June 6, 2024

Kelly Chaplin, Senior Managing Director, Private Equity recently spoke at BCI’s 2024 Investor Day, where he shared insights on the current private equity landscape, the advantages of direct investing, our approach to managing liquidity, and the benefits of BCI’s global expansion.

Are there any silver linings related to recent market volatility?

Private equity has weathered a couple challenges recently, particularly with interest rates and inflation. This environment has caused privately-owned companies to adapt, evolve, and overall become more efficient. As the market and economy continue to improve and interest rates decline, these companies usually come out stronger on the other side. For us, the long-term focus of our portfolio provides an advantage in volatile markets, as we can make more significant commitments during these times and can negotiate for better deals.

What are the benefits of direct investing in the current environment?

Direct investing offers two main advantages in volatile markets. First, it allows us to actively monitor and influence decisions through representation on the boards of our investment companies, enabling us to address issues like inflation, higher interest rates, and cash flow preservation. Second, direct investing allows for quicker reactions to market shifts where we can take advantage of specific opportunities.

If you only focus on funds, it can take longer to adapt and invest in new areas. With a direct program and coverage of different sub-strategies across private equity, we can work with our partners to target more value-oriented investments.

What is your approach to managing liquidity?

For the past few years, we’ve been using the secondary market to sell funds that we consider to be lower performing, and not meeting the strategic or performance benchmarks. Using secondaries sales helps us generate immediate liquidity and redeploy capital into higher returning opportunities. Over the last seven years, we have sold more than $5 billion of our fund investments and redeployed that capital into new deals, strategic partners, and our direct investing program.

How has the New York office impacted the private equity program?

Having team members in New York City is invaluable to the success of the private equity program. Opening this office allowed us to hire and retain people that we may not have been able to otherwise. It has also brought us closer to our investment partners in the private equity world, increasing the quality of our interactions and giving us better access to deals that contribute to our direct portfolio growth.

Learn more about our diverse private equity portfolio, comprising nearly $30 billion in directs, co-investments, and funds.