5 questions with Bob Long

For those who aren’t familiar with Conversus Capital, the publicly traded fund of funds was born out of one of the largest secondary transactions in history. Conversus debuted on the Euronext exchange in Amsterdam in July 2007, raising $1.8 billion. The firm, which is based in the Channel Islands, but has offices in Charlotte, N.C., and Chicago, then used its IPO proceeds to buy a fully baked, $1.9 billion portfolio of limited partnership interests from Bank of America. Today, Conversus commands a $2.2 billion portfolio of interests in 215 private equity funds and direct investments. About 80% percent of its holdings come from funds closed in vintage year 2004 or earlier.

The firm is led by CEO Bob Long, former head of Banc of America Strategic Capital, a division that managed about $7 billion in private equity funds and direct investments. PE Week Senior Editor Constance Loizos recently caught up with Long and asked him a few venture-related questions.

Q. How many of the 49 venture fund holdings of Conversus are from secondary opportunities?

The initial portfolio included 41 of our 49 venture funds. We have committed to three new, primary venture funds since our formation and acquired five others in secondaries in two separate portfolio acquisitions.

We’re looking to complement our existing portfolio with commitments to new top-tier funds and attractive acquisitions of funds on the secondary market.

Q. A lot of LPs say that if they can’t get into top-tier VC firms, they aren’t bothering to invest in venture. What are your thoughts on VC as an asset class right now?

Technology has been and will remain a growth engine of the U.S. and global economy. We think the health care sector will experience above-average growth over the foreseeable future, and venture allows our investors to participate in that growth.

Q. Are there certain investment sectors you like more than others

In general, we prefer to target the best managers who have a proven ability to identify and exploit the most promising sectors, rather than making sector selection bets ourselves.

Q. What do you like least about investing in venture funds?

Investing in top-tier venture firms means evaluating unrealized investments and less-proven portfolios, a process that is characterized by shorter review cycles and smaller allocations.

Limited access to top-tier funds is leading certain investors to abandon the venture component of their investment strategy, and that limited access is presenting an opportunity for Conversus Capital, with our permanent capital dedicated to private equity, to gain larger allocations in top-tier funds.

Q. What’s most appealing to you about the asset class?

Venture capital presents the potential for out-sized returns as compared to LBO investments.