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Rather than directly financing investment vehicles managed by General Partners (GPs), some investors choose to acquire equity stakes in the management firms themselves. This approach, known as GP Stakes, focuses on the growth and profitability of the investment platform itself rather than solely on the performance of the funds it raises. It stands in contrast to the traditional Limited Partner (LP) approach, which centers on the performance of a single fund rather than the enduring value of the management company.
Originating in the United States in the early 2000s, GP Stakes gradually institutionalized with the emergence of dedicated vehicles such as Dyal Capital (now Blue Owl) and Petershill (Goldman Sachs). Today, GP Stakes are recognized as a standalone investment strategy, attracting institutional investors seeking stable, differentiated, and non-correlated cash flows.
A GP Stake investment consists of acquiring a minority equity position—typically between 10% and 30%—in a GP. This ownership confers rights to three primary sources of income:
- Management fees: predictable and recurring revenue derived from Assets Under Management (AUM).
- Carried interest: a share of the profits generated by the funds, usually set at 20% beyond a performance threshold.
- Co-investments (balance sheet returns): direct exposure to the GP’s own investments in its funds, often on preferential terms.
For the investor (LP), this strategy provides access to three distinct revenue streams, differentiating it from traditional private equity approaches that typically only offer net fund performance.
The rise of GP Stakes is underpinned by several structural trends:
• Growth of alternative assets: According to Preqin, global AUM is expected to reach nearly $30 trillion by 2029.
• Industry consolidation: mid-sized GPs are seeking strategic partners to fund expansion and compete with global platforms.
• Demand for stable income: institutional investors increasingly prioritize recurring cash flows that are uncorrelated to public markets.
North America maintains a lead, with multi-billion-dollar vehicles dedicated to top-tier managers (e.g., CVC, PAI, H.I.G.). Europe, however, is experiencing emerging momentum, with growing interest from actors such as AXA IM and GP House.
A defining feature of GP Stakes is their capacity to generate recurring cash flows over time. Unlike secondary portfolios, which naturally deplete as funds mature, the continuous raising of new funds by the GP perpetually fuels the economic engine. This “regenerative” logic provides a rare degree of visibility.
The value differential relative to traditional private equity investments is often referred to as** GP Alpha: ** • receiving management fees rather than paying them
• access to carried interest across multiple funds and vintages
• preferential co-investment exposure, often without additional fees
• potential appreciation of the management company itself in the event of a sale or IPO.
For investorss
• Diversified returns (management fees, carried interest, equity appreciation)
• Generally stable income, less sensitive to market cycles
• Preferential access to GP governance and deal flow
• Complementary to secondary strategies, mitigating the J-curve
For GPs
• Immediate liquidity to finance growth or strengthen the balance sheet.
• Facilitates intergenerational succession.
• Opens new distribution channels.
• Access to strategic expertise from investors.
Despite their advantages, GP Stakes entail specific risks that must be carefully managed:
• Fundraising dependence: GP revenues rely on their ability to raise new funds. A slowdown in fundraising directly affects future cash flows.
• Concentration on human capital: the value of a GP is highly dependent on key teams. Departure of strategic partners can disrupt growth momentum.
• Valuation and liquidity constraints: GP Stakes are long-term investments (10–12 years), with no well-established secondary market, and valuations depend on sensitive assumptions.
• Regulatory and reputational context: regulatory tightening or controversies can affect both profitability and reputation.
• Capital and liquidity risk: investing in alternative investment funds (AIFs) carries risks, including potential capital loss and limited liquidity.
At the intersection of private equity, private debt, and secondaries, GP Stakes have emerged as a hybrid and differentiated strategy. For GPs, they provide a lever for growth, succession, and financial resilience. For investors, they offer “meta” access to the private markets economy, combining structural alpha with a rare blend of stability and growth.
Sources
PitchBook – General Partner Stakes: An Overview (2020) ; Blue Owl Capital (site institutionnel).
Investcorp – GP Stakes Investing (2023).
Blue Owl Capital – GP Stakes Strategy Overview.
Preqin – Global Alternatives Report 2024 (prévisions : ~30 trillions d’AUM en 2029).
Pitchbook – GP stakes gain traction as fundraising slows
A GP Stakes refers to the acquisition of a minority equity interest (typically 10–30%) in a fund manager (GP). The investor then benefits from three primary sources of income: management fees (regular revenue linked to assets under management), carried interest (a share of the fund profits), and co-investments by the GP (direct exposure to the GP’s own funds, often on preferential terms).
The leading actors in GP Stakes include Blue Owl Capital and Petershill Partners (Goldman Sachs), pioneers in minority stakes in private equity and private credit management firms. Other key players include Blackstone, Wafra, Hunter Point Capital, and PACT Capital, all active in the GP Stakes market.
GP Stakes allow investors to capture stable income through management fees, alongside potential upside via carried interest and equity appreciation. The strategy also offers significant diversification, exposing investors to multiple GPs across different strategies, geographies, and vintages, thereby mitigating risk while concentrating the commitment within a single investment vehicle.
Investors in GP Stakes are entities acquiring minority stakes in private equity firms. Today, this primarily includes private equity firms themselves, deploying capital from dedicated GP Stakes funds provided by their LPs. These LPs then benefit from the returns and strategic advantages generated by the stake, which are integrated into their broader portfolio.