Page 113 - Forbes - USA (November 2019)

MIKE BINGLE, 47
SILVER LAKE, MENLO PARK, CA
ASSETS: $43 BIL NET WORTH: $1.2 BIL

Joined firm in 2000, after stints at Apollo Global and Goldman Sachs. Within a
decade became co-head of its North American operations. He helped close
deals for Ameritrade, Virtu Financial, Datek Online, SoFi and Ancestry.com.

SCOTT KAPNICK, 60 GREG MONDRE, 45 109
HPS INVESTMENT PARTNERS, NEW YORK CITY SILVER LAKE, MENLO PARK, CA
ASSETS: $55 BIL NET WORTH: $1.4 BIL ASSETS: $43 BIL NET WORTH: $1.2 BIL
Formerly CEO of Highbridge Capital, the hedge Joined Silver Lake in 1999. He has done deals for T
fund and credit manager owned by JPMorgan. Sabre Corp., Vantage Data Centers, UGS Corp., H
Kapnick started at Goldman Sachs, where he rose GoDaddy and Motorola Solutions. He first started E

to co-head of investment banking and co-CEO of doing tech private equity deals at TPG and also
I

Goldman Sachs International. He left before the worked at Goldman Sachs. N
financial crisis and joined Highbridge in 2007 after V

its sale to JPMorgan to build a credit business. In E
S
2016, JPMorgan divested HPS. Assets have since T
ballooned. LAWRENCE GOLUB, 60 I
G
GOLUB CAPITAL, NEW YORK CITY A T
ASSETS: $30 BIL NET WORTH: $1.1 BIL I
EGON DURBAN, 46 Founder of Golub Capital, which claims it received O

no tax benefit from its stake sale. A former banker N
SILVER LAKE, MENLO PARK, CA
with stints at Allen & Co., Wasserstein Perella and
ASSETS: $43 BIL NET WORTH: $1.2 BIL Bankers Trust, Golub founded Golub Capital in 1994
One of four managing partners who now run the as a traditional leveraged buyout firm. In 2001, he

firm, which specializes in tech investments and pivoted and turned the firm into a lender, mostly to

manages $43 billion. Durban is best known for other private equity firms like Vista Equity and Thoma

orchestrating high-profile deals for Dell, Motorola Bravo. Since the crisis, assets have grown fifteenfold.

Solutions and Pivotal Software. Was a founding

principal of the firm in 1999.
DAVID GOLUB, 57
GOLUB CAPITAL, NEW YORK CITY
KENNETH HAO, 51
ASSETS: $30 BIL NET WORTH: $1.1 BIL
SILVER LAKE, MENLO PARK, CA Joined brother Lawrence in 2003 at Golub Capital, which says it received
ASSETS: $43 BIL NET WORTH: $1.2 BIL no tax benefit from its stake sale. He’s now CEO of the firm’s publicly

Hao expanded the tech private equity firm into key Asian markets by traded Golub Capital BDC. After graduating from Harvard, Golub got a

starting offices in China and Japan. He led Silver Lake’s profitable invest- master’s in philosophy from Oxford, where he was a Marshall Scholar, and

ment in Alibaba Group. Hao joined Silver Lake in 2000 after spending an M.B.A. from Stanford. He was the first chairman and a longtime direc-

nearly a decade at San Francisco investment bank Hambrecht & Quist. tor of the Michael J. Fox Foundation for Parkinson’s Research.
“The Vista deal woke everybody up,” says one senior Wall leveraged, long-term model had seemingly been tailor-
Street dealmaker. made for a low-interest-rate prolonged bull market.
Rees quickly pivoted to focus on private equity. By Sep- In a typical deal, Rees would spend between $400 mil-
tember 2015 he was telling institutional investors like the lion and $800 million over a two- to four-year period and
New Jersey State Investment Council that Dyal’s private eq- in return receive a 10% to 20% stake in all of a private eq-
uity stake deals were a “natural continuation of its existing uity firm’s net management fees and half of its performance

business in acquiring similar stakes in hedge fund manag- fees, or carry, meaning Dyal would get, say, 15% of the fu-
ers.” He marketed the Dyal private equity general partner- ture management fees and 7.5% of the carry. Dyal’s minority
ship funds as steady income-gushers, with yields in the low stakes were passive—Rees would have no say in the running

teens, at a time when Treasury bills were near zero and AAA of the private equity firm. To make it work, Rees structured
corporates paid less than 4%. For the liability-matchers of his Dyal funds as perpetual vehicles with a life span as long
the pension and insurance world, it was music to their ears. as forever, meaning Rees would never be forced to sell his
The hedge fund boom was ending, and private equity— general-partnership stakes—so he and his institutional in-
with its ten-year life-span funds—seemed like a better deal. vestors could hold on to them like a high-yield annuity.
Assets under management are stable, making those 2% fees If the private equity managers selling decide to leave the
associated with them more predictable. Limited partners proceeds in their firm or roll it into its other funds, the PE

almost never default on the capital commitments. managers pay no tax on it—the tax bill is deferred—until
By contrast, hedge funds proved inherently more vola- the money comes out. In other words, the seller gets to turn
tile. In early 2015, for example, Dyal bought a 20% stake in future ordinary income into long-term capital gains—and
activist hedge fund Jana Partners at a $2 billion valuation if they leave the money in the fund, they effectively invest

when Jana managed $11 billion. But within four years Jana pretax and put off the tax bill indefinitely.

was down to $2.5 billion in assets managed as returns went Either way, the government is collecting less tax revenue,
south and investors yanked their capital. Private equity’s because Dyal’s investors are often foreign and tax-exempt
GOLUB: JOHN MINCHILLO/INVISION/AP
KAPNICK: BENNETT RAGLIN/GETTY IMAGES; MONDRE: JARED SISKIN-PMC/GETTY IMAGES;
N O V E M B E R 3 0 , 2 0 1 9 F O R B E S . C O M