. And that's

59:33

why you said what you should wish you would have done

59:35

earlier in life. Like I

59:37

don't regret anything and I'm really proud. 14-year-old

59:39

Yan would look at 48-year-old Yan and be

59:42

like, good for you bud. From where

59:44

I started to where I'm at today, I'm like, not

59:46

arrogance, but just proud. But it

59:48

took me some time to get to a point where I

59:50

was like, oh, here are some patterns. Here are some behaviors.

59:53

How can I do better? How can I improve myself? How can

59:55

I grow? Well, Yan, thanks so

59:58

much for sharing this innovative perspective. about

1:00:00

in the secondary market. Thank you,

1:00:02

buddy. It's been fun. Appreciate you. you