Lecture Notes: Growth Opportunities in Private Equity by David Samber and Matt Neward

Introduction

• Speakers: David Samber & Matt Neward
• Companies: Invited Clubs (largest operator of pickleball courts in the USA)
• Core Value: Challenging convention
• Firm Background:
  • Entering 35th year
  • Started in 1990 with a culture of flexibility, capital preservation, downside protection
  • Assets under management: $135 billion in equity
  • 39% growth, 24% net compounded return since inception

Growth Story Overview

• 2022 Pivotal Moment:
  • Avoided following trends like cryptocurrencies, memes, NFTs
  • Consistent investment strategy appreciated by investors
• Key Business Areas:
  • Hybrid and equity replacement
  • Climate and infrastructure
  • Secondaries business

Private Equity Performance

• Bedrock of the Business: Consistent, superior risk-adjusted returns
• Recent Fund Performance:
  • Fund 9: IRR 29%, $14 billion capital return
  • Fund 10: IRR 47%, strong start
• Positioning for Fund 11: Expected to be larger than Fund 10

Future Growth Areas

• Infrastructure & Climate Business: Generational need for capital
• Hybrid Opportunities:
  • Less levered equity and structured equity
  • More downside protection
  • $70 billion in assets under hybrid-related strategies

Unique Positioning for Hybrid

• Apollo Aligned Alternatives (AAA):
  • Opened to market two years ago
  • Strong performance and growth potential
  • Second largest fund at Apollo

Market Opportunities

• Equity Bucket Penetration:
  • Public equity markets critique: 60% indexed, active management struggles
  • AAA providing better income and growth for retirees

Summary and Roadmap

• Current AUM: $135 billion, expected to double in 5 years
• Key Strategies:
  • Continue execution in Funds 9 and 10
  • Scale climate, infra, secondaries
  • Capture hybrid opportunities
• Long-term Upside: Equity replacement, retirement market products
• Overall Goal: Continue leveraging capabilities for growth and innovation