General Atlantic to push other asset classes

Ford says he thinks “the firm’s global presence will differentiate General Atlantic from other asset managers and help portfolio companies scale”. — Bloomberg

NEW YORK: General Atlantic is reorganising around three core businesses to prepare for a more aggressive expansion beyond its roots as a growth equity firm and become a bigger money manager.

“Looking to the future, there will be fewer firms, yet they will offer a greater number of solutions,” chief executive officer Bill Ford, 62, said in an interview. “We’re positioning ourselves to be one of those.”

The firm tapped Martin Escobari, 51, to oversee growth equity and his fellow co-president, Gabriel Caillaux, 47, to head climate investing, signalling the importance of both businesses to General Atlantic.

The moves cement their growing roles at the firm, with about US$77bil of assets under management, as it weighs an initial public offering (IPO).

Escobari will continue to lead the firm’s investment committee and Latin America business, while Caillaux will keep overseeing General Atlantic’s business in Europe, the Middle East and Africa.

The firm also plans to become a bigger source of financing following this year’s acquisition of Iron Park Capital Partners, the business founded by credit pioneer Tripp Smith.

Executives project climate investments and credit eventually could each grow into US$40bil businesses, compared with about US$3bil apiece now.

Being bigger in other areas, Ford said, will help the firm build closer ties with investors.

General Atlantic has been mulling an IPO in recent years, a milestone that would put more pressure on the company to generate steady fees and grow assets across markets during good times and bad.

Today, startup investors are grappling with slumping valuations and rising interest rates. The IPO market is showing signs of thawing but isn’t a clear route to profits.

The challenging climate strengthened General Atlantic’s resolve to continue becoming less reliant on growth equity.

As the firm with more than 550 employees becomes more complex, Ford has been clarifying the roles of key lieutenants.

Graves Tompkins, who led fundraising efforts, will be chief operating officer. Co-president Anton Levy, the firm’s chairman of technology, will spend more time hunting for deals.

General Atlantic debuted in 1980 as a family office for Charles “Chuck” Feeney, who co-founded airport retailer Duty Free Shoppers and made a fortune selling liquor and luxury goods to travellers.

It helped pioneer growth equity as an asset class and is known for bets on CrowdStrike Holdings Inc, Slack and ByteDance.

The firm was an early US entrant to Latin America, where it has done deals since the 1990s.

It did its first transactions in China and India in the early 2000s and has invested about US$7bil in China since. Asia makes up roughly a quarter of its portfolio.

Ford, speaking during a business trip that includes stops in India, China and Abu Dhabi, said he thinks “the firm’s global presence will differentiate General Atlantic from other asset managers and help portfolio companies scale”.

Investing in China will be different from the past two decades because of the changing geopolitical environment, Ford said.

While it’s always reassessing the risks of new bets, Ford said the firm is “excited about the growth opportunities in many segments of the Chinese economy” over the long term.

General Atlantic has slowed the pace of investment in China in recent years, according to Mary Armstrong, a spokeswoman for the New York-based firm.

It doesn’t have stakes in Chinese companies involved in quantum computing, semiconductors and artificial intelligence – areas that will be restricted under an executive order from President Joe Biden – and General Atlantic will respond as US rules evolve, she added.

For its next leg of growth, the firm plans to continue building on its momentum in climate investing and credit.

Last year, General Atlantic closed its first fund to invest in businesses poised to profit from the push by countries and companies to minimise their carbon footprints.

Caillaux, the new head of climate investing, will help figure out how General Atlantic can be a bigger player in renewable infrastructure and battery storage.

Ford said he isn’t ruling out an acquisition of another firm or team.

Even as General Atlantic grows beyond growth equity, its oldest business will continue to be a major focus.

“What we want to do is use the same approach that made us successful in growth equity to expand to additional asset classes,” Ford said. — Bloomberg

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