As a co-founder, she gave insights into her strategy at SKKY Partners.
(Photo: AFP)
Frankfurt As expected, the large hall called Potsdam I at the Superreturn in Berlin was bursting at the seams. At the conference, which brought together the so-called who’s who of the private equity industry, one name in particular drew the crowds this time: Kim Kardashian, as co-founder, gave insights into her strategy at SKKY Partners.
Together with the experienced managing partner Jay Sammons, she says she wants to advance the company. The ex-wife of controversial rapper Kanye West is followed by more than 300 million people on Instagram, and her fortune is estimated at $1.2 billion. Sammons worked for many years at the private equity house Carlyle and was involved in investments such as Beats by Dre and Beautycounter.
Stylish in a business outfit, Kardashian reported on her first experiences in the industry. “People in the private equity business are very, very nice,” said the influencer and thus had the audience on her side right from the start of the discussion.
But then she became more specific. Together with Sammons, she wants to help young entrepreneurs in the Internet universe to build consumer brands. She emphasized that there are communities in the social media channels that promote brands. She herself is a “storyteller” and knows that “you have to do things that are challenging.”
The veteran entrepreneur promoting cosmetics and brand names only got into trouble last year. The trigger for this was an Instagram post for a little-known cryptocurrency. At that time, it even became the focus of the SEC.
Distraction from all the troubles of the investment manager
But stories of this kind can’t spoil the entrepreneur’s good mood on the outside, with which she infected her audience at the Kardashian panel. Away from this event, the mood remained clearly gloomy.
Because in the private equity industry there is little reason for financial investors, fund managers and financiers to be in a good mood: the number of deals is falling sharply, launching new funds is more difficult and the stock exchanges are closed as a lucrative exit channel.
Above all, the provision of credit for company takeovers is scarce in the case of large deals.
The investment funds such as KKR, Carlyle, EQT or Advent buy medium-sized companies and parts of the group, restructure them and then sell them on after a few years at a higher price or take them public. In times of the past zero interest rate policy, mega deals could also be financed easily, but these times are over after the interest rate increases by the central banks.
“We will still have to wait six to twelve months for the situation to normalize,” estimated a private equity manager at the conference, which was very well attended with an estimated 4,000 participants.
Most private equity managers agree that the price expectations of buyers and sellers of investments are still far apart. That’s why it’s so difficult to come to a conclusion. On the other hand, the valuations have come down, in the technology sector the discounts compared to the boom period are 30 to 40 percent – depending on the profitability of the companies, explained an expert. Wait until the “expectation gap” closes.
Private investors will be the new target group in focus in the future
The investment industry was getting on in years, agreed KKR manager Philipp Freise. In his opinion, the business model should be better explained to the public. At the same time, he was bullish on new investment opportunities as valuations have fallen.
A current trend in the industry is greater “democratization”. What is meant by this is that private customers should have better access to the market – for example via European long-term funds (so-called Eltifs).
The fact that new deals are currently governed primarily by the principle of hope was also shown in an interview with SKKY partners Kardashian and Sammons at Superreturn in Berlin. We are currently examining some investment opportunities and hope for a conclusion in the coming months. Maybe then we could come up with deals for the next super return.
More: Harder times are ahead for financial investors