Multiplicity Partners

Our investment approach with a focus on opportunistic secondaries is paying off. The LTO Fund family has been ranked #1 in the PitchBook Global Manager Performance League Tables! The LTO Fund family was launched by Multiplicity Partners in 2016 and we are currently investing with our fourth fund. The consistently strong returns across all LTO Funds, paired with high DPI bring us to the top spot. #privatemarkets #privatequity #secondaries https://lnkd.in/erSN5WVP

Interesting to read that Rede Partners LLP find a rise in confidence that distributions to LPs finally rebound - fingers crossed that this holds true. At the same time, LPs increase their allocation to secondaries funds as those can offer liquidity solutions to both LPs and GPs when traditional exit routes remain challenging. Should this increased allocation be seen as a hedge against a continued difficult exit market? Multiplicity Partners manages a range of shorter duration secondaries funds that focus on DPI and returning cash to investors - irrespective of the exit environment. #privateequity #privatemarkets #secondaries https://lnkd.in/eSh2f6Y3

Thanks to Moonfare for summarizing the understanding that private market investors prioritize cash returns over paper gains with the sharp formula "IRR < DPI". That is probably the shortest way to express Limited Partner’s frustration that some private market funds generate fantastic returns on paper with an IRR that is based on rather subjective accounting values but fail to distribute real cash that is urgently needed to cover future capital calls. At Multiplicity Partners we focus on DPI and consider IRR primarily relevant for more mature funds where DPI is moving towards TVPI. #privatemarkets #privateequity #secondaries

Thanks a lot, Rede Partners LLP for sharing your report on NAV financing - a hot topic right now when distributions to LPs are drying up. What I consider the most relevant finding is that LPs clearly differentiate between "money-in" (financing of new investments) and "money-out" (dividend recap at the fund level) NAV financing. Essentially "money-in" delays capital calls - something that LPs apparently appreciate - while "money-out" is a synthetic distribution to artificially boost DPI - when LPs would rather see real DPI. And to make matters worse: synthetic distributions are often recallable, so LPs are still on the hook for that cash! I have the strong view that synthetic distributions distort DPI, the otherwise reliable cash-on-cash private equity performance measurement of choice, making it as subjective as IRR or RVPI/ TVPI. At Multiplicity Partners, we manage funds investing at the intersection between private market secondaries and special situations with a focus on delivering real DPI and returning cash to investors quickly. #privateequity #secondaries #privatemarkets https://lnkd.in/ePEF7seM

Thank you to CAIA Zurich for the opportunity to share our insights on the “The Importance of Due Diligence” panel discussion.  I hope we provided some insights on how to avoid losses in the future. Although history won’t repeat itself, it’s still worth studying the investment industry's past failures (Madoff, Abraaj, Greensill,…) to avoid pitfalls in the future.

...just coming back from the SuperReturn in Berlin, and I definitely agree with Citywire that liquidity is at the top of everybody's mind. Investors want distributions to cover those capital calls, and slowly but steadily DPI is replacing IRR as the performance measure of choice. At Multiplicity Partners, we see cash as king and DPI has always been our top priority, particularly for shorter duration funds, including secondary funds. #privateequity #privatemarkets #secondaries #superreturn

I am looking forward to seeing everyone at SuperReturn International in June! Please reach out if you would like to connect! Multiplicity Partners #SuperReturn #Secondaries #PrivateMarkets

There is a lot of talk about the PE industry not delivering the exits they promised. PitchBook succinctly put it with the title “Behind the J-curve” in its recent in-depth analysis of distribution activity in private market funds. Another side of that story, particularly relevant for secondary buyers like us, is that many private market funds hold their assets at seemingly inflated valuations. TVPI numbers look great for most funds, but they can’t monetize their holdings anywhere near their current NAV, indicating their estimate of “fair market value” is way too optimistic. There is always a market, the price may just not be where you wish it. To a large degree, the reluctance to exit companies results from having them marked too high. Assets were aggressively written up to look good in the short-term, impressing LPs with “paper gains” to raise the next, much bigger fund. #secondaries #privatemarkets