Duff & Phelps on expanding into GP-leds

Richard Olson, Bill Arnold and Dan Nolan talk to Secondaries Investor about the firm's plans in the GP-led space and how it plans to stand out from the crowd.

Dan Nolan

Tell us about the makeup of Duff & Phelps’s secondaries market advisory team and which part of the market you are focusing on.

DN The team consists of 12 team members, with half of our team concentrated in our two primary hubs of London and New York, and the rest positioned in Boston, San Francisco, Hong Kong and Mumbai. As well as our core secondaries team, we benefit from members of the wider alternative asset advisory practice representing us on the ground in more than 70 locations across Europe, Asia and North America. The make-up of our team is quite different from other advisors as we have attracted individuals from both the intermediation and the buy-side space.

You recently added two Tullett Prebon secondaries professionals, Bill Arnold and Dan Nolan to your London team. Why and what do they bring to the team?

RO I have personally worked with Bill and Dan for nearly seven years, first as an investor, and now as a colleague. I’m proud to have such experienced professionals for colleagues, and we enjoy a good team chemistry.

As a firm, our relationships with sponsors are very deep, span many years and many fund vintages, and that trust and reliability form the core of our Duff & Phelps brand. Having Bill and Dan on board enhances our capabilities to work with sponsors by putting them in touch with a broad set of traditional and non-traditional secondaries investors to find solutions to their unique circumstances.

Richard Olson

From a deal execution perspective, Bill and Dan have transacted with dozens of buyers over hundreds of transactions totalling billions of assets, so we knew that we would be gaining two safe pairs of hands who know the market extremely well.

DN Our motivation to move to a well-known advisory platform like Duff & Phelps was based purely around our desire to expand our offering to better compete as the secondaries market has evolved. Over the past few years we found that an execution-only pitch was becoming harder to win GP mandates so we needed to provide a broader array of services. Our reputations and experience at our prior firm were enough to get us in the door but we suffered in many cases because our service offering was perceived to be limited to intermediating trades in LP interests. Duff & Phelps knew that it needed a team of complementary individuals capable of delivering a full-service advisory offering to its clients.

Is there a different skillset required when completing LP transactions compared with more complicated GP-led deals?

Bill Arnold

BA Dan and I have completed some very large processes both at an LP and a GP level. One thing that is necessary across both is the high level of accuracy and diligence required to successfully complete the transaction. On an individual basis we and our colleagues have completed billions of dollars in transactions across hedge, private equity and real estate funds. A lot of this took place at a GP level, so I think that we are well-placed to build upon our knowledge base. The main differentiator for us will be our level of service and also our client base. Being able to offer advisory services as well as the other services of the firm is a huge benefit for us in winning GP-led business.

Duff & Phelps is well-known for its third-party valuations business. How do you navigate potential conflicts of interest with the launch of your secondaries advisory business?

RO The secondary market advisory group operates as a fully independent team within Duff & Phelps. Our reputation for independence is paramount to us as a firm and we will always take the necessary steps to ensure that this reputation is uncompromised. All of Duff & Phelps’s work is meant to benefit our clients, and we therefore have instituted proper controls and governance around a GP’s fiduciary duties and responsibilities. In any GP-led secondary, if for instance we already have a role as an independent third-party valuation provider, our advisory role is functionally and operationally distinct from our valuation work. We operate as a regulated business, in conformance with Financial Conduct Authority and Financial Industry Regulation Authority regulation and guidance. As such, we zealously guard client information, and we maintain strict walls between and within our project teams.

Many say the advisory market is crowded and highly competitive. How do you plan to differentiate yourselves

RO Reputation, coverage, and excellence. We are a trusted brand with a global presence and our broad service offering makes us a valued partner for our clients. Our team is experienced and that collective experience spans the full range of asset classes and geographies. What we don’t know ourselves, individually, we can tap into our 2,500-person firm. The secondaries market as a whole may appear competitive in terms of numbers of intermediary service providers, but Duff & Phelps provides unique advisory capabilities for alternative asset managers. We will choose our engagements in a way that we know we can deliver.

Dan Nolan and Bill Arnold are directors in Duff & Phelps’s secondary market advisory practice. Both were previously with Tullett Prebon where Arnold co-founded the firm’s secondaries market operation and Nolan was a senior broker.

Richard Olson is managing director leader of Duff & Phelps’s European secondary market advisory practice. He was previously a managing director at Origami Capital Partners where he was head of research and the head of European origination.