Key Takeaways
- • The Johnson Private Equity & Credit Club hosted the 2022 Cornell Alternative Investments Symposium on Feb. 18, 2022, at the Verizon Executive Education Center on the Cornell Tech campus in New York City, the first in-person event since 2019, attracting more than 250 graduate students, alumni, faculty and industry professionals.
- • The inaugural Cornell Strategic Alternatives Case Competition asked student teams to pitch a hypothetical acquisition of Chewy (NYSE: CHWY) to a mock private equity investment committee; NYU Stern placed first, UVA Darden second and Johnson's Executive MBA Metro NY third.
- • Five panels covered private equity, private credit, venture capital, real estate and cryptocurrencies, with each panel addressing ESG's impact on its asset class.
- • Private credit panelists estimated roughly $1 trillion of the approximately $4 trillion sub-investment grade market is private credit, and said leverage is at or near all-time highs while credit quality remains significantly higher than before the Great Recession.
- • Panelists across asset classes reported that investors increasingly ask about ESG factors when selecting managers, and that sponsors are pushing portfolio companies toward higher ESG scores.
Summary
The 2022 Cornell Alternative Investments Symposium, hosted by the Johnson Private Equity & Credit Club (JPEC) on Feb. 18, 2022, was the first in-person edition since 2019 and followed the student-run event's growth from a 2016 campus conference into a professional conference in New York City. The event was supported by platinum sponsor White & Case LLP and corporate sponsors Civitas Capital Group, Smooth Commerce and the CAIA Association, according to the college's account of the event.
The symposium featured JPEC's inaugural Cornell Strategic Alternatives Case Competition, in which graduate teams from Johnson, NYU Stern, Duke Fuqua and UVA Darden pitched a hypothetical acquisition of Chewy to a mock investment committee. Ideas ranged from a take-private leveraged buyout and partial public equity purchase to a recommendation not to invest. Judges Craig Klosk and Frank Schiff, who together have more than 50 years of private equity experience, led the questioning.
The first panel, on private equity value creation, included representatives of White & Case, Blackstone, A&M Capital and CDPQ. Panelists discussed the record volume of private equity deals in 2021 and debated the large amount of dry powder awaiting deployment, with one noting that megafund partnerships and deal competition leave relatively little capital actually waiting. Panelists also said clients increasingly request ESG considerations. Venture capital panelists discussed founder persistence, corporate venture arms and the rise of female-founded firms, while noting the difficulty of measuring ESG impact at early stages. Real estate panelists identified industrial assets as the pandemic outperformers and discussed rising-rate effects, with developers seeking fixed-rate financing and institutional investors in industrial and multifamily favoring floating-rate loans.
The private credit panel, featuring TD Asset Management, Morgan Stanley Private Credit and Blackstone, said the lower end of the public high-yield market is shrinking as borrowers shift toward private markets. Floating-rate private loans were cited as a mitigant to rising rates, though speakers flagged aggressive EBITDA add-backs and loose documentation. Sustainability-linked loans were described as popular in Europe, with the U.S. following at a lag.
The symposium featured JPEC's inaugural Cornell Strategic Alternatives Case Competition, in which graduate teams from Johnson, NYU Stern, Duke Fuqua and UVA Darden pitched a hypothetical acquisition of Chewy to a mock investment committee. Ideas ranged from a take-private leveraged buyout and partial public equity purchase to a recommendation not to invest. Judges Craig Klosk and Frank Schiff, who together have more than 50 years of private equity experience, led the questioning.
The first panel, on private equity value creation, included representatives of White & Case, Blackstone, A&M Capital and CDPQ. Panelists discussed the record volume of private equity deals in 2021 and debated the large amount of dry powder awaiting deployment, with one noting that megafund partnerships and deal competition leave relatively little capital actually waiting. Panelists also said clients increasingly request ESG considerations. Venture capital panelists discussed founder persistence, corporate venture arms and the rise of female-founded firms, while noting the difficulty of measuring ESG impact at early stages. Real estate panelists identified industrial assets as the pandemic outperformers and discussed rising-rate effects, with developers seeking fixed-rate financing and institutional investors in industrial and multifamily favoring floating-rate loans.
The private credit panel, featuring TD Asset Management, Morgan Stanley Private Credit and Blackstone, said the lower end of the public high-yield market is shrinking as borrowers shift toward private markets. Floating-rate private loans were cited as a mitigant to rising rates, though speakers flagged aggressive EBITDA add-backs and loose documentation. Sustainability-linked loans were described as popular in Europe, with the U.S. following at a lag.
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