Episode summary
Episode 30: Private Equity: Opportunities in Growth Equity with Guest Bobby Stevenson, Franklin V...
Alternative Allocations
· · Hosts: Tony Davidow · Guests: Robert Stevenson, Bobby Stevenson
Summary
Bobby Stevenson says private and growth equity look more attractive than they did two years ago because valuations have reset and the market is again offering clearer entry points. He describes 2022 to 2023 as the trough for private-market valuations, and argues that the best companies from the 2021 cohort have mostly recovered to those levels while now growing into much larger revenue bases. At the same time, many companies from that era will never revisit peak valuations, which he sees as a healthy reset.
He argues that the most interesting opportunities are now spread across AI, fintech, and energy. In AI, he says the opportunity goes well beyond chatbots into industrial robotics, defense autonomy, software productivity, and creative tools. In fintech, he emphasizes stablecoins and next-generation banking, while in energy he points to rising electricity demand from data centers, the need for always-on power, battery storage, and better use of stranded energy such as natural gas flaring.
On exits, Stevenson expects IPO and M&A activity to accelerate through 2025, saying the public markets are reopening and pipelines are strong. He says Franklin prefers to invest at a discount to public market valuations, with upside coming from both business growth and the removal of the illiquidity discount when a company goes public.
Key takeaways
- Stevenson says private-market valuations bottomed in mid to late 2022 through mid to late 2023, making today a better time to deploy capital than two years ago.
- He argues the best 2021-vintage private companies have now returned to their prior valuations while growing revenue multiples since then.
- He sees the biggest growth equity opportunities in AI applications, especially industrial robotics, defense autonomy, and software productivity tools.
- He says stablecoins are the most interesting crypto-linked theme in fintech because they could reinforce the U.S. dollar’s global role.
- He expects IPO and M&A activity to accelerate in the second half of 2025 as the public markets reopen more fully.
- Franklin’s preferred setup is to buy private companies at a discount to public-market fair value and earn returns from growth plus liquidity-driven multiple expansion.
Notable quotes
“mid to late 22 through mid to late 23 maybe was kind of the trough for valuations in the private market”
“what you're seeing across the board is that sort of the best companies from that cohort have now sort of returned to their 2021 valuations”
“there are what we would think to be some more reasonable valuations and some really interesting places to go deploy capital within that cohort”
“we think that's really exciting”
“when we get excited about putting capital to work is when we can invest in the private markets at a discount to where companies would trade in the public markets”
How the episode opens
This is Alternative Allocations by Franklin Templeton, a monthly podcast where we share practical, relatable advice and discuss new investment ideas with leaders in the field. Please subscribe on Apple, Spotify, or wherever you get your podcast to make sure you don't miss an episode. Here is your host, Tony Davidau.
Welcome to the latest episode of the Alternative Allocations podcast series. I'm joined today by Bobby Stevenson. Bobby, we've been talking about having you in the podcast for quite some time.
Why don't you share with everyone your background in your role?
Yeah, thanks for having me on. I'm excited to be here. I've actually been at Franklin Touleton for 21 years, basically my entire career since college.
I work in the Franklin Equity Group, which is sort of the original kind of flagship group from back in the days when we were just Franklin, not even Franklin Templeton. The group now manages nearly 200 billion in what people would think of when they think of Franklin Templeton, traditional, long equity mutual funds. And I started my career as a public equity research analyst covering a number of different industries across the industrial and technology sectors.
I also was a co-pm on an allcap growth fund. Post financial crisis, there were three of us on the team who really started thinking about where we could go to start to find alpha for our clients that was not directly correlated to the public indices. And so we started looking around in the private markets and thinking about whether or not some of the mutual funds, it was within their sort of strategy and mandate to invest in these private companies.
We started doing that right at the beginning of 2014. So it's now been over 10 years. That's hard to believe.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- private equity landscape
- growth equity opportunities
- ai fintech sustainable energy
- discounts to public market valuations
- ipo m&a exits
Companies and tickers mentioned
- Franklin Equity Group
- Franklin Venture Partners
- Franklin Templeton Investments
- Franklin Flex Cap Growth VIP Fund
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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Alternative Allocations, this episode and its artwork belong to Franklin Templeton. Octagon is not affiliated with the show; this page is an independent summary.
