First, they were peddling SPACs (and failed). Then they started cashing in on ‘disastrous’ crypto endorsements. Now familiar famous faces have started dipping their pedicured toes into the world of private equity. Last week reality star Kim Kardashian announced the launch of a private equity fund called SKKY Partners. As one of the richest self-made women in the world, Kim has plenty of money to put to work and she’s teaming up with Carlyle Group money man Jay Sammons to help make it a reality. 🤞 But unlike her bootiful shapewear undies, private equity carries plenty of risk, and not even her celeb-status guarantees she won’t lose money.
Kim K joins a few other big name celebs hoping to seed their own investing funds. This includes tennis GOAT Serena Williams, 🎾 and actor, Ashton Kutcher, who made early investments in Spotify (SPOT), Airbnb (ABNB) and bought shares in cyber security company Sentinel One (S). So what is ‘private equity’, exactly?
Private equity investors aim to invest in companies that appear undervalued or under-managed and ideally transform them into beautiful, desirable swans. 🦢 These newly preened companies may then be sold, for what they hope is huge profits. At least that’s the idea - but there are no guarantees of returns. We’re still waiting for the All Blacks’ swan-like turn around after a huge investment from global private equity firm, Silver Lake, earlier this year. 😛
When Blackstone Group (BX), the ‘world’s largest’ alternative asset manager, took dating app Bumble (BMBL) public last year, they seemed to hit the jackpot. 🐝 Forbes estimates Blackstone made a buzzy four-times their initial investment, pocketing billions in the process. But in 50 years of private equity, performance success has been steadily falling across the industry.
Other major hopefuls in private equity include investment firms Apollo Global Management (APO), The Carlyle Group (CG), and KKR (KKR) whose private equity portfolio includes Kiwi company Natural Pet Food Group. 🐶 The companies make money from management fees they charge those who invest into their funds. They can also earn performance fees if they are successful. No wonder the rich and famous want to keep up.