We get these calls from time to time, and they aren’t on behalf of corporate governance experts. The intro is usually the same: “Hello, would you be interested in meeting many of North America’s largest institutional investors and family offices (aka “LPs”)? We are holding a summit / conference / session at [Resort X]”.
The first time you get the call, you naturally say “yes, we’d be interested”. Raising capital from large institutions is generally difficult, so you invariably would welcome every chance you can get to talk about your private equity/debt/venture fund with the very firms that make or break you in the business.
It all sounds good until the salesman tells you that they charge fund GPs $75,000 (sometimes it’s just $65,000) to attend. Someone is making a good margin on the two day event.
To think that there are at least half a dozen firms in North America trying to book these sessions each and every quarter. Yesterday’s call came from someone purporting to work for the “Canadian Institutional Investors Group”.
Talk about a fancy name. While he is making the pitch, I Google the corporate name and the company doesn’t actually exist in the billions of web pages Google tracks. When asked if this is really the Company’s name, he says it’s a “subsidiary of a conference firm called Market Events”. Google that. Zip. Not easily found either, I report.
But wait, he says.
We have the $70 billion Alberta Investment Management team coming, as well as the Family Office of the “Kerr” Family, a high net worth group. The conference will supposedly be held next month at the Casino Hilton property in Gatineau, Quebec. I just have to mortgage my right arm to be able to buy a ticket to attend.
The salesman guarantees “at least” 8 meetings with groups who’ve selected you based upon your fund profile (much like a Thai dance bar). Who knows if AIM, or similar institutional investors are actually attending. It is easy for a salesman to throw around the names of pension funds that you read about in the newspaper, but can you imagine what would happen if a fund manager actually agreed to pay the $75,000 to attend, only to find out that this entire event is the Bre-X of institutional investing conferences.
That’s be something called “fraud” which has its own place in the Criminal Code. At $75k per head, the SQ would probably pay attention.
Which begs the question. Are LPs actually attending these conferences? And do they know that the General Partners in attendance had to pay $75k to break bread with them? At $75k for a couple of days in Gatineau, even caviar wouldn’t do; it must be something really speacial, like Roasted Unicorn.
When a construction CEO pays $1,000 to attend a cocktail party with a Federal politician, the Opposition Parties and media cry foul. As the LPs themselves are often stewards of public money, it begs the question. Do they know about the tollgating that’s going on behind their backs?
The ILPA should tailor some rules for these things. GPs shouldn’t feel as though they need to fork over money (other than airfare) to meet the very people that are already paid by their own pension funds to know who the good and bad GPs are.
MRM
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