In a recent fireside chat hosted by Giovanni Amodeo for the ION Influencers series, Chris Lawrence, Managing Partner & Founder at Labyrinth Capital Partners, delved into the intricacies of investing in private equity secondaries. With nearly three decades of experience in capital markets, Lawrence shared his journey and insights, particularly highlighting his tenure starting in 2008 at HQ Capital, where he navigated through the global financial crisis and its aftermath.

Lawrence discussed the evolution of private equity secondaries, emphasizing their role in providing liquidity during financial distress, similar to the 2008 crisis and the COVID-19 pandemic. He noted the cyclical nature of private markets and predicted continued growth in secondary market transactions, fuelled by an increase in private market distributions and institutional investments.

The conversation also covered the technical aspects of secondary transactions, including GP-led and LP-led deals. Lawrence explained the different strategies involved, such as continuation funds, strip sales, and fund restructurings, each catering to specific liquidity and portfolio management needs.

Moreover, Lawrence highlighted the importance of relationship capital and the nuanced understanding required to navigate the secondary market’s complexities. He stressed that while the market has matured, with intermediaries playing a crucial role, the fundamental dynamics of private equity secondaries still demand a deep, hands-on approach to managing risks and enhancing value effectively.

Looking ahead, Lawrence envisions Labyrinth Capital Partners continuing to innovate and adapt to the evolving landscape of private equity secondaries, focusing on niche strategies that offer unique opportunities for growth and investment.

Key timestamps:

00:08: Introduction to ION Influencers Fireside Chats
00:33: Chris Lawrence’s Background
01:31: Cycles in Private Equity Secondaries
02:28: Impact of Global Financial Crisis on Private Equity Secondaries
03:05: Challenges and Trends in Private Equity Secondaries
04:19: Emotional Aspects and Portfolio Management in Private Equity Secondaries
05:44: Insights into the Secondary Market and Intermediaries
08:50: Growth of LP-Led and GP-Led Transactions
11:16: Risk Profiles and Education in LP-Led and GP-Led Transactions
12:00: Approach to GP-Led Continuation Funds
13:57: Transparency in Strip Sales and Fund Restructuring
16:04: Administrative Aspects and Secondary Investors
17:03: Secondary Investors
17:29: Changing Skill Set
19:22: Uniqueness and Market Focus
22:29: Market Dynamics
23:47: Relationship Capital
24:39: Investment Process and Future Outlook
27:19: Brand Awareness and Education