PE GPs acquiring LPs – what does it suggest?

Recently Carlyle announced the purchase of Dutch asset manager AlpInvest Management from its anchor investors APG and PGGM pension funds. APG and PGGM Agree to Sell AlpInvest Partners to The Carlyle Group and AlpInvest Management

AlpInvest is considered one of the world’s biggest PE fund manager with USD 43.3 billion AUM and these two dutch pension funds as the main investors. Even though these pension funds have given commitments of around USD 13.5 billion till 2015, this divestment signals a new investment philosophy on the LP front.

I believe LPs such as APG and PGGM want to remove the FoF intermediary in future and invest directly or through co-investments. On the other hand GPs such as Carlyle who are integrating backwards through such acquisitions want to have access to bigger cash pools. However to me GP and LP owned by same management would create conflicts of interest and investors would surely like to have these two entities different.

Let’s see how things go around for Carlyle while managing AlpInvest? Time will tell us if they will be able to maintain the trust and commitments from AlpInvest investors?

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