Alternative Investing Report - September 18, 2024

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_{*as of 9/17}

The VC and private equity firm Insight Partners is on the verge of closing a $10 billion fund, its thirteenth overall. It also just announced the $2.65 billion sale of portfolio company Recorded Future to Mastercard, a hefty return on its $780 million purchase in 2019. They are also exploring the sale of software company Tricentis at a valuation of $4 billion and are selling around $1 billion worth of stakes in other startups.

➨ TAKEAWAY: While the $10 billion figure is eye-popping, and it may increase to $12 billion by the time the fund is officially closed, it is still significantly less than the $20 billion Insight raised for its last fund. It is telling that Insight made a number of transactions to free up capital to return to investors in the lead-up to raising this fund. Look for funds to continue to be creative in searching out liquidity for their investors to help with future fundraising.

Last August, the SEC adopted a set of rules and amended the 1940 Investment Advisers Act, which placed new burdens on the private funds industry and set off legal action. In June, an appeals court sided with the funds and threw out the SEC’s changes. Now, rather than govern via rulemaking and relegation, the SEC is turning to litigation, targeting specific funds that they believe have broken the law.

➨ TAKEAWAY: The SEC has been trying to restrict the ability of private funds to offer preferential terms to certain investors and force them to provide investors with more transparency around fees. It is good for investors to be protected, but aggressive regulation will also ensnare innovators in the process. After the election, new agency leadership is likely no matter who wins, so investors should track which way the winds are blowing to see what the regulatory climate may be like next year.

In our latest episode of Smart Humans, Slava Rubin talks with EquityZen CEO and Co-Founder Atish Davda about pre-IPO venture investing and the latest trends in the asset class.

🎨 Christie’s expanding: It is becoming the first international auction house to operate in Saudi Arabia, and the new office will focus on art, jewelry and watches. This follows its first Middle East location in Dubai as they look to develop a new, potentially lucrative market.

🏡 Ares raises $3.3 billion: The alternative investment manager announced its largest ever real estate fund as it eyes significant opportunities in a ”dislocated” market.

🚀 AI investment: Salesforce Ventures announced a new $500 million AI fund in addition to its first $500 million AI fund, as AI remains the hottest sector in venture capital

💵 BlackRock and private credit: The world’s largest asset manager announced a new private credit division, as it tries to build a larger footprint in the asset class.

🪙 MicroStrategy buys more Bitcoin: The software company purchased $1.1 billion worth of the cryptocurrency, to bring its holdings to around $14.2 billion worth - and it just proposed taking on more debt to buy more Bitcoin in the future.

🏢 Liquidity in CRE: In a notoriously illiquid asset class, investors should focus on liquidity management, increasing flexibility to pursue opportunities.

The Helium network bills itself as a reliable, decentralized and global wireless network for the “Internet of things",” enabling people to connect devices to its hotspots, which are operated by people who earn HNT tokens for doing so. It got a lot of hype a few years ago, with the price of HNT reaching above $50, but low user counts and minimal mining rewards threatened to kill the project. It launched Helium Mobile last year, which revived interest and its price has risen by 400% in the last year as the service topped 100,000 subscribers. Its price has dropped the most of any top 100 coin in the past week, but it still is nearly double what it was in July.