Online private equity marketplace Palico has entered into an agreement with the Institutional Limited Partners Association (ILPA) to provide free use of its platform to ILPA members, sister publication Private Equity International has learned.
The agreement will add ILPA’s more than 400 member organisations with more than $1 trillion in private equity assets under management to the platform, which industry insiders can use for primary fundraisings, co-investments and secondaries trades.
Antoine Dréan, founder and chief executive of Palico, told PEI the agreement was “a turning point” for the marketplace.
“This is, I think, a very clear illustration that private equity is getting digital,” he said. “Coming from ILPA, which is the largest LP organisation on the planet, it means they are seeing the online way of doing things is there and that it can help people very much.”
Palico has 2,800 LPs from 1,800 firms on its platform, as well as 5,000 GPs from around 2,500 firms. There are more than $64 billion in investable opportunities on the platform.
GPs in market can list their funds on Palico and be seen by LPs that have expressed interest in that particular strategy. When LPs register their interest in a fund, they can gain access to a virtual data room where they can download private placement memoranda and limited partnership agreements.
Secondaries sellers can list their opportunities on the marketplace and receive bids from interested parties.
“GPs can have 500 meetings with LPs and pretty quickly understand that 400 of them have no interest. There’s a much better way to do that, and that’s called the internet,” Dréan said.
“The private equity industry is starting to become digital, to understand that efficiency can save a lot of time and money, and that going to the right people very quickly and being able to do deals very quickly on the fundraising side and on the secondaries side makes a lot of sense.”
Palico has two streams of revenues: subscription fees, which will be free for ILPA members, and a success fee for GPs fundraising via the platform. Secondaries buyers also pay a fee.
“That’s pretty unique, usually on the secondaries side the sellers pay a fee,” Dréan said. This is because the buyers on the Palico platform are looking for dealflow.
“For them the value is to get dealflow. [It’s] pretty unique dealflow, because if you sit somewhere in the middle of a given country and you want to see every secondary in the fund of funds space or the VC space, it’s pretty difficult, if not impossible.”
The same is true on the primary fundraising side, Dréan added.
“We have some of the largest LPs on the planet on Palico, and these people don’t use us to invest in the top five GPs around the world, they know each other already and they’re doing deals already, they’re investors in their funds. But when it comes to looking at different strategies or different areas, then Palico is very useful.”
The partnership with Palico is the latest in a string for the ILPA. Last month the LP body signed an agreement to offer its members discounted access to due diligence software produced by eVestment, and in March joined with CEPRES, an investment technology firm, to offer members an upgraded version of the company’s PE.Analyzer Due Diligence System.
In a statement, Palico and ILPA said that, going forward, the pair would “explore cooperation in the creation of new investment features and tools for LPs”.