The art of making money from private equity does not involve working in it

As US private equity firms battle to hire junior bankers before junior bankers have even begun their jobs and as junior bankers complain that the big private equity firms aren’t even reimbursing their expenses for travelling miles to interviews, maybe there’s another way. Maybe you don’t even have to actually work in private equity at all.

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Mark O’Hare, a 65-year-old Cambridge mathematics graduate with an MBA from London Business School, has illuminated the alternative path, although whether anyone else can follow him along it is questionable. 

O’Hare has never worked in private equity himself and yet he and his wife – an English and contemporary arts graduate – yesterday made £2bn from the sale of Preqin, their company which sells data on private equity and other alternative asset providers, to BlackRock. O’Hare’s co-founder, Nick Arnott, who studied computing at the University of East Anglia and who left Preqin in 2011, is possibly kicking himself. 300 Preqin employees will also share £500m.

O’Hare has never worked in private equity. He has never even worked in banking. He began his career at Boston Consulting Group in London and has since been a serial entrepreneur. Pre-Preqin there was a range of other businesses, including Citywatch, which he sold to Reuters in 1993.

While private equity professionals struggle to exit underwater investments and to earn the carried interest that might, possibly, bring them a fraction of O’Hare’s riches, the man who trod the alternative path is therefore becoming more financially endowed than BlackRock founder Larry Fink. O’Hare and his wife own an estate and outdoor theatre in Suffolk and although O’Hare is joining BlackRock as vice chair after the deal closes, this country estate will presumably occupy more of his time in the future. 

Fink, meanwhile, now has the task of extracting value from his big purchase. Preqin is reportedly on track to earn revenues of $240m this year. The Financial Times notes that its $3.2bn sale price implies a 13x revenue multiple and says that BlackRock plans to use Preqin to position itself at the centre of private markets, where it intends for Preqin to provide definitive performance benchmarks. There’s talk of synergies and of diversification and hope that the Preqin deal will prove as foresightful as BlackRock’s purchase of iShares from Barclays 15 years ago….

Separately, for all the whinging about Millennium’s strict risk limits and alleged tendency to abruptly withdraw capital from loss-making portfolio managers with no ifs or buts, there are good reasons to work there. 

After returning 10% last year, the Financial Times reports that Millennium returned 6.9% through to the end of June. It’s not clear how this compares to rivals like Citadel, but it might be presumed that Millennium will be hiring: last month Bloomberg reported that the fund plans to raise around $6.8bn in new cash to deploy as needed. With each of Millennium’s investment staff managing an average of $25.6m in assets, this implies the recruitment of 266 new people. 

Meanwhile…

Jonathan Kaye, who resigned from Moelis a week ago, was arrested and charged on Monday morning on second- and third-degree assault charges. He turned himself in. (Financial Times) 

A longer video of Kaye’s infraction shows the escalation ahead of the punch. (OverheardonWall Street) 

Morgan Stanley is ditching the EU bonus cap but isn’t saying how big its bonuses will be in relation to salaries. Instead it says it will adopt “an appropriate internal bonus cap”, and, “continue to pay competitively and reward strong performance.” (Financial Times) 

Revolut is about to file some results showing bumper increases in revenue and income. (Bloomberg) 

Goldman Sachs cut employees at its Chinese securities unit from 500 to 370 last year. Western banks as a whole cut Chinese headcount by 13%. Suddenly India looks more appealing instead. (Financial Times) 

Bridgewater launched a $2bn fund based on its proprietary machine learning technology. (Bloomberg) 

Paul Weiss is set to pay its newly qualified lawyers £180,000 in London amid fierce competition for talent among law firms. (Financial News) 

Robey Warsaw hired FIG banker Chetan Singh from JPMorgan. He’s joining as a partner. (Financial News) 

Tassos Stassopoulos, founder and managing partner of Trinetra, a London-based investment, likes to look in people’s fridges. “I realized that the answer is the fridge! The fridge could tell me how people would behave once they had some extra money—before they even know it themselves.” (Wired) 

Technology banker Rob Chisholm was raised by a single mother in a tiny town on the coast of eastern Canada. He grew up playing lots of sports and working manual labor jobs like painting houses, cutting Christmas trees, and helping out on his uncle’s farm. He now has imposter syndrome. (Business Insider) 

The World Economic Forum is a nightmare to work for. Harassment from staff and attendees is rife. At a WEF Africa summit, one young female employee recalls a CEO asking if she wanted to come back to his room and have a special Japanese whisky with him. She said no. (WSJ) 

HSBC has been displaced. Drug traffickers now like to launder money through Citi. By splitting sums into dozens of smaller deposits, prosecutors claim, they stayed below the $10,000 threshold at which banks are required to report cash transactions to the US Treasury. (Financial Times) 

HSBC has big hiring intentions in South Asia where it wants to increase its wealth management presence. (Bloomberg) 

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