You studied history and politics at university, but right from the beginning you’ve worked in corporate finance, was that always the plan?

No, not at all. I don’t think I knew what corporate finance was growing up! I spent my school and university holidays working for my mother’s wholesale jewellery business and traveling as much as I could, while everyone else was doing multiple internships. In my final term at Oxford, I met someone from Investec at a careers fair. I liked the way they presented themselves as an entrepreneurial firm, focused on building long-term client relationships, so I applied, and I was accepted onto their graduate programme. I developed an interest in helping businesses grow and develop from there.

Tell us a little bit about your career. You mentioned Investec, you were at Bank of America, leading their high growth corporate broking team, and you now work for Blue Owl.

Investec was a fantastic place to grow up. The founders, Bernard Kantor and Stephen Koseff, still had a big presence in the day to day and a lot of our clients were founder-led small and mid-cap businesses with huge growth aspirations. You learn to put yourselves in their shoes, to help them access the capital markets and develop a supportive shareholder base, to think strategically about “how do I grow my business to the next level?”. Is it through taking on debt or by listing my business on the stock exchange? Especially in that post-GFC period, I learnt a lot about the value of sound, transparent advice and staying grounded for your clients.

Culturally, Bank of America was a very different place – another great learning experience and, of course, the springboard to meeting Michael Rees, the founder of Dyal Capital, which became Blue Owl’s GP Strategic Capital platform. I was a lead adviser on a strategic project relating to public equity markets and some of their earlier vintage assets. I loved working with the amazing team there and at some point, towards the end of the project, Michael asked me to come and join them.

How would you describe what Blue Owl is and does?

Blue Owl is an NYSE-listed alternative asset manager that was founded in May 2021, with the aim of becoming a one stop shop of private capital solutions for the very high growth private markets ecosystem. It was formed through the combination of Dyal Capital, Owl Rock and, a little time later, Oak Street, all leaders in their respective fields of GP stakes, direct lending and real estate investing. So, across the private markets’ continuum, the group has the capital and capabilities to provide flexible financing solutions at the firm or management company level, at the portfolio asset level and across the real estate assets of private markets businesses.

Blue Owl has been quite a disruptive force in the alternatives space. Since inception, we’ve grown assets under management from $70bn to $192bn, both organically and through the acquisition of several complementary businesses with strong permanent capital bases, cash-flow oriented returns and a focus on capital preservation or limiting downside risk for our shareholders.

You are a Managing Director and investment committee member on the GP Strategic Capital investment team. What kinds of projects do you get involved in?

The senior GPSC investment team takes a generalist-specialist approach – we all have specialisms and functions within the business that we are responsible for driving forward, but we are interchangeable when it comes to promoting the platform with both our LP client base and our GP partners. Given my background, I have responsibility for strategic projects and partner transactions relating to equity capital markets – and that’s a growing focus for us as we evolve our platform. Sitting in London with one other investment team partner, I also support coverage of our European and Southeast Asian institutional and private wealth clients (i.e. our investors) and our relationships with current and prospective GP partners in Europe (i.e. our investments).

More recently, I’ve been asked to lead a new effort to leverage the incredible insights we have as equity partners in 45 of the world’s leading alternative asset managers, and to produce thought leadership and thematic content for our clients. We have a really unique vantage point to spot forward trends in private markets, given our partners manage in aggregate over $2.5tr of private capital assets and we ourselves are at the coalface raising capital for our own funds.

One of the things you’ve written about is that in negotiating partnerships with GPs, the best positioning is ‘maximally aligned and minimally invasive’ to the day to day running of the business. Why is that important?

When we enter into partnership with a GP, we are providing long duration, flexible balance sheet capital to the founders and managing partners, in return for a permanent, minority equity position in their business and a pro-rata share of their firm’s earnings. Our ownership positions are passive, minority stakes (typically c. 10-30%) by design because, far from being in the business of cashing partners out, we are really in the business of cashing partners in. Firms who sell us a stake do so from a position of strength, at an inflection point when the partners want to reinvest more of their money back into the business, and that provides strong alignment.

Because we have minority interests, we don’t get involved in the day to day running of these businesses – the minimally invasive nature of our capital is one of the key attractions for alternative asset managers. That being said, the relationships we build with our founders and managing partners, plus the ongoing strategic engagement across our post-transaction value creation team, means we’re often the first call when management are considering a new initiative or need a trusted sounding board. With over 15 years’ experience, the team is highly skilled in structuring transactions that enable us to engage our partnerships actively without being disruptive to the culture or operations that first attracted us to the GP.

You mentioned you operate a global business services platform (“BSP”) with 57 industry professionals who provide partner firms with post-transaction strategic support. Can you explain how that works and the value it delivers to partners?

The BSP is our post-transaction value creation team and was conceived as a way of helping our partners navigate the radical structural shifts and institutionalisation trends across the alternatives industry. The team started with a focus on capital strategy, but has since grown to provide advice across multiple disciplines that help our GPs remain best-in-class managers. This includes everything from fundraising strategy and client development, business strategy and growth, and digital transformation and optimisation. It’s totally free for our GPs, so we are never incentivised to push them down a particular path, and there is no obligation to use the service, so the extremely high engagement levels tell you something about the value they add.

This is about helping strong firms maintain a competitive edge – exceptional investors have a natural curiosity about where they benchmark and want to stay ahead of the curve. Day one, if you asked our GPs why they entered into partnership with Blue Owl, the primary motivator is invariably capital. But, even our largest and most sophisticated GPs are often amazed, as the partnership develops, how much they go on to engage with and leverage the resources of our strategic platform, especially in an industry that is evolving rapidly and in which there are few comprehensive benchmarks or reference points.

Your focus is on long duration, value created over time, ‘institutionalising’ and building durable, multi-generational organisations. Is this part of the evolution of the PE industry?

As the PE industry, now entering its fifth decade, has developed and matured, it has gone from a very simple business model of raising one fund, investing it and then four years later raising another fund, to the creation of asset management businesses with multiple product lines operating on a global basis. The first step in this journey of institutionalisation is the establishment of a permanent balance sheet and a desire to build a durable organisation with real enterprise value. One that is going to outlast the firm’s current leadership.

Success in this industry is always going to be related to investment performance, but it is no longer enough just to be a great investor. Successful GPs in this new era of alternative asset management must now focus equal attention on professionalising their institutional business development and private wealth capabilities, to maximise the pools of capital that they can access, building competitive advantage through their post-transaction value creation teams, and implementing scalable operational infrastructure that can support the future growth aspirations of the firm.

Perhaps the most critical factor in our assessment of long-term franchise value and the durability of a firm, is the mentality of the managing partners regarding succession planning and incentivisation of future generations of leadership. As investors in GPs, this is where we have developed pattern recognition capabilities that have guided our investment decisions since our first private markets partnership in 2014.

Is this the backdrop that caused the emergence of the GP stakes industry or asset class?

Yes – the GP stakes market as we understand it today, with dedicated pools of capital, emerged as a result of the institutionalisation of private markets, that we’ve just discussed, the rapid growth in AUM within private markets, which has more than quadrupled since 2008, and the shift from being a capital light to a capital intense industry, for the partners financing the growth of these firms.

The overall commitment of money to funds managed by GPs has grown from less than 1% in 2009 to an average of around 5% today – so if you are raising a $1bn fund, the equity partners may now be expected to commit $50m vs $10m of their own cash to demonstrate alignment with their LP investors. An industry that was originally self-funded, now requires external capital to continue its growth trajectory.

Unlike most other industries, where firms wishing to scale reach an inflection point where the public capital markets become an attractive source of funding, only 16 of the world’s 200 largest alternative asset managers have chosen to go public. So that’s where Blue Owl, or Dyal Capital at the time, stepped into the void and became the provider of growth capital to a rapidly growing and evolving industry.

Is GP stakes investing an asset class in its own right?

We have raised over $30bn of capital dedicated to GP stakes, which represents about 60% of all the capital that has ever been raised across the market. So that alone tells you that it has grown into a serious sub-asset class.

However, the real catalyst to it becoming an asset class in of its own right has really been the heightened focus from investors on DPI – the distributed to paid-in capital ratio, which measures the cumulative proceeds returned to investors by a fund, relative to its paid-in capital – in addition to IRR as a key performance metric, in a period where there have been limited distributions because of the lack of exit activity.

GP stakes provide investors with a differentiated investment experience – we have always been a DPI-focused strategy, long before it became a necessity – as there is typically a limited J-curve, and the fund can begin paying out cash distributions to investors very quickly after it starts investing. So, you can achieve private credit type yields and consistent cash flow generation, with private equity style capital appreciation over time. In a period when LP allocations remain stretched and there is a lot of capital tied up in the system, a strategy that can yield immediate returns is very attractive and we’ve seen an increase in the number and types of investors carving out specific sleeves of capital for GP stakes.

Why is the universe of firms involved in GP stakes so small? About a dozen significant players?

For a long time, there were only three major players in the industry, which is unusual given we estimate the investable universe to be in excess of $500bn today. The biggest barrier to entry in GP stakes is the difficulty in raising permanent capital, which is required to match the duration of the investments. Over the past few years, we have seen some new entrants to the market, but these are predominantly focused on partnering with smaller GPs than we are.

What will change most for the industry over the next five to ten years?

The biggest structural changes are likely to be the composition of capital flowing into private markets and the increased complexity of accessing it. The trend of LPs consolidating their relationships with fewer managers is a real one and we see it globally. This will benefit those managers with either scaled operations or strong differentiation, a consistent performance track record and systematic marketing and sales strategies.

In terms of the composition of flows, the earlier adopters of private markets investing, i.e. public pension funds, endowments & foundations and family offices, have target allocations reflective of their maturity, but there are three more recent investor segments that we identify as being critical to the next wave of capital formation.

We believe there will be growing participation from wealth channels, increased partnership between insurance and alternative asset managers driven by mutual economic benefits, and a wave of more recent sovereign investors in private capital markets who have ambitions to significantly increase allocations and gain more direct access to private markets growth. Conservatively, we think the wealth channel alone could allocate an incremental $7.4tr to private markets in the next decade.

How do you see the market outlook at the moment?

The most obvious obstacle in private markets right now is the lack of exits and therefore distributions back to LPs. Distributions are a critical fuel to the capital formation flywheel and a key bellwether for the overall health of private markets. Beyond that, given the enormous growth and diversification we’ve seen across private markets in the last decade, each segment of the ecosystem now faces a unique set of drivers and challenges at different points in a cycle and it’s difficult to talk about the private market outlook as a whole or participants in private markets, either on the GP or LP side, as a homogenous group.

For example, even within private equity, last year was a record fundraising year for buyout strategies, but growth and VC strategies have suffered -31% annualised decline in capital raised since the peak of $513bn in 2021. When you take a step back and consider growth and VC AUM went from $442bn to over $4tr between 2010 and 2023, growing at nearly double the annualised rate of buyout, but net cash distributions to LPs over that period have actually been negative in all years bar 2016, it’s perhaps less surprising that appetite for fresh allocations has dampened, with so much capital still caught up in the system.

Fundraising is a lag indicator, so we may see persistent headlines this year about a slowdown in buyout capital raised, even as the exit environment is accelerating. Given the healthy amounts of dry powder sitting with the largest buyout managers and the distributions we expect to resume, especially if there are rate cuts, we are confident there will be positive progress in cash flows back to LPs over the next 12-18 months.

If we can turn to a key human capital question – how important is a commitment to diversity and inclusion in private equity?

Whilst it’s not yet reflected in the statistics, for me, the most significant shift in thinking around diversity and inclusion is that it is no longer considered by business leaders as an imposition or a burden, but as a strategic imperative that requires authenticity. There is a huge body of evidence that demonstrates it delivers real economic value and competitive advantage, in terms of the quality of talent you can attract and retain, and through enhanced idea generation, risk management and decision making. For that reason, it forms an important component of our diligence when we enter in a new GP partnership and is a very active pillar within our BSP post-transaction.

I think for a long time in finance, diversity and inclusion was interpreted, rightly or wrongly, as a need to place women into senior positions to satisfy reporting requirements. But I have never felt that being one of very few women in finance has defined me or the contributions I’ve made, even after having three children. I have always thought of the value of my diversity much more in terms of the experiences and influences I was exposed to, having been born and raised in Hong Kong to a Korean mother and an English father. It is my culture, experiences and differentiated perspectives that have enabled me to connect with a much broader set of clients, innovate with colleagues and provide mentorship to juniors through my career.

I think that unconscious bias training is one of the most impactful tools to encourage diversity and inclusion in an organisation, especially for those responsible for recruiting and retaining talent. You always come away thinking you’ve learnt something, or you will improve something about the way you interact with people. I’m pleased to say that Blue Owl has just rolled out their own training and it is one of the most comprehensive and practical programmes that I have come across.

If you weren’t at Blue Owl, what would you be doing? If you could do anything else other than this?

Well, with my history and politics background, I always fancied a job in MI6.