The Smart Money is Investing in Tech

A businessman checking his investments on his phone.

Photo credit: Shutterstock

Where is the smart money going when it comes to tech companies? Some leading experts will be exploring that subject at Fortune’s upcoming Brainstorm TECH conference.

Anton Levy of General Atlantic, Kirsten Green of Forerunner Ventures, and David Trujillo of TPG will share the stage in a panel discussion on what industries, ideas, or trends they’re betting on; what they’re seeing in the tech space; and the changes they’re watching for.

It’s no surprise that technology is on people’s minds, with the June ransomware attacks and Microsoft’s announcement of its new SMB-oriented software-as-a-service bundle. A recent article in Institutional Investor says that tech deals are booming in the PE sector.

Not only that, but 2017 has been a boom year for tech IPOs, with Snap going public in March, and Carvana, Cloudera, Elevate Credit, Mulesoft, Netshoes, Okta, and Yext also making their public trading debut. The aggregate value of these IPOs is a whopping $37.5 billion, with Snap making up the lion’s share at a valuation of approximately $20 billion.

Today’s tech IPOs are already light years ahead of those in 2016. By May of 2016, only two companies had gone public. Between January and May of 2017, more than four times that number went public, and more public offerings may be on the horizon. (Tech companies that have been floated as possible IPOs, despite rigorous denial from some of them, include Airbnb, Dropbox, Pinterest, Spotify, and Uber.)

Because of the growing success and valuation of tech companies, private equity money is now flowing into the sector, accounting for almost 40.1 percent of U.S. buyouts last year. This is the highest proportion on record. Firms with a broad range of investment interest, such as General Atlantic, KKR, and Carlyle, are jumping into the game and are being joined by tech-focused PE firms like Golden Gate Capital and Siris Capital.

“An increasing number of tech-related companies have moved beyond the traditional territory of venture capital funds, and the sector as a whole has increasingly become a target for the wider private equity industry,” Christopher Elvin, Head of Private Equity at Prequin, told Institutional Investor.

China has also become a PE magnet. However, concerns about the possible imposition of U.S. trade tariffs, plus concerns about its credit, real estate, and technology sectors seem to be cooling interest in the nation. However, when risk and potential are calmly weighed, China may be the most promising private equity market in the world.

This echoes sentiments that General Atlantic CEO Bill Ford shared in a recent interview with Bloomberg. “We’ve been bullish on China despite lots of mixed sentiment—the country is succeeding in pivoting its economy from export and manufacturing to services and consumption,” he said. “We’re seeing companies there generating 15 to 20 percent-plus nominal GDP growth.”

With so many potential IPOs on the horizon, and some really promising companies to be found in emerging markets, it’s no wonder that the smart money is betting on tech to be the next private equity profit-maker.

I will be curious to see what Levy, Green, and Trujillo share at Brainstorm TECH about their vision for private equity in the tech sector and if it matches up with what other observers have been saying.

KKR Continues Energy Infrastructure Expansion

Hong Kong

One of KKR’s Asia offices is located in Hong Kong. IMG: via Shutterstock

KKR, the private equity and global investment company founded by Henry Kravis, George Roberts, and Jerome Kohlberg in 1976, is no stranger to the energy and infrastructure sectors. For the past thirty years, the company has invested in global energy opportunities—and it’s not slowing down anytime soon.

Recently, KKR announced that it would be continuing the investment trend by expanding its global energy and infrastructure business in Asia by appointing Tony Schultz and Ash Upadhyaya to lead the charge.

“KKR aims to create a unique offering in the energy, infrastructure and natural resources market, and part of that comes from combining our local geographic knowledge with industry expertise,” said Joe Bae, who heads KKR Asia, and Mark Lipschultz, who is Global Head of Energy & Infrastructure. “We are very pleased to have Tony and Ash leading this effort in Asia.”

Schultz and Upadhyaya will focus their efforts on energy, resources, and infrastructure in Australia and Asia. Their goals will include continue building up the team in Asia Pacific, finding new global metals and mining opportunities, and providing flexibility in capital and solutions, according to Justin Reizes of KKR Australia.

Tony Schultz was formerly Managing Director at Sydney’s EIG. While there, he focused specifically on energy, metals, and mining investments in Asia Pacific—making him very well suited to his new post at KKR. Ash Upadhyaya has been with KKR since 2011, previously working as a Director on KKR’s Energy & Infrastructure team in the U.S. Both men bring a huge amount of knowledge about the sector to their new positions.

Hillary Clinton is Taking Over Private Equity

Hillary Clinton

IMG: Alan Freed/ Shutterstock.com

Even though Hillary Clinton is no longer the Secretary of State, she is still getting her hours in around the country. This time, it’s in private equity.

Clinton recently spoke at a private equity event in California with about 400 people in attendance. Here she answered questions from KKR co-founder, Henry Kravis on politics, business and more. Last year, KKR partnered with Clinton by creating an infrastructure improvement plan as part of the Clinton Global Initiative.

More recently, Hillary Clinton is scheduled to speak at the private equity firm the Carlyle Group’s investor conference next month. The moderator of the discussion is the group’s founder, David Rubenstein, who is also a Democrat. Two sources familiar with the event confirmed Clinton’s attendance at the September 9th event in Washington.

At these type of events, she generally does a question-and-answer talk, instead of giving a speech.

According to multiple reports, her speaking fee per event is about $200,000. Bill Clinton’s highest paying speaking event after his presidency brought in $750,000 at a the telecom company Ericsson in Hong Kong.

Ken Mehlman Discusses Operational Expertise, Private Equity on Super Return TV

Ken Mehlman was recently interviewed by Cristina Alesci for Super Return TV in Boston. They discussed topics ranging from operational expertise, private equity, and what General David Petraeus’ role at KKR will be.

When asked, “The notion of private equity using more and more operational expertise to generate returns and improve businesses — what makes KKR different in this respect? How do you stand out from other firms as most claim the same thing?” He answered, “One of the main differences we have is that we have 60 people in our firm who are operational experts and these experts go into a company for a period of 18-24 months and focus on the specific business area that we think that company can operationally enhance.”

Operational expertise seems to be the “hot topic” in business, she points out. Ken Mehlman explains that the private equity industry is about solving problems for companies. Their goal is to make them better. Operational expertise focuses on taking this to the next level.

Alesci then asked about Petraeus’ role at KKR. Ken explained he will be heading the KKR Global Institute along with himself and Henry McVey. “[Petraeus] will build on helping us understand macroeconomic, geopolitical, governance, environmental, regulatory external factors that in today’s world are really important to the success or failure of an investment and are really important to helping our companies do even better.”

Watch below for the entire interview.

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