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FORBES.COM NOVEMBER 30, 20 19ing increasing GP commitments. Many also want
to invest more in their own deals, and this is a
very efficient mechanism as the proceeds raised
usually are funded over time matching the needs,
and there are some tax advantages,” says Ever-
core’s Saul Goodman, the investment banker on
most of the general-partnership-stake (GP-stake)
deals.
Private equity firms, normally secretive about
their internal economics, are loath to discuss
these sales. Gores declined to comment, as did
pretty much all his private equity tycoon peers.
However, based on months of reporting and doz-
ens of interviews with insiders and investors in
these funds, Forbes has been able to identify 13
new billionaires who have unlocked fortunes by
this financial engineering. Ever heard of Steven
B. Klinsky, Egon Durban, Mike Bingle or Scott
Kapnick? All are part of a new guard of private
equity titans who are taking advantage of a world
awash in cheap capital and tax advantages and
driving a boom in the buyout business.
As investment banks and hedge funds struggle,
private equity—a business predicated on raising
capital subject to long-term lockups to invest in
assets using large amounts of leverage—is enjoy-
ing go-go times. The decade-long bull market has
helped the group log average annual returns of
13.69% over the 15 years ending March 31, 2019,
according to Cambridge Associates, compared
with 8.57% for the S&P 500. Last year alone, PE
deals amounted to some $1.4 trillion, and in the
U.S., private equity firms now own more than
8,000 companies, compared with 4,000 in 2006.
Down the road from Gores’ palatial offices, in
Santa Monica, California, José E. Feliciano and
Behdad Eghbali operate Clearlake Capital, a bou-
tique firm with a relatively modest $10 billion
in assets. Feliciano grew up in Bayamón, Puerto
Rico, a city known for fried pork rinds, before at-
tending Princeton. Born in Iran, Eghbali arrived
in the U.S. in 1986 at age 10 on a tourist visa with
his parents, who wanted to avoid his conscrip-
tion in the Iran-Iraq War. After graduating from
college, both Feliciano and Eghbali paid their
dues toiling at old-guard private equity firms like
TPG Capital. Then in 2006, they teamed up to
form Clearlake Capital.
By all accounts, their firm, which tends to buy
little-known software, industrial and consumer
products companies, has been a roaring success.
Clearlake’s 2012 fund, for example, has posted an
annual net internal rate of return of 42.7%. So
last year, as the GP-stakes market was exploding,
a bidding war heated up for Clearlake. Feliciano
and Eghbali got Dyal and Goldman to team up
for a slice that valued Clearlake at a rich $4.2 bil-
lion, making Feliciano, 46, and Eghbali, 43, two
of the youngest billionaires in private equity.He’s hardly alone. In the last four years, no
fewer than 60 private equity firms have followed
the same playbook, selling slivers of their general
partnerships, according to PitchBook, frequently
at eye-popping valuations. More than $20 bil-
lion is being raised this year alone for more
such deals, half by Dyal, a unit of the large New
York asset manager Neuberger Berman, the rest
by others, including units of Blackstone Group,
Goldman Sachs and Jefferies. Secretary of Educa-
tion Betsy DeVos and her husband, Richard, are
getting into this game, out of their family office.
Former Florida governor Jeb Bush has teamed up
with Bahrain’s Investcorp to invest in private eq-
uity general partnerships, as well.
“Some firms have grown rapidly and are see-When the Detroit Pistons
opened their 2017-2018
season to a sellout crowd
and a big welcome from
rapper Eminem, the team’s
owner, billionaire Tom
Gores, beamed courtside.
Yes, the gleaming new $863 million downtown arena was worth cel-
ebrating, but Gores was finalizing the deal of his lifetime, a ten-digit
payout from his Beverly Hills buyout firm, Platinum Equity.
The deal was done quietly, without fanfare or a press release. Gores
forked over an estimated 15% of his stake in Platinum to another firm,
Dyal Capital Partners, which will garner $1 billion for him over four
years. In doing so, Gores, who’s now worth $5.6 billion after the trans-
action, scored a huge personal windfall, raised the valuation of his
firm, which he still controls—and avoided taxes.THEINVESTIGATION→