Marc Rubinstein on Blue Owl Capital and the Economics of Private Equity

We had the pleasure of speaking with Marc Rubinstein, author of Net Interest, an acclaimed financial sector newsletter, about his essay, The Private Equity Firms’ Private Equity Firm.

Marc writes:

A few weeks ago, in Zuckerman’s Curse and the Economics of Fund Management, we talked about hedge funds. We concluded that owning a hedge fund, or at least a basket of them, could be more lucrative than investing in one. However, aside from Sculptor Capital Management (formerly Och Ziff) there aren’t that many publicly available.

What are publicly available are private equity firms. Large firms like Blackstone, KKR, Carlyle and Apollo all trade on the public markets. Joining their ranks in the not-too-distant future is Blue Owl, which is in the process of coming to the market via a SPAC merger.

Blue Owl is different from your regular SPAC because it is being formed via the merger of three companies rather than the usual two. One is the SPAC sponsor, the vehicle through which the others go public—Altimar Acquisition Corporation. Another is Owl Rock, a direct lending platform which lends to companies, including those that do private equity. And the third is Dyal, a private equity firm that invests in other private equity firms. In many ways this new company is the private equity firms’ private equity firm.

So if hedge fund equity was worth thinking about as an investment, what about this thing? And more broadly, how do the economics of private equity stack up against the economics of hedge funds?

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About This Audio Series:

MOI Global is delighted to engage in illuminating conversations on the financial sector with Marc Rubinstein, whose Net Interest newsletter we have found to be truly exceptional. Our goal is to bring you Marc’s insights into financial services businesses and trends on a regular basis, with Marc’s weekly essays serving as inspiration for our discussions.

About Marc Rubinstein:

Marc is a fellow MOI Global member, managing partner of Fordington Advisors, and author of Net Interest. He is a former analyst and hedge fund manager, most recently at Lansdowne Partners, with more than 25 years of experience in the financial sector. Marc is based in London.

About Net Interest:

Net Interest, authored by Marc Rubinstein, is a newsletter of insight and analysis from the world of finance. Enjoyed by the most senior executives and smartest investors in the industry, it casts light on this important sector in an easy-to-read style. Each post explores a theme trending in the sector. Between fintech, economics and investment cycles—there’s always something to talk about!

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