Finding Value Investments in Private Equity


Finding Value Investments in Private Equity

Private investors and venture capitalists are always looking for the next great company, idea or product to put their money into, in order to reap great financial rewards down the road. However, how do private investors know where to find the true value investments that exist?

Experienced Investor

Jonathan Coslet is the Chief Investment Officer at Texas Pacific Group, also known as TPG capital, and he has been with the firm since its inception in 1993. He also serves on TPG’s Executive Committee. Before joining TPG, Jonathan started his career at Drexel Burnham Lambert and later moved to Donaldson, Lufkin & Jenrette. His formal education includes earning a BS in economics and finance from the Wharton School of the University of Pennsylvania where he was Valedictorian and later he received his MBA from Harvard Business School, where he was a Baker Scholar. Jonathan currently serves on the Board of the Stanford Institute for Economic Policy Research, the Stanford Children’s Hospital and the Stanford Medical Advisory Council. Jonathan and I discussed TPG’s state of private equity, as the company currently has almost $80 billion under its management. So I asked Jonathan how he finds the value investments?

Working on the Fringe

“At the end of the day, we have to be what I call fringe capital. Private equity as a whole is maybe 5 percent of the entire equity market capital ecosystem. The public markets are very efficient. They are getting more and more efficient every day and therefore the return on that capital is going to be tighter. We have to play around the fringes. We have to see things that others don’t see and we have to be willing to do things that others won’t do.” Jonathan said his firm has to do two things around the fringes. He said they have to have a different or uncommon point of view as an investor, which means they have to specialize, which includes both industry specialization and geographical specialization.

A Change for the Better

The other thing they need to do, according to Jonathan is to change or improve companies once they own them. “We have to do the hard work, like we did at Continental Airlines, like we did at Burger King, like we did with so many other companies along the way. That often means changing management. It often means employing new operational and strategic approaches to companies that for whatever reason aren’t being managed in a way that is aligned with the shareholders’ way.” Jonathan then explained that when you have a different point of view as an investor and you can change companies, you can outperform. “It’s hard. It takes a lot of work and it takes a lot of capabilities that you develop over time, but that’s what we do.”

Be Honest With Yourself

Jonathan concluded by saying that you have to be very selective. If you realize that you don’t see it in a very different way from everyone else or you don’t think you can really change it then maybe it’s not worth the investment because you can’t add a lot of value to it, as opposed to the ones where you do have a different point of view and where you do have a different strategic approach to operational improvement.

Follow us on Facebook

Contact Us here

Posted in
Lee Brower

Empowering Leaders of Family Businesses

Transcript: Alan Olsen Welcome to American Dreams. My guest today is Lee Brower. Lee, welcome to today’s show.   Lee Brower Alan, I’m delighted to be here. Thank you for having me.   Alan Olsen Oh, I’m excited for this session night ugly. I’ve sat in classes with you. Management Consulting techniques, strategic planning. And…

Redefining Social Responsibility In The Financial Industry: Our Conversation With David Reiling

See David’s Recent Interview with Alan Olsen: David Reiling is an accomplished social entrepreneur and innovator in the field of community development finance and financial inclusion. He has been the Chief Executive Officer of Sunrise Banks since 1995, and since then, he has successfully transformed Sunrise Banks into a leading player in the industry,…

David Reiling

Banking As A Social Entrepreneur

Transcript: Alan Olsen Welcome to American Dreams. My guest this week is David Reiling. David, welcome to today’s show.   David Reiling Thanks, Alan. Great to be here.   Alan Olsen So David, you have a very unique background. You know, tell us a little bit about the, the picture your your background in, you…

The Economic Influence of the NBA All-Star Weekend

NBA All-Star Weekend Economic Influence

Written by Ryan Hickman   If you have walked around downtown Salt Lake City recently, you’d come across ginormous signs advertising the NBA. But not just advertisements for the local Utah Jazz, but for the annual pinnacle of NBA events: the 2023 All-Star Game. This annual event envelopes whichever city hosts the events, which include…