In a recent fireside chat, Thomas De Waen, Managing Director and Co-founder of Core Equity Holdings, delved into the evolving landscape of private equity, focusing on the sector’s trajectory into 2024 and beyond. Hosted by Giovanni Amodeo, the discussion illuminated several key areas shaping the future of private equity.

Background and Core Equity Holdings’ Genesis: Thomas De Waen, with a rich background in private equity, shared his journey from BCG in Brussels to Bain Capital in London, culminating in the establishment of Core Equity Holdings in 2016. The inception of Core Equity Holdings was driven by a desire to innovate within the private equity model, particularly by extending the investment horizon and focusing on long-term value creation rather than short-term gains.

Innovative Approach to Private Equity: De Waen highlighted three distinctive aspects of Core Equity Holdings’ approach:

Time: Emphasizing a long-term investment horizon, Core Equity Holdings operates with the philosophy that time should be an output, not an input, allowing for more substantial and sustainable business transformations.
Consolidation: Unlike traditional funds, Core Equity Holdings does not impose diversification constraints, enabling them to invest more significantly in fewer businesses, thereby fostering deeper involvement and potentially greater impacts on their performance.
Investment Strategy: The firm adopts a two-phased investment strategy, initially acquiring businesses and subsequently deploying additional capital into these companies to drive consolidation and growth within their respective industries.
Future Fundraising and Market Evolution: De Waen discussed plans for future fundraising, emphasizing a model that avoids the pressure of forced asset sales or purchases by raising capital in tranches. This approach allows for strategic flexibility and aligns with their long-term investment philosophy.

Market Trends and Predictions: The conversation also touched upon broader market trends, including the anticipated normalization of returns due to increased purchase multiples, the potential for industry consolidation amidst a crowded European private equity landscape, and the growing significance of secondary markets and private credit. De Waen also noted the increasing involvement of high-net-worth individuals and family offices in private equity, driven by the mega-managers’ ability to tap into this investor base.

Personal and Professional Aspirations: On a personal note, De Waen shared his simple aspiration to enjoy running in the woods, reflecting a grounded perspective on life and work. Professionally, he expressed a commitment to creating value for investors and fostering the growth of young professionals within Core Equity Holdings.

In summary, Thomas De Waen’s fireside chat offered insightful perspectives on the evolution of private equity, highlighting innovative approaches to investment, the importance of a long-term outlook, and the dynamic changes shaping the industry’s future.

Key timestamps:

00:09: Introduction to ION Influencers’ Fireside Chats
00:27: Thomas De Waen’s Background
01:34: Unique Model of Core Equity Holdings
02:29: Launch and Uniqueness of the Fund
04:22: Long-Term Ownership Approach
05:13: Fundraising and Investment Horizon
05:57: Consolidation and Diversification
07:37: Initial Business Size and Growth Strategy
09:44: Fundraising Strategy and Long-Term Focus
12:38: Unique Business Model and Market Survival
13:08: Predictions for the Private Equity Landscape
16:21: Impact of IRRs and Fund Differentiation
17:13: Expectations for Industry Consolidation
17:55: Fragmentation and Mega Managers
19:30: Challenges for Smaller Funds
20:58: Trends in Secondary Markets and Private Credit
22:59: Involvement of Family Offices and High-Net-Worth Individuals
24:40: Continuation Funds in Private Equity
26:42: Final Thoughts and Aspirations