Welcome back to the Alt Goes Mainstream podcast.
Today’s podcast dives into the continued innovation in the GP stakes space with someone who has advised some of the industry’s largest firms on their businesses and going public.
Cantilever is an independent firm focused on providing capital solutions to middle market asset managers. Their capital can be used to accelerate growth, support acquisitions or liftouts, fund GP commitments, seed new strategies, facilitate generational ownership transfer, and provide liquidity to founders. They focus on businesses that have enterprise values between $50mm and $500mm. The team has executed on over $500M of GP stake, financing, and seeding transactions as both investors and principals. Their advisory experience working with stakes funds includes over 15 GP stakes transactions, multiple GP stakes portfolio financings, numerous GP and BDC IPOs, and dozens of asset management financing and control transactions.
Cantilever is working with two strategic partners as they build their firm: BTG Pactual, the near $30B market cap Brazilian bank and wealth and asset manager has committed 9 figures into Cantilever’s fund, and Broadhaven Ventures, the venture capital arm of Broadhaven Capital Partners.
Todd has over 30 years of experience as an advisor covering financial institutions and as a senior financial services executive. Prior to founding Cantilever, Todd has been a partner at Broadhaven Capital Partners, an independent financial services focused investment bank that’s completed over $90B in announced M&A transaction volume, as well as the former CEO of Fifth Street Finance. Todd began his career at Goldman, Sachs & Co, spending 24 years including as a Managing Director and Partner in the Investment Banking Division.
Todd and I had a fascinating discussion about how funds are becoming firms and why there’s an investment opportunity around that transformation. We discussed:
- The evolution of alternative asset managers from Todd’s perspective as a banker to many alternative asset managers.
- Why GP stakes has become a solution for alternative asset managers.
- Why and how alternative asset managers are businesses and why it can make sense for them to take investment to grow.
- The benefits of GP stakes for investors and why the growing AUM of private markets means investors could benefit from exposure to GP ownership.
- The risks and challenges with GP stakes as an investment strategy.
- Why the middle market is an underserved and attractive segment in alternative asset management.
- What the currency of consolidation will look like in alternative asset management.
- What it means to grow and evolve a business as an alternative asset manager.
Thanks Todd for coming on the show to share your wisdom and experience on the evolution of asset management from your 30 years in the industry. We hope you enjoy.
A word from AGM podcast sponsor, Ultimus Fund Solutions
This episode of Alt Goes Mainstream is brought to you by
Ultimus Fund Solutions, a leading full-service fund administrator for asset managers in private and public markets. As private markets continue to move into the mainstream, the industry requires infrastructure solutions that help funds and investors keep pace. In an increasingly sophisticated financial marketplace, investment managers must navigate a growing array of challenges: elaborate fund structures, specialized strategies, evolving compliance requirements, a growing need for sophisticated reporting, and intensifying demands for transparency.
To assist with these challenging opportunities, more and more fund sponsors and asset managers are turning to Ultimus, a leading service provider that blends high tech and high touch in unique and customized fund administration and middle office solutions for a diverse and growing universe of over 450 clients and 1,800 funds, representing $500 billion assets under administration, all handled by a team of over 1,000 professionals. Ultimus offers a wide range of capabilities across registered funds, private funds and public plans, as well as outsourced middle office services. Delivering operational excellence, Ultimus helps firms manage the ever-changing regulatory environment while meeting the needs of their institutional and retail investors. Ultimus provides comprehensive operational support and fund governance services to help managers successfully launch retail alternative products.
Visit
www.ultimusfundsolutions.com to learn more about Ultimus’ technology enhanced services and solutions or contact Ultimus Executive Vice President of Business Development
Gary Harris on email at
gharris@ultimusfundsolutions.com.
We thank Ultimus for their support of alts going mainstream.
Show Notes00:00 Introduction and Sponsor Message
01:18 Podcast Opening and Theme
01:59 Introduction to Todd Owens and Cantilever Group
03:10 Todd Owens' Career Background
04:39 Early Days of Alternative Asset Management
08:28 Challenges and Opportunities in Alternative Asset Management
10:00 Cantilever's Focus on the Middle Market
11:35 Investment Opportunities in the Middle Market
13:50 Identifying and Investing in Promising Managers
16:24 Insights from Working with Founders
18:42 Sizing Up the Middle Market Opportunity
19:49 Sourcing and Structuring Investments
21:16 Offering Diverse Financial Solutions
23:15 Evaluating and Picking the Right Managers
25:54 Identifying Investment Opportunities
26:16 Winning Deals: Strategies and Insights
26:51 Providing Strategic Capital and Advisory
27:58 Focusing on Growth and Diversification
29:18 Underwriting and Growth Expectations
31:15 Exit Strategies and Market Dynamics
33:13 Diversification and Portfolio Construction
34:29 Revenue Streams and Valuation
35:54 Cantilever's Market Edge
37:33 Strategic Partnerships and Support
39:01 Founders' Perspective and Industry Insights
41:01 Cantilever's Unique Value Proposition
42:40 Leadership and Influences
43:34 Concerns and Challenges
46:05 Reflections and Future Outlook