Q&A: Joanne Huckle, Ogier
Ogier partner Joanne Huckle discusses some of the key issues on the horizon, including GP/LP advice, women in PE and downstream trends.
AW: How has recent market behaviour impacted the relationship between LPs and GPs?
JH: 2017 was a record year for capital put to work and distributions back to LPs, generating a cycle whereby LPs have more money to invest back in the industry. That has meant that fund sizes are now getting larger, with (especially in Europe) no trend of capping fund sizes; it also means that many GPs are back in the market with their next fund in just two years.
Consequently, LPs now have more choice than ever, and they know it, making them extremely disciplined and selective; LPs note that they continue to diligence past returns (which, generally, have been coming down) with particular care. As such, the feeling among some GPs is that whilst it is certainly a good time for GPs to raise money in private markets, it is not always an easy ride getting commitments.
AW: How does that play out from the perspective of an Attorney?
JH: Increasingly, I am instructed by LPs seeking their own Cayman legal counsel prior to committing capital. It has always been a mystery to me why LPs are willing to rely on the manger's/GP’s Cayman counsel when committing significant capital to a new fund.
As an attorney who advises both GPs on fund formation and LPs on fund investment, watching an open debate at a recent conference between various different LPs and GPs made very real the day-to-day negotiations on which I advise.
The relationship between GP and LP is delicate, particularly in the early stages when the parties may be new to each other. It requires a balancing act and a careful negotiation; sitting on opposite sides of the negotiating table, depending on my instruction, keeps me on my toes.
AW: After ten years in practice, how has life changed for women in the funds industry?
JH: What really stood out to me, after a packed 48 hours with 300 other women in the private equity industry at the Kayo Women's Private Equity Conference in Chicago at the end of last year, was how incredibly inspirational, how powerful and how motivational it is to simply hear the stories of women who have risen to the top of the industry.
Speakers included, amongst others, Sally Pofcher, the operating partner at L Catterton, and Ann Fox, President and CEO of listed oil and gas company Nine Energy Service. It made me realise how powerful this wave of openness amongst women in the industry is; there is a real sense of support and of willingness, even eagerness, to help one another.
I left feeling excited, energised but also responsible, realising how important this sort of peer engagement is not only for women in the industry and those of a younger generation with aspirations to join it, but for the industry as a whole. I am proud that 'women helping women' is something we already see in the funds industry in Cayman, particularly through 100 Women in Finance, but I do have a sense that we can always do more; I am looking forward to doing my part over the coming months and years.
AW: Fast-forward 12 months – what will the next hot topics be in the industry?
JH: We are seeing huge changes and opportunity emanating from digitisation, fintech, crypto and digital assets; but the fundamentals are also changing at a fast rate – we are dealing with an evolving LP base, as well as the impact of legal and regulatory change on the industry.
I spent considerable time last year speculating with fellow conference panellists about what funds and GPs of the future may look like in terms of everything from structure to strategy and objective. But for those trying to predict the future, as they consider taking the plunge with a start-up or a spin-off, the best advice I have from clients that have recently done exactly that is to focus on the fundamentals: taking your time, doing your diligence, evidencing your track record and surrounding yourself with a strong team.
AW: Separating the signal from the noise, what's your forecast for downstream activity in 2019?
JH: Valuations remain high; this was a recurrent theme on the conference circuit last year. But there is also a more positive message regarding a robust M&A market. In particular, venture backed IPO volumes picked up over the course of the year. It seems likely we may continue to see a trend of venture backed companies being bought up by PE funds as 'growth' assets.
The increase in downstream activity is what makes my job particularly rewarding; seeing a fund through formation and then helping it put capital to work is exciting. I think I can be justifiably hopeful that deal volume growth is set to continue with increasing momentum in 2019.
Joanne Huckle is a partner in Ogier's Cayman Corporate and Investment Funds team. She advises hedge funds, hybrid funds and private equity funds, top tier investment GPs, administrators and other fund service providers on fund launches, ongoing legal and regulatory compliance and termination. Before joining Ogier in 2012, Huckle worked for Hogan Lovells in London and in Hong Kong, during her time at Hogan Lovells she was seconded to Lloyds Banking Group to oversee the Bank of Scotland banking business transfer.
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