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Paul Newsome Matthias Knab, Opalesque for New Managers: How Unigestion has been rewriting the playbook on secondaries and emerging managers
In an era where private equity giants chase mega-deals and eye-catching discounts, Unigestion's Paul Newsome, Head of Investment Solutions, says the firm is taking a decidedly different approach. Over the past 30 years, the Geneva-headquartered firm's $12 billion private equity platform has built a reputation for contrarian thinking that's delivering outsized returns.
"Our overriding rule is: invest with the outcome in mind," Newsome explains to Opalesque founder Matthias Knab in Berlin.
"When we invest, we're investing to a specific cash flow profile that we want to deliver to our investors."
It's a philosophy that has produced remarkable results. Over the past four years, Unigestion has distributed back to investors around $1 billion annually-in fact higher than the amount they are investing. "While the distribution pace of the rest of the market has been weak in recent years, we're distributing large gains back to our investors," Newsome notes with evident satisfaction.
The Four-Pillar Strategy
Unigestion's private equity business operates across four distinct strategies, each designed to capture different market opportunities while maintaining their focus on global mid-market companies.
Their primaries strategy specializes in emerging managers as well as established managers, while their co-investment arm both partners with existing managers and leads independent deals.
The secondaries business, which started 25 years ago, has evolved into what Newsome calls "one of our flagship offerings," making Unigestion a leading player in the secondary market.
The newest addition is their climate impact strategy, starting 15 years ago, launching a dedicated fund last year targeting buyouts and growth companies addressing climate challenges.
What unifies these seemingly diverse approaches is Unigestion's thematic investment philosophy. "We invest in specific themes where we see long-term growth-including Healthcare, Supply Chain Efficiency, Service Efficiency or what we call 'Future of Work,' " Newsome explains. "These are areas where we see growth in all environments."
Challenging Secondary Market Orthodoxy
Perhaps nowhere is Unigestion's contrarian approach more evident than in secondaries, where conventional wisdom has long centered on securing attractive discounts. Newsome dismisses this thinking as outdated.
"The old question of 'are you getting good discounts?' was relevant 15-20 years ago when discounts drove returns," he says. "Today, for the last fifteen years, the discount is statistically proven to be irrelevant. What's relevant is the quality of the underlying company."
This philosophy puts Unigestion at odds with many secondary market participants who chase large portfolio transactions from motivated sellers. "You hear about U.S. endowments selling multi-hundred million portfolios lately. The big guys come along and get a nice discount, maybe 10-15%. In order hit their target return, they have to put leverage on it, but the issue is that in a difficult environment, only certain companies can be exited."
The result, according to Newsome, is the portfolio takes years to generate meaningful distributions to investors, with leverage needing to be paid off first. "We think that's inefficient. Secondaries should provide consistent, predictable distributions and liquidity back to investors." Worse, such portfolios have 'sticky tails' with many lower quality companies taking a long time to be finally exited.
Instead, Unigestion focuses on concentrated portfolios of high-quality companies sourced primarily from managers they already know. These can be either LP-stakes in single funds, or GP-led continuation vehicles consisting of one, maybe two companies.
"We know what we buy," Newsome emphasizes. "We're buying portfolios we've been monitoring for four, five, or six years."
The "Emerging Manager" Misnomer
One of Unigestion's most successful strategies challenges another industry assumption: that emerging managers represent higher risk. With over 100 commitments to emerging managers over 25 years, Newsome has data to prove otherwise.
"This is another myth-that emerging managers are risky. Of more than 100 emerging managers (raising their first or second fund) we've backed, only two have been under 1x," he reveals. "We get very high hit rates because we're backing seasoned, specialised professionals who've typically done it for 20 plus years."
The term "emerging manager" itself is somewhat misleading, Newsome acknowledges. "It's a bit of a misnomer because while we define them as Fund I or Fund II, we typically invest with managers who are veterans, having spent years honing their skills in another firm."
The strategy has produced exceptional returns. Unigestion's first dedicated emerging manager fund, launched in 2019, is now the best-performing buyout fund-of-funds in its vintage, delivering over 2x net returns and 25% net IRR. "It's number one in its vintage, top quartile against all buyout funds, and even top quartile when measuring DPI against secondary funds," Newsome proudly states.
Relationship Capital Pays Dividends
The long-term nature of Unigestion's approach has created valuable relationship capital. Early backing of now-established firms like EQT, Permira, Francisco Partners, and Blackfin in their Fund I or Fund II days has paid ongoing dividends.
"The beauty of backing these names early on is they never forget you," Newsome reflects. "One manager we backed at the very beginning now manages $5+ billion, and are hard to access for new investors, but we still invest with them. They show us co-investment or secondary deals before anyone else even though we are no longer their largest investor."
This relationship advantage enables unique opportunities like "direct secondaries"-midlife investments in portfolio companies requiring further capital, for example, to make add-on acquisitions. "You come in like a co-investment on a no-fee, no-carry basis," Newsome explains. "You can get co-investment-like returns of 2.5x with shorter holding periods and reduced risk."
Fee Innovation in a High-Cost Environment
Recognizing investor fatigue with layered fees, Unigestion is always looking for ways to reduce total expense ratios through their emerging manager investments. Through, for example, staggered carry, shorter investment periods, and 30% co-investments, they've effectively eliminated one layer of fees.
"We tell investors they're getting access to a portfolio of emerging managers on a 2-and-20 all-in basis," Newsome explains. "We're obsessed with keeping down total expense ratios."
Market Timing and Future Outlook
With market volatility creating opportunities, Unigestion is well-positioned for the current environment. Their secondary fund, approaching a EUR 1.5 billion final close in August, already has close to EUR 600 million committed with a substantial up-valuation, driven by strong growth in the portfolio rather than discounts. The emerging managers fund, which just completed a sizeable first close, remains open through 2026.
"Liquidity is more important than ever," Newsome observes. "The secondaries market benefits from this because investors wanting liquidity obviously provides more deal flow."
For exits, Unigestion relies primarily on strategic sales to larger companies or large cap private equity firms rather than IPOs. "Large and mega cap firms have a lot of dry powder because they have been raising ever larger funds, creating a nice exit route for us," Newsome notes.
As private equity faces headwinds from higher interest rates and valuation concerns, Unigestion's focus on quality over price, relationship building over opportunistic deals, and thematic consistency over market timing appears increasingly prescient. In Newsome's words: "We're confident that we're backing resilient companies which will grow in all markets - and the ultimate buyers will want to own these companies irrespective of the macro environment."
Paul Newsome is Head of Investment Solutions and a member of the Investment Committee for Unigestion's private equity team. Unigestion manages over $15 billion in assets across multiple strategies, with offices in Geneva, London, Zurich, Paris, New York, and Singapore.
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