Touchstone’s professionals have been LPs in buyout funds, venture capital funds and PE funds of funds, and have been principals in buyout, mezzanine and venture capital transactions with institutional investors. Our broad buy-side experience gives us deep practical insight into the demands of institutional investors and their needs to manage portfolio strategies, allocations and liquidity; assess past and prospective returns; and manage capital calls and reinvestment of distributions. Most importantly, we know how institutional LPs assess alternative asset managers, fund strategies, investment-level portfolio issues and perform due-diligence.
Touchstone screens potential GPs against several criteria for their likely appeal to institutional LPs. We know how LPs assess potential alternative asset managers, their investment strategies, performance, investment portfolio and due-diligence, and we embed these criteria in our own determinations of whether to represent a GP. Emerging managers in particular must meet more stringent institutional investor criteria. We are sensitive to the reality that LPs are inundated with hundreds of fund proposals a year – their time is at a premium. Our materials are designed to convey key decision-enabling information clearly and succinctly. Each individual LP makes its own decision whether to commit to a particular fund, but they know that any GP represented by Touchstone will at least meet the minimum criteria for serious consideration. If the LP has interest in considering funds with this strategy, number of roman numerals, and fund size, and the materials we convey will enable them to efficiently make a decision on how to proceed.
CO-INVESTMENT SOURCING & ADVISORY
Touchstone helps LPs bolster their co-investment activity by selectively sourcing co-investment transactions with current or former GP clients. LPs are increasingly seeking direct co-investment opportunities to complement their fund portfolios and establish deeper relationships with GPs – particularly emerging GPs – beyond their primary fund commitments. Touchstone’s relationships with GP clients during and after fundraising and our buy-side knowledge helps us secure co-investors for too-large or between-fund investments. We market co-investments to selected institutional investors, typically those who are likely to also make a commitment to the GP’s current or future fund, or some combination of the two.
Secondary trades of LP fund interests are an increasingly useful portfolio management tool for illiquid strategies like private equity and venture capital. While a number of LPs have long been active in the secondary market, an increasing number of institutional investors are participating in secondaries. Touchstone can assist LPs considering a secondary transaction – our extensive institutional investor relationships and database allows us to market secondary interests to a range of traditional and non-traditional buyers. We seek to maximize value by identifying potential buyers with demand for specific funds or co-investments within a seller’s portfolio.