The case for building, not buying… | PitchBook News Summary

1. Key Themes

Firms are building CEOs internally rather than hiring from outside

Alpine Investors and Shore Capital Partners have built formal pipelines to develop operating talent from within, rather than relying on external executive hires.

"Alpine Investors and Shore Capital Partners have each built separate pipelines to funnel operational talent, aiming to equip executives to take charge of their portfolio companies."

The programs are extremely selective, rivaling elite academic institutions, suggesting strong demand from young talent for a fast-track into leadership.

"The firm received 750 applications for 12 slots in its 2024 CIT program, a lower acceptance rate than Harvard."

Direct and co-investment structures are overtaking traditional blind-pool fund commitments

LPs increasingly prefer deal-specific visibility over committing capital blindly to primary funds, a structural shift in how private capital gets allocated.

"Investors expect that PE direct investments and co-investments will overtake traditional fund investing as the largest capital source within five years, according to a survey that exposes the shifting dynamics in LP-GP relations."

"The reasoning comes down to visibility. Investors can underwrite a specific asset and model its returns directly, which is not possible when committing blindly to a primary fund."

The scale of this shift is already large and expected to set records again.

"Some 78% of active buyers expect direct and co-investment volumes to set a record in 2026, beating the $215 billion the bank estimates the market reached last year: a record $161 billion in directs and $54 billion in co-investment."

India's secondaries market is reaching an inflection point after years of being "premature"

Multiple independent tailwinds — IPO market health, regulatory tightening, aging fund vintages — are converging to create a real secondaries opportunity in India, even as primary fundraising struggles.

"Secondaries investing in India has long been regarded as a premature asset class, but not any longer... Secondaries investors have sailed into India on several independent tailwinds."

"Indian private markets have struggled... Indian fundraising has declined for four consecutive years following a 2021 peak."

PE returns are increasingly diverging based on business model, not just brand

Earnings quality (organic growth vs. multiple expansion) and asset mix (software/AI exposure vs. credit-heavy models) are separating winners from laggards among the largest alternative asset managers.

"PE returns rebounded on earnings growth rather than multiple expansion, with KKR and TPG citing limited software exposure and AI-ready underwriting in newer vintages. The quarter also widened the gap between stronger PE franchises, Blackstone, KKR and TPG, and increasingly credit-first firms, Apollo, Carlyle, Blue Owl and Ares."

2. Contrarian Perspectives

Building CEOs is fundamentally a retention play disguised as a talent-development strategy. Rather than simply being about producing better operators, these executive pipeline programs may be a response to firms losing talent to competitors and needing a compelling career-progression narrative.

"'This is a retention tool,' said Kate O'Sullivan, an executive coach and co-founder of CoachSelect. 'Firms are losing top talent. [These programs] are showing them that the firm is investing in you, because people will leave when they feel like there isn't investment in their career progression.'"

Co-investors are pickier about economics than direct-deal buyers, despite direct deals implying more risk/control. One might assume co-investors (piggybacking on a GP's lead) would demand simpler terms, but they show more willingness to accept performance-linked carry than direct investors do — suggesting a bifurcation in how LPs price different forms of "sole discretion" exposure.

"As LPs look for more direct and co-investment opportunities, almost three in four survey respondents said they are willing to pay variable carry on co-investments, tied to managers meeting certain return thresholds. Directs buyers are less willing: 46% would accept variable carry, and just 13% would pay more than 20%."

3. Companies Identified

Alpine Investors — Lower-middle-market PE firm. Mentioned as a leader in building internal CEO talent pipelines via its CIT program. "Alpine places early-career talent, typically straight out of MBA programs, into portfolio companies, with promotion into the C-suite the eventual aim."
Shore Capital Partners — Lower-middle-market buyout firm. Cited for its CXO program, a structured two-year executive development track. "Shore runs what it calls its CXO program, a two-year training scheme that places early- to mid-career talent and recent MBA grads into C-suite-adjacent roles at its portfolio companies."
Clearlake Capital — PE firm. Case study in sports/asset valuation surge; took full control of Chelsea FC. "Clearlake Capital now has full control of Chelsea FC, with the club's valuation, including debt, doubling from 2022 to £5 billion."
Houlihan Lokey — Investment bank. Source of the first-ever combined co-investment/directs market survey (LP Compass), underpinning the fund-structure theme. "That's according to 56 of the most active buyers surveyed in investment bank Houlihan Lokey's LP Compass, its first survey of the combined co-investment and directs market."
360 ONE Asset Management — $74B AUM Indian wealth/asset/alternatives firm. Cited as bullish example of secondaries players positioning in India. "'We love this market that we're in,' said Sameer Nath, chief investment officer of 360 ONE Asset Management."
TR Capital, Neo Asset Management, Kenro Capital — Asian mid-market funds. Cited as evidence of expanding secondaries activity into India. "Over the past year, a growing number of Asian mid-market funds, including TR Capital, Neo Asset Management and Kenro Capital, have expanded their secondaries remit to India or launched new dedicated secondary vehicles."
Blackstone, KKR, TPG — Named as the "stronger PE franchises" in the current earnings cycle, credited with earnings-driven returns and limited software exposure risk. "PE returns rebounded on earnings growth rather than multiple expansion, with KKR and TPG citing limited software exposure and AI-ready underwriting in newer vintages."
Apollo, Carlyle, Blue Owl, Ares — Named as "increasingly credit-first firms," implying a less favorable positioning in the current cycle relative to Blackstone/KKR/TPG.

4. People Identified

Kate O'Sullivan — Executive coach and co-founder of CoachSelect. Cited for her contrarian read on PE CEO-development programs as retention tools rather than pure talent-building strategies. "'This is a retention tool,' said Kate O'Sullivan."
Sameer Nath — Chief investment officer of 360 ONE Asset Management. Cited as a bullish voice on India's secondaries opportunity despite broader market jitters. "'We love this market that we're in,' said Sameer Nath."

5. Operating Insights

Formal talent pipelines can be a competitive moat for recruiting. Promising "CEO after your MBA" is a powerful recruiting hook that lets smaller/mid-market firms compete for elite talent against larger institutions and traditional corporate ladders — evidenced by the CIT program's sub-Harvard acceptance rate.
Retention risk should shape how firms design career-development programs. O'Sullivan's framing suggests operators/investors should treat visible career-progression investment as a retention lever, not just a pipeline-building exercise — a tactic applicable well beyond PE.
Deal-specific underwriting is becoming the LP expectation, not the exception. Fund managers raising primary vehicles should anticipate LPs pushing harder for co-investment/direct rights, since LPs increasingly value the ability to model and underwrite named assets over blind pool commitments.

6. Overlooked Insights

Regulatory tightening on primary funds in India is inadvertently creating demand for secondaries solutions — a second-order effect of regulation reshaping market structure that could be a template for how tightening rules elsewhere might spur new asset classes.

"Second, regulators have tightened rules on primary funds and created demand for solutions from secondaries investors."

Geopolitical shocks are quietly delaying major IPOs, creating a window for secondaries buyers to step in as liquidity providers. The mention of Zepto, Reliance Jio Platforms and PayU delaying listings is a subtle but significant signal of how secondaries capital fills gaps left by public market volatility.

"After the US-Iran war erupted in February, IPO hopefuls, including Zepto, Reliance Jio Platforms and PayU, have delayed their listing plans while they wait for the market jitters to shake out. But secondaries players like 360 ONE Asset Management are just getting ready to deploy."