As a co-founder, she provides her strategic insights at SKKY Partners.
(Photo: AFP)
frankfurt As expected, the Potsdam I hall of the Berlin Superreturn was packed. At a conference that brought together the so-called who’s who of the private equity industry, one name in particular drew the crowd this time: Kim Kardashian, a co-founder, offered insights into her strategy at SKKY Partners.
Along with veteran managing partner Jay Sammons, she said she wanted to move the company forward. The ex-wife of controversial rapper Kanye West has more than 300 million Instagram followers and an estimated fortune of $1.2 billion. Sammons worked for years at private equity firm Carlyle, where he was involved in investments such as Beats by Dre and Beautycounter.
Kardashian spoke about her first experience in the industry in a stylish business attire. “People in private equity are very, very nice,” said the influencer, thus putting the audience on her side from the start of the discussion.
But then she got more specific. Together with Sammons, she hopes to help young Internet entrepreneurs build consumer brands. She emphasized that there are communities within social media channels where brands can be promoted. She is a “storyteller” herself and knows “to do challenging things”.
The veteran entrepreneur who sells cosmetics and brands only got into trouble last year. The incident was sparked by an Instagram post about a little-known cryptocurrency. It even became the focus of the SEC’s attention at the time.
All the worries of distracted investment managers
But stories like this can’t spoil the entrepreneur’s good mood out there, which she infected with the audience at the Kardashian panel. Moving away from the event, the mood remains distinctly sombre.
Because in the private equity industry, financial investors, fund managers and financiers have little reason to be cheerful: the number of deals has plummeted, it is more difficult to launch new funds, and the stock exchange is closed as a lucrative exit channel.
On top of that, in the case of large deals, very little credit is provided for corporate acquisitions.
Investment funds such as KKR, Carlyle, EQT or Advent buy mid-sized companies and parts of groups, restructure them and then sell them at a higher price or take them public after a few years. Big deals were also easily financed during the past zero interest rate policy era, but those times are over after the central bank raised interest rates.
“We still have to wait six to 12 months for things to normalize,” one private equity manager estimated at the meeting, which was attended by an estimated 4,000 people.
Most private equity managers agree that price expectations between buyers and sellers of investments are still far apart. That’s why it’s hard to draw conclusions. Valuations, on the other hand, have fallen, and in technology, the discount to the boom period is 30% to 40% — depending on the profitability of the company, an expert explained. Wait until the “expectation gap” closes.
Private investors will become a new target group to focus on in the future
KKR manager Philipp Freise said the investment industry had been evolving over the years. In his view, the business model should be better explained to the public. At the same time, he is bullish on new investment opportunities as valuations fall.
The current trend in the industry is toward greater “democratization.” This means that private clients should have better access to the market – for example through European long-term funds (so-called Eltifs).
Interviews with SKKY partners Kardashian and Sammons at Superreturn in Berlin also revealed the fact that new deals are currently largely governed by the principle of hope. We are currently researching a number of investment opportunities and hope to draw conclusions in the coming months. Maybe then we can strike a deal for the next super return.
more: Tougher times ahead for financial investors