Episode summary
AGM Live! Cantilever Group's Todd Owens - GP stakes: the best of all world?
Alt Goes Mainstream
· · Hosts: Michael Sidgmore · Guests: Todd Owens
Summary
Todd Owens argues that GP stakes has matured from a niche financing idea into a mainstream way to back alternative asset managers, especially in the middle market. He traces the arc from the early 2000s, when minority investors were hard to find and many doubted alternative managers could even go public, to today’s environment where large public firms and dedicated GP stakes strategies have validated the model.
Owens draws a sharp line between the biggest firms and the middle market. At the top end, he says large managers are already highly institutionalized and often do not need much strategic help from a minority investor. In the middle market, by contrast, firms are real businesses but often lack strategic planning resources, leaving room for an investor that can provide capital and practical operating insight. He also says the market is still diversified by strategy and business model, which makes smaller managers attractive.
On returns, Owens frames GP stakes as a hybrid of private equity, private credit, and secondaries: it offers contractual revenue, yield, and growth, while being less directly exposed to rates than private credit. He thinks private markets growth and wealth-channel adoption will keep creating new firms, even if consolidation eventually reduces the long-run total. In the near term, he expects the number of alternative asset managers to be higher in five years than it is today.
Key takeaways
- Todd Owens says the biggest alternative managers are already sophisticated, but middle-market firms still need strategic help and are a better fit for GP stakes capital.
- Owens argues GP stakes combines visible contractual cash flows, roughly 10-12% yield, and growth, making it a hybrid of private credit and private equity.
- He thinks private markets access in the wealth channel will keep spawning new managers, and he expects more alternative asset managers in five years than today.
- Owens says liquidity in GP stakes is still imperfect, but IPOs, consolidation, strip sales, back leverage, and NAV financing can all create realizations.
- He estimates the middle-market GP stakes opportunity, roughly $10 billion raised today, could reach $12 billion to $13 billion in three years and roughly double over five to seven years.
Notable quotes
“we're just going to be passive. Our capital by itself is strategic”
“the middle market, the businesses are real businesses. They are institutionalized. They are on their third or fourth fund”
“you can create a portfolio that does have yield and because we're investing in businesses that have contractual cash flows but they really don't have any need for capital”
“If you like private credit, we're private credit. We just have growth. And if you like private equity, we're private equity. We just have yield”
“I will bet that in 5 years there will be more alternative asset management firms than there are today by number”
How the episode opens
Everybody gets a piece. We're going to eat. We're going mainream.
All my family see. See you on mainream. From Wall Street to Melrose Avenue.
We're going mainream. venture capitalist to athletes to creators to the person who's collecting trading cards and collision of culture and finance. Welcome back to the Algo's mainstream podcast.
Today's conversation features a live podcast from BTG Pakal's New York office for an audience in private markets. We are joined by Todd Owens, the co-founder and managing partner of Cantalver Group, where BTG Pakal is an investor. Cantalver is an independent firm focused on providing capital solutions to middle market asset managers.
Their capital can be used to accelerate growth, support acquisitions or liftouts, fund GP commitments, seed new strategies, facilitate generational ownership transfer, and provide liquidity to founders. They focus on asset management businesses that have enterprise values between $50 million and $500 million. The team has executed on over $500 million of GP stake financing and seating transactions as both investors and principles.
Cantalver is working with two strategic partners as they build their firm. BTG Pakab, the near $30 billion market cap Brazilian bank and wealth and asset manager that has invested in Cantalver's fund and Broadhaven Ventures, the principal investment arm of Broad Haven Capital Partners. Todd has over 30 years of experience as an adviser covering financial institutions and as a senior financial services executive.
Prior to founding Cantalver, Todd has been a partner at Broad Haven Capital Partners, an independent financial services focused investment bank that's completed over a hundred billion in announced M&A transaction volume, as well as being the former CEO of Fifth Street Finance. Todd began his career at Goldman Sachs, spending 24 years, including as a managing director and partner in the investment banking division.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- gp stakes
- alternative asset managers evolution
- alternative asset manager firm building
- middle market private markets
- private market aum and investor exposure
Companies and tickers mentioned
- GS
- Cantilever Group
- BTG Pactual
- Broadhaven Ventures
- Broadhaven Capital Partners
- Fifth Street Finance
- Goldman, Sachs & Co.
Watch the episode
Watch “AGM Live! Cantilever Group's Todd Owens - GP stakes: the best of all world?” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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Alt Goes Mainstream, this episode and its artwork belong to Michael Sidgmore. Octagon is not affiliated with the show; this page is an independent summary.
