🎥 Investcorp Strategic Capital Group's Anthony Maniscalco - the evolution of GP stakes

Welcome back to the Alt Goes Mainstream podcast.We sat down with Anthony Maniscalco, the Managing Partner and Business Head of Investcorp Strategic Capital Group (ISCG).We were live from Berlin, which becomes the “capital of private capital” in June as private equity industry leaders make the annual pilgrimage to the city for one of the marquee private equity conferences, SuperReturn Berlin.With Prosek Partners and former Bloomberg TV journalist Deirdre Bolton as my producer, along with her team, we took over a Tiny Space cabin to hold big conversations with some of the industry’s leading alternative asset managers.Investcorp has been a pioneer in private equity. Since its founding in 1982, the firm has grown from a “boutique Gulf firm” into a global and diversified alternative asset manager.Investcorp launched its Strategic Capital Group (SCG) (GP stakes) business long after its founding in 1982. But the firm brought in a pioneer to launch and build SCG into a leading GP stakes firm, which now has over $2.2B of AUM.Anthony has been involved in GP stakes from the industry’s early days. He was a founding member of Blackstone Strategic Capital Holdings, a $3.3B private, permanent capital vehicle focused on acquiring minority interests in alternative asset manager GPs. He was also a Managing Director of the Hedge Fund Solutions business at The Blackstone Group. Prior to joining Investcorp, Anthony was a Managing Director and Co-Head of Credit Suisse Anteil Capital Partners.Launched in 2019, Investcorp’s SCG acquires minority interests in alternative asset managers, particularly GPs that manage longer-duration private capital strategies. SCG has completed 12 investments since inception.Anthony and I had a fascinating conversation about the evolution of GP stakes and the benefits of GP stakes for investors. We covered:Why have stakes shifted from hedge funds to alternative asset managers?Why the features of the alternative asset management business model (contracted management fees, locked-up capital, less key-person risk) can make for a good GP stake investment.Why a GP would sell an equity stake in its firm to finance its growth.Unpacking the middle-market GP landscape and where middle-market GPs need help growing their firm.The evolution from fund to firm and what’s next for GP stakes.BioAnthony Maniscalco is the Managing Partner and Business Head of Investcorp Strategic Capital Group (ISCG), based in New York. ISCG is focused on providing capital solutions to the GPs of mid-sized private market alternative asset managers. ISCG closed its inaugural fund in the Spring of 2022 and currently manages over $2.2 billion of AUM. In his current role, Mr. Maniscalco is focused on managing the overall business, sourcing new investment opportunities, advising portfolio GPs and is the chairperson of the Investment Committee.Prior to his current role, Mr. Maniscalco was a Managing Director and Co-Head of Credit Suisse Anteil Capital Partners. Prior to this, he was Managing Director of the Hedge Fund Solutions business at The Blackstone Group. At Blackstone, he was a founding member and on the investment committee of Blackstone Strategic Capital Holdings, a USD 3.3 billion private, permanent capital vehicle focused on acquiring minority interests in alternative asset manager GPs.Prior to Blackstone, Mr. Maniscalco was Head of Alternative Asset Management Banking at Barclays (and its predecessor Lehman Brothers) within its Financial Institutions Group. Prior to this role, Mr. Maniscalco was head of the Media and Telecom vertical within Lehman Brothers’ Leveraged Finance Group.Early in his career, he worked at Bank of America and its predecessor Continental Bank in Chicago, focused on high-yield, mezzanine, syndicated bank loans, and interim financing products.Anthony holds a B.S. from Indiana University (2026 College Football National Champions!) and an M.B.A. from the University of Chicago.Thanks, Anthony, for sharing your expertise, wisdom, and passion about GP stakes and the business of alternative asset management.Show Notes00:00 Live From SuperReturn00:27 Meet Anthony Maniscalco02:22 Early Stakes Were Hedge Funds04:03 Private Equity Stakes Inflection04:56 Why GP Stakes Invest Well05:19 Locked-In Fee Cashflows05:58 Carry And Diversification06:34 Where LPs Bucket Stakes07:32 Today’s Allocation Buckets08:29 Stakes As Strategic Access09:05 The LP-GP Flywheel10:12 Catalyzing Fundraising Growth10:40 Capital Formation Support11:32 Underwriting Growth Readiness12:05 Scalability And Persistence12:57 Primary Capital Use Of Proceeds13:12 Why Sell Expensive Equity14:33 Equity Plus Prefs And Debt14:56 Barbell Market And Wealth15:35 Talent Retention And Next Gen16:41 Wealth Channel Strategy Fit17:21 Underwriting Middle Market Plays19:31 Portfolio Construction Framework19:56 Where Buyout Works Today20:59 Why Venture Is Harder22:13 Hardest Middle Market Questions23:11 What Creates Manager Edge24:03 Fund Three Minimum Rule24:57 From Fund To Firm26:15 Liquidity And Exit Paths27:20 Deal Level Vs Fund Liquidity28:15 Strategic Buyers And Realizations28:54 Fund Leverage And Bonds29:24 Rise Of Prefs And Debt30:16 Multi Solution Stakes Platform31:02 GP Stakes For Wealth Investors32:09 Downside Protection And Speed32:47 Still Upside With Equity33:25 Alignment Is Everything34:36 Cash In Not Cash Out35:38 Do Stakes Improve Performance36:43 Growth Keeps Firms Stable37:08 What’s Faster And Slower37:29 Is The Market Really Crowded38:23 Mid-Market TAM Opportunity39:47 New Liquidity Tools Emerging40:20 Continuation Vehicles Boost Economics41:04 CV Market Impact On Stakes42:03 Helping GPs Launch CVs43:06 When M&A ReturnsJoin over 16,900 Substack subscribers & followers and 44,000 LinkedIn and podcast followers who are thought leaders and executives from top private markets firms and wealth management like Blackstone, Apollo, Ares, KKR, EQT, Carlyle, Blue Owl, CVC, TPG, Brookfield, Vista, Goldman Sachs, J.P. Morgan, BlackRock, Fidelity, iCapital, Franklin Templeton, Nuveen, Hg, Permira, Stonepeak, Hamilton Lane, StepStone, Partners Group, General Atlantic, Hightower, Focus Financial, Corient, Cerity Partners, and more. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit altgoesmainstream.substack.com