Gibson Dunn & Crutcher has lured a mainstay of the investment funds practice at Weil Gotshal & Manges to its office in Manhattan.
The departure of Y. Shukie Grossman, co-head of Weil’s U.S. private funds group, for Gibson Dunn is the latest in a series of high-level partner defections plaguing Weil in New York and Texas. One of the most broadly experienced funds lawyers in the industry, Grossman advises clients on the formation of private investment funds in the buyout, infrastructure, real estate, growth equity, and other sectors. Grossman also has corporate transactional expertise and puts it to work for clients undertaking the purchase or sale of stakes in fund sponsors. Yet another area of Grossman’s practice involves guiding clients on regulatory compliance matters. At the dawn of his legal career, Grossman worked as a lawyer at the SEC’s Division of Investment Management from 1994 to 1996, before moving Skadden Arps Slate Meagher & Flom, where he worked for four years prior to joining Weil.
“I’ve worked closely with several of the partners in the Gibson Dunn investment funds practice for many years, and I’ve maintained a close relationship with them. I thought that the combination of my existing practice with their existing practice would make for a spectacular opportunity to grow and develop,” Grossman said.
Grossman makes his move at a busy juncture for funds lawyers. In a discussion with IFLR1000, Grossman noted that he and others in his space have seen, over the course of 2014 and 2015, a more robust fundraising market, in terms of the number of funds raised, than in the prior twelve to eighteen months.
“In particular, private equity firms have found the means by which to exit investments, thereby putting them in a position to raise funds that were delayed due to their inability to liquidate their existing portfolios. So we’ve seen some good traction on the market in the last twelve to eighteen months. It extends to the real estate, infrastructure, and debt finance space. Across the asset classes, you’re seeing sponsors raising capital to a greater extent, at least in my estimation, than we’ve seen in recent periods,” Grossman commented.
Grossman’s sense is that the primary causal factor behind this trend is the volume of capital that LPs now have available as a result of distributions from funds in which they have previously invested, he said. Moreover, Grossman believes that many of the clients he has historically represented are increasingly raising capital outside the United States, and growing amounts of institutional capital from outside the country are pouring into funds raised by fund sponsors here, a phenomenon he expects to continue.
“On the flip side, many firms that were historically based in the U.S. and had investment activity related to the U.S. are now exploring opportunities well beyond their borders, certainly in Europe, but also Asia and elsewhere. It’s a trend I would expect to continue across asset classes,” Grossman stated.
One of the areas where Grossman sees sponsors raising capital is Africa, an emerging market on which people are focused at the moment. Grossman has noted an uptick in fundraising activity for funds devoted primarily to buyouts in Africa. He said that it remains to be seen whether there will eventually be too much capital pursuing too few deals, one of the difficulties faced in other emerging markets.
Closer to home, there are quite acute issues of a different nature, what with the U.S. private funds industry subject to increasing regulation. Grossman described this area as largely unregulated when he started out as a lawyer nearly 20 years ago. Today, by contrast, the SEC regulates most private fund managers in the U.S.
“Fund managers are also finding themselves more limited in their ability to market to European investors by virtue of the AIFMD regime, and there are an array of other regulatory regimes that are touching private equity firms and other fund sponsors in connection with their investment activity, and causing them to rethink the manner in which they operate,” Grossman continued.
“They do have to envision themselves as firms that need to provide a greater degree of transparency to the marketplace and provide a greater degree of focus on regulation and compliance, and we’ve started to see that over the past three years or so, since the rules changed and U.S. advisors have predominantly become registered,” he added.
Besides practicing law, Grossman is an adjunct faculty member at Columbia Law School. Grossman is a 1994 graduate of Fordham University School of Law.