The Faculty Spotlight with: Rhonda Ryan, Managing Director, Head of Private Funds Group Europe, Pinebridge Investments

PineBridge Investments (formerly AIG Investments) is a long-term investor in private equity, having been involved in the industry for over 20 years. Over that period, it has witnessed several economic cycles, good and bad. With Capital Creation quickly approaching, we spoke to Rhonda Ryan, Head of Private Funds Group Europe, to discuss her thoughts on a challenging fundraising environment and what it means for GP-LP relations.

“There has been a lot of talk about a post-recession period and how this is now a good time to invest”, asserts Rhonda. “However, pricing remains pretty high in many segments of the market, having not come down as much as in previous downturns”. Nevertheless, in general Rhonda believes the environment remains optimistic for private equity and that it can reach a premium that justifies continued investment in the asset class. “We’ve probably hit the bottom and now we’re coming back up, so there is great reason to be positive”.

This does not mean to say that private equity has not been affected by the financial crisis, however. “There are so few funds in the market at the moment. I have never seen anything like this. Without wanting to offend any GPs, the general quality has been lacking as well”. In addition to the impact on fundraising per se, Rhonda also believes the economic crisis will impact upon the members of fund teams. “Some GPs’ carry will be under water and, since there will be no carry, team members may end up leaving to set up their own funds”. Ironically, this might be the way we see more new funds enter the market.

With the economic crisis giving rise to a renewed demand for transparency, will this new environment result in any changes in the relationship between GPs and LPs? “Well, I view it as a 10-year relationship. It is long-term, like a marriage in some ways, and therefore is not constructive to be looking to point score or knock your partner out!”. For Rhonda, it’s about establishing an equilibrium which is fair for all parties. “In fairness, we are seeing greater transparency from GPs, with quarterly calls a feature which did not happen as much previously. So the pendulum has swung back towards LPs in this respect”.

However, for Rhonda, what the industry does not need is the pendulum swinging so far that one party dominates the other, and she feels this is where the ILPA (Institutional Limited Partnership Association) principles can help. “Not every single ILPA guideline will come into effect, and we do not want to get the point of having a simple ‘tick-box’ system”. For Rhonda, the ongoing dialogue-driven nature of the ILPA guidelines is a big positive.

The dynamic between GPs and LPs will form one of the key discussion points at September’s Capital Creation meeting, which Rhonda feels will prove an invaluable event for networking. “The number of attendees means that it’s very manageable to network and meet everyone you wish to meet. From PineBridge’s point of view, the meeting offers us a real chance to meet GPs and our fellow LPs”.

Rhonda will be putting forward her thoughts as a key panellist at Capital Creation 2010. To find out how you can join Rhonda in Monte Carlo, or to simply to find out more information about this year’s meeting, please telephone +44 (0) 20 7368 9465.