The Distribution by Juniper Square
00:22:06 · David Wachter, Brandon Sedloff
[00:22:06] S0: So the... What I was referring to is basically financial technology. [00:22:11] S1: Financial [00:22:12] S0: technology. Like, the ability to structure deals and do more things and add more innovation to your private equity portfolio management. In terms of tech platforms, having done this a long time, it's really interesting because there have been a lot of tries at building technology to create more liquidity and more information around this this market. And it's hard. Why? Because the diligence required to understand how to invest and buy in this market is limited, and the ability to share information is limited. Meaning, if you attempt to put your equity on an exchange, how much information are you able to share and what reps and warranties are you able to provide? And those two things are extremely sensitive and important in the private markets, which is why it's also a fairly constrained market from a who can comfortably compete where data and relationships do matter a lot. [00:23:21] S1: Yeah. It's a common theme across the information asymmetry. There's a lot of information that still is sensitive, as you said. So I I can I can completely understand that? I think just just switching gears a little bit. So W Capital Day, you kind of told me a little bit about the journey, but what is what is W Capital as part of BNP Paribas Alt's business look like? Size, scale, focus, kinda headcount, just any of the headline stats about the organization?
00:23:45 · David Wachter
[00:23:45] S0: Sure. So I think it's important to take you back a couple of steps to where we were an independent firm for twenty years, and we, developed this direct secondary market where we're providing liquidity to buyout firms for rollover equity or midlife growth capital. But what we saw is, like I said, starting about five years ago, this massive growth and adoption of direct secondaries as a tool being used by the very largest and most influential private equity firms. So for us, the ability to write big checks and scale was critical. We did a lot of it with co investment in in those years. But relative to our industry, almost every secondary firm was tying up with a large asset manager, and we did not have a primary private equity book of business. We didn't have a credit business and we didn't have global sales and distribution. So we said, let's see if there's a type of partner that would be a great fit for us. We didn't think a primary buyout firm would be an ideal fit because we're a solution provider to the private equity GPs. So being a private equity GP, providing a solution to other firms, we think has its limitations. We thought an asset manager with a fund investment platform would be an amazing fit for us. And at the time, AXA IM was... Had put together over the past twelve months, a a team that was gelling all of their private equity businesses, a large primary fund investment business as one of the largest insurers in the world. So very experienced at deploying capital as an LP in private equity funds, doing co investments, providing debt capital to private equity firms, and even GP stakes. What they were missing and looking for was an innovative secondary strategy that goes beyond LP led and even beyond continuation funds. So when we met, the plug and play fit was extraordinary. So as a partner for us, we now offer our GPs a primary investment product. We are benefiting from all of the data that is inside of that business, and we're collaborating closely with one of the largest LP allocators in the world. BNP acquired the entirety of AXA Investment Managers about two years ago. So we were also part of that journey. So under BNP Paribas Asset Management today, it's that original private equity team, but with more resources of BNP's primary private equity business along with all the other parts of the asset management platform.
00:26:51 · David Wachter, Brandon Sedloff
And in terms of scale, the alts platform of BNP Paribas Asset Management today is about €300,000,000,000. I say dollars, but we're in Europe right now. Yeah. So it's about €300,000,000,000. That includes private credit, real estate, and private equity. So we have a huge amount of scale, and we have a huge amount of data and relationships to leverage to be a leading player and at the scale that we would like to in in continuous liquidity journey for private equity GPs. [00:27:28] S1: So I'm gonna come back and talk a little bit about what you're excited about because, clearly, you're part of a big organization with a lot of capital to deploy and resources globally to support you. There's a lot of founders of firms probably similar to W Capital when you found AXA and and subsequently BNP who are thinking about what's next. Just any advice you can give to them as they're thinking about finding a a great potential fit as they're looking to to sell their business, merge their business, find another partner to support future future growth? Because you've you've been through this with one of the world's largest asset managers. I'm just curious kinda the lessons that you've learned throughout this process.
00:28:03 · David Wachter
[00:28:03] S0: Yeah. Two things. And and it was... I benefited from a lot of good friends in New York finance who have had similar growth journeys. And those that did strategic transactions were very helpful at some of the the largest and most successful firms in the world. And I think a few things resonated. The first and foremost was don't look for a transaction. Look for a partnership. And that was first and foremost. And that is what we accomplished. And we do come into this as true partners with our colleagues across BNP Asset Management. And I think our colleagues across the organization would recognize that this small acquired firm is treating this as a scalable synergistic opportunity for everybody involved. And secondly, before we closed, I was having dinner with, I call him my boss. He calls me his partner. And I said, I'm not doing this unless we're gonna have fun. And that is the rule of thumb every day. And we do. We're innovating. We're scaling. And the challenges of growth, we embrace. So a lot of integration going on. It's a large company. It's a complex company, but we're taking all of this as the opportunity we can now have with our scale and market position and colleagues and resources is extremely powerful. And it allows us to... My partners and I and and our entire team to fulfill the the journey and our mission to really be the pioneer, but the solution provider, doing this very specialized solution in the market.
00:29:56 · Brandon Sedloff
[00:29:56] S1: So the first twenty years independent, now together with BNP through through the AXA IM. Mhmm. What are you excited about about the next ten, twenty years? Kind of, you know, you've... You you were a pioneer of this business. You've seen it mature. You've seen it evolve. What what's coming down the pike that you're you're focusing your energy on that BNP is focusing its energy on together to support you? Kind of what... What's next?
00:30:22 · David Wachter
[00:30:22] S0: So let's take this. We're sitting here together talking about the future of private equity and the future of direct secondaries. Something that I wrote about 20 ago, and here you and I are. You've got hundreds of thousands of followers. You've got a great podcast, And I get to talk about our view of the private equity market and where we see it going. And then we have the capital and the platform to actually deliver on that. So, it's pretty fun. And I just met with a... One of the largest families in Europe and the patriarch of the family asked the same question. And I answered his question with a question. So his question was, David, why are you still doing this? And I said to him, why are you still doing this? So he paused and he smiled. And he's like, because I get to meet interesting people and be challenged. And I smiled back at him because he answered my question with his answer. So that's where we are. For us as an organization, we're growing our team. We have... When we're asked what is the size of our team, to start with, we have about 25 people in New York. But I answer it differently, which is we're about a 150 people because the private equity business that is, BNP Paribas Asset Management private equity is about a 150 people. So they're all our colleagues. And then, of course, there's thousands of people in the alts division and across BNP. So we have a lot of colleagues, and we're not really just 25 people. We're thousands of people.