From Biotech to Asset Management with Sunaina Sinha
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This week on the podcast, yet another extra special guest. Is there any other kind? Sunaina Sinha is the global head of private capital advisory group for Raymond James. The Raymond James platform manages $1.6 trillion in total assets and advises on a whole lot more. Sunaina had stood up her own

private capital group Siebel Capital, which was acquired by Raymond James. And she's been there for the past three and a half years. She works as an advisor for a number of LPs and GPs and pretty much everybody in between. If you're at all interested in the growth in private equity and private capital and how this sector of the investment world is

Thank you.

My conversation with Raymond James, Sunaina Sinha. Sunaina Sinha, welcome to Bloomberg. Thank you very much for having me, Barry. Well, thank you so much for coming. So I was delving through your background and I had to first ask, BS in management science and a master's in engineering and in chemical engineering from Stanford, where you were a Mayfield fellow and then an MBA from Harvard. What was the original career plan?

Well, the original career plan very much was to go into the biotech industry, which is what I did after I graduated from Stanford.

Hence the master's in chemical engineering, which was an unusual master's to get after doing your undergraduate in industrial engineering, which was then relabeled as management sciences and engineering at Stanford. But it allowed me to go into the healthcare vertical straight out of Stanford. I worked for two small and medium-sized businesses owned by the same investor group.

and cut my teeth on those, and then realized as a result of that experience, first it was a phenomenal experience. I was working directly with the CEO and president of both companies. But I realized that the biotech vertical was not my playing field for the long term. Hence the MBA at Harvard to find another career path, and that led me into asset management. So the really interesting thing, I...

for reasons between Stanford and the fact that you're here via San Francisco, I just assumed you were living out there, but you're not. You're London-based. Tell me, how did you end up

picking Stanford. How did you end up in California? You know, I grew up all over the world. They call people like me third culture kids. They're born in one place, so born in India, grew up in many other places, and then land up in another place altogether. Well, when you say many other places, what I often hear is, you know, India to London to Boston, New York, California,

You seem to have traveled a little. Tell me where you grew up. So my dad was a diplomat for the World Bank. I grew up in Nigeria, in Lagos, in Harare, Zimbabwe, and then in Hanoi, Vietnam. I applied to universities from colleges in the U.S. and also in the U.K. from Hanoi.

There were no places to take the SAT in Vietnam back then. So we flew to Bangkok, my dad flew me to Bangkok to take my SAT1s and then we flew back a few weeks later to take the SAT2s and flew back again to do interviews. And I was blessed enough to get into a number of great US Ivy Leagues but ended up choosing Stanford because even then, Barry, I knew I was an entrepreneur at heart. I wanted to build businesses, scale businesses and help other people scale their businesses.

And Stanford had that great magic between entrepreneurship and technology and the nexus of starting to grow things, which is what I wanted to learn most. We always pay attention to regions where there is a pool of capital, a world-class educational institution,

and a private sector that can combine all three. There's no doubt Silicon Valley and Stanford is one of the leading places. So if that's what you wanted to do, you certainly picked well. How did you end up back in London as where you wanted to live? Yes, so I had the most incredible experience at Stanford. Ended up working in the Bay Area straight after that.

still very close ties to Stanford, was still teaching a class there even after graduation and working with a bunch of professors out there at the time. When it came to picking where I wanted to do my MBA, again, I had the choice between the Stanford of the East, as I call Harvard Business School, but also to go back to Stanford.

And I knew that if I didn't leave then, I may never leave the Bay Area. It's such a special place and such a special bastion and ecosystem of entrepreneurship and technology and growth and ideas.

Made the decision to leave just to try something new at that point. Went to Harvard for my MBA and then had made the choice at that point to switch out of biotech. And interviewed with a whole bunch of firms and ended up getting into the hedge fund world, doing capital raising for two large hedge funds. And one of them, Brevin Howard, was headquartered in London.

So I moved over to London back in 2009, and the rest is history. I've been a resident of London. My family would argue with you, Barry, and argue with anybody who asked them that I live on a plane because I manage a global business over seven offices, sixth of which happen to be in the U.S. So I'm stateside a lot and also travel the rest of Europe.

But home very much is London today. So I want to rewind a little bit. I don't want to skip that middle experience. So you were at a couple of hedge funds. You were at Bridgewater, which is headquartered in Greenwich, Connecticut. And you were at Brevin Howard, which is still headquartered in London. In either of those cases, you weren't working as an investor, right? You were a researcher, analyst,

capital raiser. How did those experiences at Bridgewater and Brevin Howard affect how you look at the world of investing? Clearly, two superstar funds that have put together a really impressive long-term track record.

Absolutely. When it comes to any asset management business, Barry, two things are important. Make smart investment decisions and have investors to back you to do them. And so I knew I had to master in one of those streams. And the stream I picked was I do the capital raising that enables the asset management industry engine to turn. And both Bridgewater and Brevin Howard were incredible training grounds to teach you just how to do that.

But secondly, how to cover investors systematically and how to think about the world in a holistic way and what levers drive what others. Both were macro hedge funds, as you know, and understanding how macro markets work, how they interplay with each other is incredibly important.

I use that day to day when I speak to my private equity clients today. I use it all the time when it comes to understanding how markets are going to affect different types of investors. How does the oil price impact my sovereign wealth fund investors? How does what's happening with rates impact endowments and pension plans? All of it is incredibly interlinked. And it's that interlinkage that macro thinking really teaches you.

Really intriguing. So it's kind of interesting that you're in private equity, you spent time in the world of hedge funds, but you also made a number of venture investments going back to the early 2010s. Tell us a little bit about how you sort of got involved in seed and angel investing, very early stage venture investing.

You know, we all have to decide what our gifts are to offer in the world. One of the gifts I have to offer is how do you help businesses growth hack and get to the next level of scale? I did that with two businesses early on in the early 2010s, as you say. I bought a business called Barcore. It's a fitness boutique in the UK doing something new for women by women.

grew that over a course of six or seven years, a very successful business, and sold that to a private equity-backed strategic. Did that again with a business called Mindful Chef, a healthy recipe box business.

that grew like gangbusters, especially over the COVID years and sold that to Nestle as well. I now I'm chairperson of the board of a publicly listed company called SFC Energy. They do clean energy fuel cells and being able to steer entrepreneurs and enable them to realize their vision and think tactically as well as strategically as to how to get there and help them do that. That's

That's very much something that helps me come alive every single day. So let's expand on that because most people, I would imagine, think of angel investing very different than private equity investing. One is you're betting on a team, you're betting on a founder and some innovative new idea where there may not even be a market for that sort of thing yet, as opposed to taking existing company and management team and product and saying, here's

here's how to level up, here's how to make this more productive, efficient, and really reach your potential. What's the overlap or what skills you bring from one to the other?

Well, I think the most important skill I bring is the fact that I've started my own business, grown it from scratch, and sold it to a Fortune 300. So I've seen all legs of this journey. So not just an investor, but an operator as well. But an operator and a grower of her own business. So that's the first thing. The second thing is, you are absolutely right, Barry. The muscle it takes to grow from zero to 10.

or revenue or zero to 10 of EBITDA is very different from the journey that takes 10 to 100 and 100 to a billion. These are different muscles and these are different levers in the business, but also levers in mindset. I've done zero to 10 quite a few times. So in my angel investing businesses, it was very much that, hey, how do we get from zero to 10 of EBITDA?

That takes a certain amount of nimbleness, hunger, agility, scrappiness, and I love that. Having done that myself, I know what that feels like. I can relate to the entrepreneurs. I can help them duck and weave through whatever's coming at them. I'm sensing the word pivot coming. I'm not going to use it because you used it already.

You've got to be able to figure out what I call the incomings. If life is throwing a lot at you, the market throws a lot at you, what are you going to ignore and deflect and what are you going to say, okay, that's the signal from this noise, that's where I double click. That takes a pattern recognition that I have. Now that said, over the last few years, once I've sold my business to Raymond James, I'm doing that other second leg of the journey. How do you take something that's established, growing, proven, and really scale it

And that's the same thing I'm doing with the public board seat at SFC, helping that management team and that board take an existing business, a business that's doing close to $150 million of revenue, very profitable, growing organically 30% year on year. How do you take that and scale that to the next level? How do you make that a billion dollar business? So now I'm trying my hand at that second leg of the journey.

But that first leg of zero to 10, that I've done a few times over. And I think I've got real value to add to entrepreneurs there. So let me roll even further back. You launched Siebel Capital in 2011. Yes.

What made you decide, I'm gonna throw out a whole new company that's focused on, was it venture or private equity? - At the beginning it was focused both on private equity and hedge funds, but within a year and a half, I retired all our hedge fund business because I could see the capital inflows going into the private markets opportunity. That was the right call to make, as you think about the last decade. The inflows into private equity have been phenomenal and we've been a great beneficiary of that flow and that movement.

But in the early days, what enabled me to start or what gave me the conviction to start was really the belief that build it and they will come. And if they don't come, at least you're enjoying the journey for yourself.

I knew I loved capital raising. I knew I could do that effectively and I could do that for a handful of clients. And my goal very much was, let me give this a shot and if it doesn't work, I'll go out and get a job again. I was in my early 30s. I didn't have a mortgage. I didn't have kids. I had very few liabilities. It was a risk. It was a calculated one. And I'm very glad I took it because it worked out beautifully. But it's not for the faint of heart.

That's for sure. Being an entrepreneur isn't anyway, but being an entrepreneur in an industry like financial services, where there's these old and very incumbent 800-pound gorillas all around you, is certainly not. To say the very least. You went to Stanford. You were an adjunct professor, visiting guest professor. I was a guest lecturer with the Stanford School of Engineering, yes. But you're also on the advisory board for the Stanford Institute of Economic Policy and Research.

Tell us a little bit about what you do there and how that ties into your day job. As you know, I love macro and I love thinking about how policy and macro movements around markets around the world really impact what's happening in the ground reality for businesses that are run all over the world.

The CIPR, as it's called, the Stanford Institute for Economic Policy and Research, is an incredible congregation of leading economists, Nobel laureates, policy advisors from all walks of life across Stanford, around the world, who joined the institute to look at the big problems facing the world today.

Think about how do you solve them? How do you come at them? It could be from looking at how social security reform or looking at homelessness in California or thinking about the age issue in Japan. They could look at any number of issues globally and parse it using the world's leading experts and actually research how to come out at the other side of it.

Some of the most powerful research that I've encountered at CIPA being on that board, I'll give you one that really astounded me. One of the researchers there, Nick Bloom, has done some of the most definitive research on flexible working and how it impacts productivity, retention, and how it's very much here to stay or should be. Very much flies in the face of how some Wall Street banks think about the return to work.

fascinating empirical evidence there that he's collected. Another piece of research there that I'll quickly mention is work on labor force participation by women dipping in the summer months as kids come out to school. Interesting on how it is. Very seasonal. Very seasonal. What do we do about that? That costs the U.S. United States GDP growth in the summer months.

Fascinating the interlinkages between women, our education policy, labor force productivity, and again, ultimately the growth of the economy. 89% of business leaders say AI is a top priority, according to research by Boston Consulting Group. But with AI tools popping up everywhere, how do you separate the helpful from the hype?

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Early in the 2010s, you were doing some angel investing. Tell us what you were looking for, either in sectors or technologies. What attracted you to the angel space?

What attracted me to that angel space was that I was building my business and had skills and learnings I wanted to share. But more importantly, when I looked for businesses and entrepreneurs to back, it came down to really two very important criteria. The first is people, people, people. I learned that during my Mayfield Fellows Program journey at Stanford, where that was drilled into us. It starts with the people, it ends with the people.

And secondly, the companies and the products they were building had to do good and do well, right? That they had to have a positive impact on the communities that they operated in. So if you think about the recipe food business, that was all about healthy eating. The fitness business was all about an exercise program that's efficiently designed for women's

If you think about the clean energy business that I am now chair of the board of, that is all about clean energy fuel cell alternatives to diesel generators and to polluting generator types.

So that's kind of the thematic that I lean into the most. Really interesting. So you very easily could have either set this up as a VC fund or affiliated yourself with a venture group. What are the advantages to being an individual making single decision investments into a startup?

I think the biggest advantage is that there's full alignment because you're not operating with OPM, other people's money. It is your money. It's your skin in the game. The alignment of interest is one thing that you learn in private equity and all private markets investing that it's all about alignment of interest. You can't exit these things unless you grow value and you're in sync with the founders and with the management teams because they're private businesses.

So you've got to figure out if you have that match and alignment of both economic interest but also vision and execution forte into the next three- to five-year journey. That's the minimum amount of time you'll be together for. So that's why I think doing it as an individual always gave me much more reward and also, quite frankly, economic success than doing it as a fund investor. The other thing I'd add is that I found verticals

I found very early on that professionally speaking in terms of my day job, Barry, what was I really good at? I was really good at the capital markets function. I was really good at the capital raising, liquidity organization side of the business, and that's what Sibyl Capital did. So I knew that was going to be my day-to-day jam.

And on the board of some of these companies, I would be able to go and add the value of how to grow their businesses. So let's talk a little bit about your day job. You set up Siebel Capital in London, right? In London. That's where you founded? Correct. So before we get into the advisory services you provide, I'm a big Anglophile. I love London. But there's such a difference between how they operate, the economy, and especially the financial sector. Let's talk a little bit about that.

What's it like being, is it even bi-coastal? You're nylon pretty regularly? Nylon is my root. How different is the UK finance from the US and the startup mentality? It seems that...

"failure is not a dirty word in the US." I don't get that same vibe from Europe. Tell us a little bit about the differences. - You're absolutely right. Operating in the UK and in Europe at large, and the US are fundamentally different. Having been at Stanford, worked in the Bay Area, then went to Harvard and worked in the Boston ecosystem, came out to New York.

a bit of an adjustment, I will tell you that, because the startup ecosystem, especially in the early 2010s, was nowhere near what it was in San Francisco and the Bay Area and Boston. I mean, that's a well-established, mature, if you could say mature startup region. But it is, and the same with Boston and New York. 100%. And so startups...

So, starting Sabeel Capital in London ended up being both a blessing and a curse. Why was it a blessing? It was a blessing because there was not that many startups there, period. There was not that many new entrepreneurs starting financial services companies. And so, it made us very unique and able to differentiate ourselves in the UK and European market very quickly. There were not that many new entrants.

and we use that to our advantage and often still do. Although the market has definitely come a long way, there are still divergences on ease of doing business. But it became very clear to me, Barry, very quickly on we would have to diversify our business to be US focused.

And so we opened our first office in New York a few years after we started. And we've been heavily focused on the U.S. private equity clients and U.S. institutional investors have done so from day one, knowing that actually the U.S. market is much deeper and much larger than U.K. or Europe could ever be. But also the speed of doing business varies quite dramatically.

So we've talked about the startup and angel world. Let's talk about the advisory work you do for private equity, both in London and the U.S. I keep coming back to there seems to be such a difference between how companies operate there and how companies operate here. Every now and then, a European company comes to the U.S. and succeeds. But more often than not, they're

They have a hard time adjusting. And I imagine the same is true vice versa when a U.S. company goes to the U.K., at least outside of finance. Finance seems to have found a foothold in Europe from the U.S. Why the big cultural differences? What is it about the psychology there and here that creates such a different business and investing environment?

that it depends on what type of investing you do. At its heart, private equity is about buy low, sell high. It's a long-only strategy in the private markets. So you gotta buy a business and you gotta know that you have to add value and make it larger, better, stronger, and then sell it on. So a number of the clients we have are pure play, regional focused. So we have a German private equity client.

We have a Benelux private equity client. We have a Nordics private equity client. We've got UK clients. And they are experts in understanding what needs to happen to grow their businesses and their companies that they're buying and selling in their target market. They know the customer base. They know how to impact the value drivers, i.e. on the talent expectations.

And I just want to interrupt and say, is it that different from Germany to the Netherlands to Sweden to the UK? Like completely, like in the United States,

New York isn't Florida. Florida isn't Texas. Texas isn't California. But you could hop from one place to another, and it's not so different that you can't adjust to the regional. We more or less speak kind of the same language throughout the country. Maybe there are some dialects and differences, but the general gestalt of California, New York, Texas,

Yeah, the politics may be different, but the business seems to be the same. That's not true in Europe, is it?

It depends on the size of businesses you're buying, right? If you're buying businesses that are up to, say, 10 or 20 million dollars or euros of EBITDA, then it really matters that you're a regional champion, right? That you understand how a German business can scale in that end of the market versus how a Nordic business will scale. So they're having regional footholds and expertise really matters. But when you're doing larger businesses, and we have

clients that are pan-regional, that are European, pan-European buyout players, or there are global buyout players that do global deals, US and Europe, but they do them for larger businesses. And larger businesses often tend to have global customers because by definition, you've got to make sure you've diversified your revenue out.

So it depends on what scale of business you're doing, but even if you're the largest private equity funds out there, they will have local offices. If they know they need to operate in the Italian market, they'll have presence in Milan or they'll have Italian experts in house that know how to operate and buy businesses in Milan.

Or they'll have sector experts because a software business in Italy is going to be very similar to a software business in Texas. The operating environment might change, but the characteristics of the business and how you drive value in that business will often be very similar. So you've got to make sure you're either a sector or a regional expert, and that often depends on the size of business you buy.

So you've lived in Africa, you've lived in India, you've lived in Vietnam, you've been to Thailand and all over Asia. Have you thought of expanding to some of these other continents or is it just U.S. and Europe? We do cover Asian and Middle Eastern investors in my business prolifically and have done from almost the first day of inception. You cannot ignore the rest of the world. As you know, the sovereign wealth funds and the institutions in the Middle East are big movers in the market today.

And that's today. I started covering Middle Eastern institutions when I first opened the doors of the business now 14 years ago. And 14 years ago, people were like, I don't know if I need to go over there. It's a huge investment of time and airfare and so forth. Well, now everyone's saying, I wish I'd built those relationships long ago because relationships die hard in those markets, Asia and Middle East, and those relationships are...

I've had and my team has had for a long time. So let's talk a little bit about valuation. In the public markets, hard to say fourth quarter 2024 U.S. markets aren't at the very least fully priced, if not richly priced. When we look at the U.K., when we look at Europe, much, much less expensive. We see a lot of companies trading at book value. Yeah. Not the same growth level that we see in the U.S.,

Does that valuation difference in the public markets extend to private markets as well? So firstly, let's comment on the public market side. That is characterized very much, that valuation gap is characterized by the depth of the markets. The U.S. capital markets, vibrant, incredibly dynamic, incredible fragmentation of investors, deep, rich market where you can do business on the capital market size pretty seamlessly. And I would add...

Plus all these giant mega tech companies that certainly have rich valuations in SKU, whether it's the NASDAQ 100 or the S&P 500. Yes. You know, there's a handful of them overseas. Taiwan Semiconductor, ASM Lothrography. You can name SAP. You can name like a handful. But most of the big ones are here, which certainly skews the valuation. On the public side, what do you see on the private side? On the private side, we see a similar valuation gap.

And I'll just finish the public market side. The UK and the European capital markets just don't have the same depth, which is why you see the valuation mispricing. - So you think it's more than just the tech companies, it's the structure. - It's structural, there's not that many participants. It's also legal and regulatory, right? In the UK, there was a move away from holding UK assets by the UK pension plans. That sucked the liquidity out of the UK markets, hence the valuation gap.

So there's also regulatory angles that are at play there. On the private markets though, I've got to agree with you entirely, there is a valuation arbitrage even in the private markets. That the European buyout specialists are able to buy companies at better value in Europe

and scale them into global businesses and sell them at global valuations or U.S. market valuations when it comes down to selling time. So some of the biggest, best private equity household names that you know, whether it's a Blackstone or an Apex or a Clayton, Dubli and Rice, have headquarters both globally

sides of the pond because there's so much value to be harvested by buying smartly in Europe and an advantage, quite honestly, a valuation arbitrage that you can play all day long and many of them do so very successfully. So you're advising a lot of players in the private equity market. Is it

General partners, GPs, the funds that are essentially running, are they LPs and investors or do you advise across the whole spectrum? - We sit in between the GPs and their LPs. When it comes to, and we will raise everything from a small, for us would be a $250 million fund, and our largest client raised $27 billion in their last fund. And everybody in between. In the last year alone, we raised north of $4 billion of new capital commitments for our clients.

and are very prolific at ensuring that private equity general partners raise the capital they need to go off and buy businesses and build the ecosystems around each of their businesses. So we sit right in between general partners and limited partners.

Got a team of over 60 people, seven offices raising capital for our clients, but also intermediating in the liquidity side of the equation in private markets. As you know, in the public markets, the secondary issuance market is much larger than the primary issuance market. In private markets today, it's flipped.

But that means- Explain what you mean by that. How is that flipped? Well, in private markets today, there is a $1.6 trillion new capital raising engine that hums along annually. That's how much capital is raised across private market funds in a 12-month rolling cycle. And to just put a little flesh on that, go back to before you launched Seabroil,

Private equity was a trillion dollars. Now it's 10, 12 trillion, and it's projected to go up to 20-something trillion. Absolutely. So this has certainly been ramping up rapidly. Indeed. And your timing was quite fortuitous launching in 2011. Yes, very lucky to have launched then. But you're absolutely right. But the secondaries market in private markets is only $140, $150 billion in size. Mm-hmm.

but growing rapidly. That market, when we first did our first secondaries transaction as a firm in 2012, was only 20 billion, a drop in the bucket.

Today it's 150 billion, still small compared to the size of the primary private equity market, but these investors want liquidity too, Barry. You could have held something eight years, nine years, 10 years, you want out. Who do you go to? You've got to call a market maker like ourselves who can make and advise on that position in the secondary's private equity market to get you liquidity. Can I tell you one fun fact? - Sure. - The average age of a private equity fund

16.2 years. Wow, that's crazy. It says 10 on the tin. It's 10 with two one-year extensions, so up to 12. But the average vehicle is around for 16.2 years. Hence the need for the secondaries market to provide liquidity for investors who want out. So just for the lay listener, I want to do a little definitional work here. So when we talk about a 10-year fund,

You're putting money into a private equity fund. Over the course of that decade, they're making various investments. There's no guarantee in year 11 that all of those investments have found an exit. Right. So there'll be a series of extensions. And even after those extensions, all right, the fund is arguably inactive, but we're trying to find an exit for this fund.

A secondary market is one way that can take place. It gets people who are in that liquid and hopefully at a discount for the buyers who come in and say, we'll take this at X price. We'll give them liquidity. And then it's year one for us, not year 12. So there are different timelines. Is that fair? You have explained it very, very beautifully. The only nuance I'd add to that is that that liquidity can be asked for by both the limited partners.

so i.e. the investor in the fund itself and we get asked by pension plans, endowments, foundations, family offices saying, hey, we've held this portfolio now for eight years, nine years, it's getting long in the tooth or...

Actually, my predecessor made these investments. I'm the new CIO. Can you sell this stuff for me? I don't like it anymore. Or I've actually realized the gains I thought I would realize much sooner than I expected. Can you sell this on for me? All reasons to seek liquidity on the limited partner side. And we do that all day, every day. Actually, I've done 163 transactions in that space alone in the last decade.

And we also organize the liquidity when the general partner asks us. Sometimes the general partner will say, actually, can you help organize liquidity for a company that needs to be sold out of the fund because the fund is reaching its end of life, the fund needs to sell some companies, but I, general partner, want to hold on to it longer. So pull it out of the fund.

out of the fund and put it in its own fund. And that is called a continuation vehicle space. And that's something we do all day, every day as well. 89% of business leaders say AI is a top priority, according to research by Boston Consulting Group. But with AI tools popping up everywhere, how do you separate the helpful from the hype?

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We've been experiencing something here in the U.S. that I find kind of fascinating. And given your perch, I'm really curious as to what you see in the U.K. and Europe or the rest of the world. Over the past decade, there has been, for lack of a better word, a democratization of private equity and private debt.

you used to need 20 or 10 million dollars to participate in this. I think you get into a number of places for a quarter million, a hundred thousand dollars. - Less, Barry, less. - So this has, when I look around at Blackstone and Carlisle and so many of the big PE firms in the US, they have set up parallel funds where there's really practically no minimum

Is this trend something that's U.S.-focused? Are you seeing this in the U.K. and Europe? Tell us a little bit about private equity for everybody.

Absolutely. The entrance of private wealth into private markets, but private equity in particular, has been the single biggest innovation and movement of capital from investors into private markets in the last five years. It's been happening, it started off over the last decade, but it's really over the last three to five years we've seen an acceleration. And here's the most important fact, that as

ultra high net worth and high net worth individuals build out their portfolios. They're putting equities, they're putting bonds, and they're putting alternatives and alternatives being led by private markets.

The average investor in private wealth is under-allocated to private equity by 3 to 5x, 3 to 500%. That is a huge number. And so the growth of private wealth as an investor in private markets has absolutely exploded over the last two years and will continue to do so over the next decade or so. And it's a global phenomenon. Of course, the U.S. led the way.

And certainly the 40 Act regulation of allowing semi-liquid evergreen products and individuals to invest on those was a huge game change when it came to private wealth's interest in alternatives. We're seeing the same thing in Europe. We're seeing the same thing in Asia, that individuals who have a certain net worth

are saying, I want a bit of private equity in my portfolio. How do I go out to get it? And more and more sponsors are saying, well, I'm going to create solutions for you to access my funds and product and my alpha through accessible channels. So in the U.S., when this really began to get popular in the 2010s,

One of the big drivers was zero interest rate, the ZERP policy, where when bonds are yielding 2%, 2.5%, that side of the portfolio really wasn't producing anything and people started looking around, "Hey, where can I get better yield?" Private debt, private equity stepped into that and really filled that gap, especially for institutional investors.

So I look around the world and we had, you know, rates that were zero for a decade. How significant was that as a driver? And then what does it mean now that rates are, you know, appreciably higher than they were in the 2010s? There's no doubt that rates being low helped investors seek yield and seek alpha in different markets, including in private markets.

but also it helped private equity do deals, right? Leverage buyouts requires leverage. And when rates were so low, the leverage was cheap and easily accessible. And they used it for that decade of boom that we had until rates started going up.

Now that roads have gone up, but they are coming back down, we can always discuss what neutral looks like. What we have is now investors seeking, where do I invest that I can still find value in? Given how expensive the public markets are, right? You think about the forward PE of the public markets today. Where do I still get relative value where I can buy at sensible multiples and sell at higher ones?

private markets. So it's a diversification strategy. And secondly, it's an incredibly important way for investors to say that as I think about a balanced portfolio, I want to seek investments in folks who really know how to add value to businesses over a period of time. So they'll do that only in general partners who have a track record. And that track record is often anywhere between 15 to 22, 23% net IRRs. And

And that track record really matters. So you have to be able to return money over the neutral rate. Otherwise, you're not going to be viable. Even the best private credit funds will return high single digits or low teens type of returns, which is very much a good diversifier and an addition to private wealth portfolios.

And one of the things I noticed whenever I see a private debt or a private credit, it used to be LIBOR, now it's SOFRA, it's not a fixed rate. It's a variable rate plus some markup beyond that. So kind of raises the question, low interest rates for cent people exploring this aspect of private markets and private credit and debt, do higher rates really have a negative impact or you're still getting...

whatever the SOFRA rate is plus 5%, 6%, 7%. Yes, for sure you're going to get a, if you're comparing to SOFRA, you're definitely going to get a return normalization, which did happen when rates were in 22, 23. Less deals got done because at higher rates,

Private equity funds had a difficult time borrowing. The debt markets were shut. The deal values came down. If you look at the M&A volumes at most of the major investment banks, including at Raymagee, its volumes came down. Now they're on their way back up. But your point is a salient one. How does it impact returns? You have to be able to show, if you're doing private equity buyouts, you've got to be able to show that you can do 15 points over for SOFRA.

15, that's a big number. 10 to 15 points. If you are a mid-market private equity house, you are returning 20% net IRRs. That's kind of what you have to show fund on fund, and that's interesting. That's why you're added to a portfolio. If you're a private debt strategy, obviously not. Private debt will be more like low teens type of numbers, somewhere in the 10 to 13% net range. But even that is value add when you think about a debt strategy. Because even in public market,

So as rates come down, as money gets pushed out of T-bills, gets pushed out of money market accounts and starts to seek yields again, private markets become interesting to a lot of players. Really interesting. You mentioned the transaction numbers slid down and then came back up again.

Does that impact the secondaries you've done? You guys have done over 200 secondaries and fundraising transactions. That's a pretty big number for a relatively short period of time. How have you seen the volumes on secondaries affected by swinging interest rates?

There was a dip in the secondaries markets transacting volumes in 2023 in particular as rates were high and investors didn't know what impact that had on valuation. If you remember first half of 2023, the world froze because you had

Fed raising interest rates and all other central banks. You had Ukraine, Russia, you had Silicon Valley Bank, and then you had Credit Suisse. So everybody was deer in the headlands going, what on earth is going on? Volumes came down that year in secondaries market as well as in M&A. Now those volumes have gone up. This year, 2024, will be another high watermark for the secondaries market. Really?

in terms of transacted volumes. And that's because as the private markets grow, the need for liquidity and a liquidity solution over the period of that 10 to 15 year hold becomes all the more pertinent for both limited partners and general partners. So now, regardless of what the rates are doing, you have investors saying, you know what, every year or every two years, I'm going to sell in the secondaries market and move that cash into other more opportunistic situations or a

back into a program that will yield me a higher return because I've made what I needed to make out of this portfolio. That's become programmatic amongst many institutional investors. So I love the word opportunistic. When in the public markets, when we get those dislocations and people use the word freeze,

In public markets, we use the word panic because they have the liquidity to engage in bad behavior. It definitely creates opportunities. When you see in the private markets people pulling back and freezing, do you end up seeing the same sort of, hey, this is a substantial discount. I want to participate in this. You're absolutely right, Barry. It all comes down to the discount. And are they willing sellers at the price? There's always a price.

I'll give you one anecdote. One fund interest we sold traded at 8.5 cents on the dollar. 8.5. Really? There was a seller who said, get me any price I want out. I don't want to hold this anymore. Wow. Okay? This was, I'm going back to 2013, 2014. But there was a buyer at 8.5% of NAV, of net asset value. Great. You have all the cushion in the world.

and you look like a genius when you do your markups the next quarter. Even in the worst of the financial crisis, bad mortgages, pools of bad mortgages, they were selling for 35, 40 cents, seemed like a huge deal. 92.5% off, 91.5% off. That's unbelievable. That was in an Asian manager in 2013. But I would say the average discount these days, the best private equity,

fund managers do not trade at discounts. They trade at close to their net asset values. They trade close to par. But the average discount when it comes to the average buyout fund is somewhere in the 4% to 8% range for the average private equity buyout fund. If you hold venture, especially if it's got a lot of fintech in it these days, that's going at

30 to 50% discount because it's really hard to value that stuff. As you know, venture and growth is often valued at its last round's valuation. Well, if your last round was back in the boom years and all you've done is try to tread water and maybe raise some debt, you don't have a valid print.

So we are seeing a lot more spread. A bid-ask spread is very wide in the venture and growth world right now. When it comes to buyouts, especially mid-market, large-cap buyout, at or close to par in the 90s. Really interesting. So you mentioned deal flow has ticked up. I'm assuming that'll continue into next year. What are some of the challenges and headwinds that are out there that could be something an investor in this space should be aware of?

I think the one that's most salient that we track most closely, Barry, is the fact that because the math broke at the investor level in end '22, early '23, we're still playing catch up on that. What does that even mean? It means that the exit activity, the M&A volumes, the ability to sell companies and return cash to institutional investors,

really slowed down from summer 22 onwards as we had inflation, as we had Ukraine, as we had some of the macro challenges. Plus a pretty public market at the same time. And a very ugly public market. So at that point, institutional investors stopped seeing very much cashback from their private equity portfolios. They were still having to pay into those capital calls that were being made by their private equity clients.

Because the contributions still kept coming in saying, I want to do a new deal. I want to do an add-on. Here's some management fees and expenses you need to fund. But the cash back froze. Now, we're starting to come out of that now. But that math is still nowhere near where it needs to be. I.e., the private equity industry needs to return a lot more cash back to its investors. The capital markets need to open because some of the largest private equity funds you have out there

need to list some of those businesses and we haven't seen the IPO window open, US or Europe in the last year in a meaningful and sustainable way. We need all of that math to write in itself before institutional investors kind of come back to their normal levels of allocating to private equity. Where institutions have pulled back, private wealth has stepped in, we had that discussion. But the institutional investor

pulled back the average pension plan the average endowment the average foundation the average insurance company if they used to do a hundred dollars per fund investment last time around this go around there are 75 to 80 percent of that

So for them to come back to the $100, we need the private equity industry to sell companies and return cash back to them. It's getting better. 2024 is better M&A volumes than 2023 was. But is it back to what it was in 21? No, sir, we're not back there yet. You know, it kind of reminds me of what happened in the automobile market last year.

during the pandemic. When you're not making a lot of new cars, it means a few years later, there are not a lot of used cars for sale. Sounds like it's the same situation. When you have a 2022 slowdown, 2025, where are the exits? Am I oversimplifying that? You picked a really interesting analogy, and I like it because that is what is happening. And now we're at the point where a lot of companies that were bought in the 2021 era need to be sold.

And some of our clients have been prolific at returning that capital back. In fact, have done a great job in 2024 of exiting those businesses and returning cash back to investors. Others, not so much. Others need to pick up the speed on that. And as an industry, if you look at the entirety of the industry, let me give you some numbers. The average returns that investors get, cash back that they're used to expecting, distributions as a percentage of the total value held in private equity is generally around 24%. Mm-hmm.

In '23, that number dipped to only 11%. So far in '24, we're back to about 14%, but we're not back to 24. - So, and we're not talking about returns, we're talking about-- - Exit activity as a percentage of the net asset value. - So 14% exit as opposed to almost a quarter, big difference. - Yes, historical average of 24%. The institutional investor does not like that math

They like to have their cash back, come back to normal levels, because that's the cash back they then recycle into new investments. Right. They see other opportunities. So I asked you the negative question. What are the challenges? Let me flip it. What are the tailwinds? What are some of the positive things you see coming forward for the private markets?

I think that as you see the increase in regulation around public market listings, more and more companies around the world, U.S. and Europe and beyond, want to remain private because they see the benefits of being under private equity ownership, the value add, the access to resources, the ability to have capital at hand to grow faster is a very valuable playbook. So I expect that the private equity industry will continue to grow academically

at the very rapid expansion rate that they've enjoyed. The other point I'll say is that this is a really interesting return driving environment for private equity. Valuations in the private markets remain very sensible.

And there's a great arbitrage between U.S. and Europe. The U.S.-Europe divergence, as they're calling it these days, is real. So when it comes to saying, hey, I'm going to globalize my company's revenue chain, how do you do that? That's an interesting playbook, especially in the political environment we're in. And private equity is very well positioned to figure that out.

The third thing we've already touched on, which is private wealth is a game change for private markets, is a game change in terms of the capital inflows that's coming in. And we're still at the early innings of that. It would change private equity for good. And I think it's very exciting to see that gather pace and to be at the forefront of that at Raymond James, which is

of one of the largest platforms, global private wealth platforms in the world. So let's talk a little bit about your time at Raymond James. First, you stand up your own firm, Siebel,

And now you're at a Fortune 500 bank and advisory firm. That's got to be a culture shock. Tell us a little bit about what that transition was like. On paper, it is a culture shock. But during diligence, Raymond James approached me with an offer to acquire the business. And we spent months getting to know each other to ensure that the culture fit would work. Because if that didn't work, the key asset you were buying, which is talent in financial services, was going to walk.

And so my boss now, who is the person who acquired Sabeel, Jim Bunn, and I spent a lot of time getting to know each other and ensuring that him and I could work together well and effectively and that the cultural alignment and entrepreneurial DNA would stay intact when they acquired the firm. Now I've been part of Raymond James three and a half years. I can safely say that the honeymoon's over.

but also say that the culture of fit has been a real hit. Raymond James has a very affable, community-oriented, very low ego type of culture in general. And I found the same thing in the capital markets business. And it's been actually one of my upside surprises of joining Raymond James on the cultural side. You wouldn't know it if you looked at the paper announcement that the Fortune 300 was buying a small boutique.

And you go from small boutique to a trillion dollar platform. How has that changed how you operate, not just globally, but the sort of companies you advise, the sort of funds that you're working with? What has been the upside for you being on this trillion plus dollar platform? Barry, there'd be two things I'd point to. The first is almost overnight, the largest private equity funds in the world started hiring us. Same team.

Same people, same services. All that changed was the logo of the boutique got replaced with the logo of a Fortune 300. Plus, Fortune 300 is a giant, you know, there's thousands and thousands of banks and funds there.

only a couple hundred companies attain that heft size and it's not just the boutique, it's everything around it. You can tap into a giant network of experts. And one of my clients said, listen, no one gets fired for hiring a Fortune 300. Now you are part of one.

And it changed our game overnight. Now, overnight, we started signing 10, 20, $30 billion funds, and that was incredibly exciting. So do what we love to do, but to do it for some of the biggest players in the markets is very exciting. The second one is that we were able to

figure out and avail of and offer the synergy with our private wealth partners at Raymond James very quickly. And for that, I'll always be thankful to the leadership of the firm because they saw the opportunity and they made that happen. And that's been a huge value add to our clients. I can imagine. All right. So I only have you for a handful of minutes left. Before I get to my favorite questions that I ask all my guests, I have a couple of curveballs I have to throw at you, starting with

You're a certified sommelier from the Court of Master Sommeliers. Tell us a little bit about your enthusiasm for wine and what led you into that. - So I started teaching a wine class at Stanford for one unit of credit.

in my junior year. I was part of living in the French house there where I was a member of the staff and I had to teach a class that had something to do with France. I said, France and wine, that makes sense. Even though you were less than an hour from Napa Valley. And guess who my teachers were? I would get guest speakers and winemakers from Napa and Sonoma to come and my pitch to them was, hey, you get to teach, you get to talk to and teach wine to an impressionable young person

audience that can go on and become loyal customers. They loved it. They would come down and do a talk on wine, and we'd do a small wine tasting. Maybe bring a couple of bottles, right? They sure did. It was voted Stanford's most popular class. It would often shut down the Stanford systems during sign-up day. And even after I graduated from Stanford, I kept teaching that wine class for close to three years after graduation.

When I went to Harvard for my MBA, Harvard College, one of the houses there, residential houses there, asked me to come teach a wine seminar for them, which I did, which was, again, a roaring success. And then I moved to London.

And when I moved to London, I said, "Well, I'm not teaching anything here. I guess I'm going to lose all this wine knowledge. Let me put it to the test." And I decided to take the Court of Master Sommeliers test. It was a three-day test. I don't think I've crammed that hard for anything in my life. It was a blind tasting of 10 wines. It had a service test, had theory papers. It was incredibly intense.

But lo and behold, I ended up passing. And here we are. It's a lifetime qualification. I still have it with pride and honor, although I don't use it as much anymore now being a mom of three. So I was going to ask, you're London-based. It's a short train ride to France, to Germany, to Italy. There are some great wines in that area. How often do you get to...

go to local wineries and sample the wares. I love tasting wine. And so I have joined a wine club in London, which I love. I used to take part in blind wine tasting competitions, less so now. So any opportunity I can to enjoy and experiment and try new wines, I do so. You're absolutely right. Europe is a bastion of winemaking. And so if I go to board meetings in Germany or if I head off

for a weekend in Spain. It's all about diving deep into the local wine. I recently went for dinner with about 10, 12 friends to a lovely restaurant near Barcelona in Spain. And there was a wine tasting pairing there for all Spanish wines. And we did that together and learned more about Spanish wines than we ever thought we would know.

That's the kind of thing that I do now as a passion and hobby. Really, really interesting. All right. So I'll have you for a few more minutes. Let's jump to our favorite questions. Tell us what's keeping you entertained these days. What are you either watching or listening to? What are you streaming?

Watching, I have to say, I tend to watch in limited doses these days, given life and travel and children. But I love The Diplomat on Netflix. Fascinating, again, geopolitics. I'm absolutely interested in the new spy thriller that Paramount has out called The Agency. I've watched a couple of episodes. It's trending well so far.

I love listening to a number of podcasts. My go-to list will be Andrew Huberman. Love his, he's a Stanford professor. Right, the healthcare. Yes, he loves it. He talks about health, wellness protocols. Super fascinating. I try to dive into his stuff as much as I possibly can. They're long though, so sometimes it takes a few iterations. I'll often listen to the news via podcasts, whether it's Bloomberg, CNBC, CNN,

That's often part of my regular rota.

And more than any of the others, I am a huge believer in preventative mental health. I meditate every day, go to an annual meditation course. So I'm often listening to talks around meditation, around mental health, how do you deepen your meditation practice. That's a huge part of my repository as well. And while we're on streaming entertainment, if you like The Diplomat and The Agency, let me suggest The Lioness. Ooh.

on Paramount about intelligent agencies and how they infiltrate terrorist groups. Really fascinating. Very cool. I just finished the first season and I'm looking. You need a break because it's like very tense and wow. We're about to start the second season. Tell us about your mentors who helped shape your career. I am lucky enough to have been picked up by a wonderful professor at Stanford called Professor Tom Kosnick.

Tom took me on at the tender age of 19 or 20 and took me under his wing, made me a research fellow. He's the one that enabled me to guest lecture at Stanford. I wrote case studies that are still used in the teaching curriculum there under him. And he's been a tremendous mentor and supporter very early on and forever thankful to him for his coaching and mentorship over the years.

Similarly, there's a wonderful professor at Stanford called Professor Tina Selig. She gave me one of the best pieces of advice I think any young career professional, but certainly a woman, could have received. She said to me, "You can have it all, just not at once." And that has stuck with me forever since, and it's been true in many walks of life as I've had my children, as I've grown my businesses, as I do what I do on a daily basis.

So those are the two that stand out, both at Stanford, both influential in the way they mentored me, but also what they imparted in me. Really interesting. Let's talk about books. What are some of your favorites and what are you reading right now?

I love the book The Big Leap by Gray Hendricks. Everyone should pick it up. It's a quick read. It talks about upper limits, how we set upper limits unconsciously in our lives. He starts off with this great research about how most lottery winners

After five years, most of them end up being broke or really unhappy. Broke, divorce, suicide. It's terrible. It's terrible. Why? We've just been coming to all these riches. The mind has a reset point that brings you down into what you're used to feeling and the kind of mental space you're used to inhabiting.

How do you break out of that and increase your upper limits so you can continue to scale in your life and in your career and in your personal life and so on? Fascinating quick read, Big Leap by Gay Hendricks, highly recommend it.

I'm reading a book right now, I'm only about 30 pages into it, called The Mind Matters. Back to my thematic about mental and understanding how the mind works and mental health. Mind Matters is by a professor who talks about how the mind can often visualize things into reality. So you hear this phrase called manifestation a lot. This is a neuroscientist studying what that means in terms of how the brain fires.

to try to make things into reality for us. Fascinating 35 pages or so, so far. So early innings, but it's going well. Really interesting. And our final two questions, what sort of advice would you give to a recent college grad interested in a career in private markets or finance?

My number one piece of advice to anybody entering finance is play the long game. Too many young people, I'm sure that you come across, Barry, that I come across, are all about the short-term hits and the short-term wins. If it doesn't work out, they move on and they try to make it work somewhere else and they move on again.

A rolling stone gathers no moss and especially in finance, it's a world that ends up being one, maybe two degrees of separation. It's a world in which relationships still really, really matter and you have to cultivate them thinking about a 10, 20 year career in mind, not what can this person do for me today or this week or this month or immediately.

And that is, I think, one of the most profound pieces of advice I leaned into early in my career, looking at every human being as a long-term investment of time and energy, not looking for quick paybacks. Same with investing in private equity, but certainly true when it comes to people. Really interesting. And our final question, what do you know about the world of private equity today? You wish you knew 20 plus years ago when you were first starting out.

What I know now that I wish I knew back then is that the market will change and adapt even faster and more furiously than you ever thought possible. Did we ever see the trillions of dollars in the private equity primary market? No. Did I see the secondaries market growing to $150 billion on its way to a trillion dollars itself? No. So the growth will far outpace anything

your wildest dreams both in your own industry but also in the finance world around you think about 20 years ago had you and i ever envisioned the mag 7 and the trends we're seeing in technology and how markets would be at the levels they are today not even in our wildest dreams so as i think about the next 20 years i keep that in mind really really interesting

Thank you, Sunaina, for being so generous with your time. We have been speaking with Sunaina Sinha. She is the global head of the Private Capital Advisory Group for Raymond James. If you enjoy this conversation, well, be sure and check out any of the previous 540 we've done over the past 10 and a half years. You can find those at iTunes, Spotify, Bloomberg, YouTube, wherever you find your favorite podcasts.

And be sure and check out my new podcast, At The Money, short 10-minute conversations with experts about topics affecting your money, earning it, spending it, and most importantly, investing it.

at the money in the Masters in Business feed or wherever you find your favorite podcasts. I would be remiss if I did not thank the crack team who helps us put these conversations together each week. John Wasserman is my audio engineer. Anna Luke is my producer. Sean Russo is my researcher. Sage Bauman is the head of podcasts here at Bloomberg. I'm Barry Ritholtz. You've been listening to Masters in Business on Bloomberg Radio.

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