NOVEMBER 30, 20 19 FORBES.COM109TH
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leveraged, long-term model had seemingly been tailor-
made for a low-interest-rate prolonged bull market.
In a typical deal, Rees would spend between $400 mil-
lion and $800 million over a two- to four-year period and
in return receive a 10% to 20% stake in all of a private eq-
uity fi rm’s net management fees and half of its performance
fees, or carry, meaning Dyal would get, say, 15% of the fu-
ture management fees and 7.5% of the carry. Dyal’s minority
stakes were passive—Rees would have no say in the running
of the private equity fi rm. To make it work, Rees structured
his Dyal funds as perpetual vehicles with a life span as long
as forever, meaning Rees would never be forced to sell his
general-partnership stakes—so he and his institutional in-
vestors could hold on to them like a high-yield annuity.
If the private equity managers selling decide to leave the
proceeds in their fi rm or roll it into its other funds, the PE
managers pay no tax on it—the tax bill is deferred—until
the money comes out. In other words, the seller gets to turn
future ordinary income into long-term capital gains—and
if they leave the money in the fund, they eff ectively invest
pretax and put off the tax bill indefi nitely.
Either way, the government is collecting less tax revenue,
because Dyal’s investors are often foreign and tax-exempt
“The Vista deal woke everybody up,” says one senior Wall
Street dealmaker.
Rees quickly pivoted to focus on private equity. By Sep-
tember 2015 he was telling institutional investors like the
New Jersey State Investment Council that Dyal’s private eq-
uity stake deals were a “natural continuation of its existing
business in acquiring similar stakes in hedge fund manag-
ers.” He marketed the Dyal private equity general partner-
ship funds as steady income-gushers, with yields in the low
teens, at a time when Treasury bills were near zero and AAA
corporates paid less than 4%. For the liability-matchers of
the pension and insurance world, it was music to their ears.
The hedge fund boom was ending, and private equity—
with its ten-year life-span funds—seemed like a better deal.
Assets under management are stable, making those 2% fees
associated with them more predictable. Limited partners
almost never default on the capital commitments.
By contrast, hedge funds proved inherently more vola-
tile. In early 2015, for example, Dyal bought a 20% stake in
activist hedge fund Jana Partners at a $2 billion valuation
when Jana managed $11 billion. But within four years Jana
was down to $2.5 billion in assets managed as returns went
south and investors yanked their capital. Private equity’s
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AP
KENNETH HAO, 51
SILVER LAKE, MENLO PARK, CA
ASSETS: $43 BIL NET WORTH: $1.2 BIL
Hao expanded the tech private equity fi rm into key Asian markets by
starting offi ces in China and Japan. He led Silver Lake’s profi table invest-
ment in Alibaba Group. Hao joined Silver Lake in 2000 aft er spending
nearly a decade at San Francisco investment bank Hambrecht & Quist.
MIKE BINGLE, 47
SILVER LAKE, MENLO PARK, CA
ASSETS: $43 BIL NET WORTH: $1.2 BIL
Joined fi rm in 2000, aft er stints at Apollo Global and Goldman Sachs. Within a
decade became co-head of its North American operations. He helped close
deals for Ameritrade, Virtu Financial, Datek Online, SoFi and Ancestry.com.
DAVID GOLUB, 57
GOLUB CAPITAL, NEW YORK CITY
ASSETS: $30 BIL NET WORTH: $1.1 BIL
Joined brother Lawrence in 2003 at Golub Capital, which says it received
no tax benefi t from its stake sale. He’s now CEO of the fi rm’s publicly
traded Golub Capital BDC. Aft er graduating from Harvard, Golub got a
master’s in philosophy from Oxford, where he was a Marshall Scholar, and
an M.B.A. from Stanford. He was the fi rst chairman and a longtime direc-
tor of the Michael J. Fox Foundation for Parkinson’s Research.
EGON DURBAN, 46
SILVER LAKE, MENLO PARK, CA
ASSETS: $43 BIL NET WORTH: $1.2 BIL
One of four managing partners who now run the
fi rm, which specializes in tech investments and
manages $43 billion. Durban is best known for
orchestrating high-profi le deals for Dell, Motorola
Solutions and Pivotal Soft ware. Was a founding
principal of the fi rm in 1999.
GREG MONDRE, 45
SILVER LAKE, MENLO PARK, CA
ASSETS: $43 BIL NET WORTH: $1.2 BIL
Joined Silver Lake in 1999. He has done deals for
Sabre Corp., Vantage Data Centers, UGS Corp.,
GoDaddy and Motorola Solutions. He fi rst started
doing tech private equity deals at TPG and also
worked at Goldman Sachs.
LAWRENCE GOLUB, 60
GOLUB CAPITAL, NEW YORK CITY
ASSETS: $30 BIL NET WORTH: $1.1 BIL
Founder of Golub Capital, which claims it received
no tax benefi t from its stake sale. A former banker
with stints at Allen & Co., Wasserstein Perella and
Bankers Trust, Golub founded Golub Capital in 1994
as a traditional leveraged buyout fi rm. In 2001, he
pivoted and turned the fi rm into a lender, mostly to
other private equity fi rms like Vista Equity and Thoma
Bravo. Since the crisis, assets have grown fi ft eenfold.
SCOTT KAPNICK, 60
HPS INVESTMENT PARTNERS, NEW YORK CITY
ASSETS: $55 BIL NET WORTH: $1.4 BIL
Formerly CEO of Highbridge Capital, the hedge
fund and credit manager owned by JPMorgan.
Kapnick started at Goldman Sachs, where he rose
to co-head of investment banking and co-CEO of
Goldman Sachs International. He left before the
fi nancial crisis and joined Highbridge in 2007 aft er
its sale to JPMorgan to build a credit business. In
2016, JPMorgan divested HPS. Assets have since
ballooned.