How might StepStone Group refine its secondaries investment strategy to capitalize on current market dislocations?

Introduction

To refine StepStone Group's secondaries investment strategy and capitalize on current market dislocations, we need to conduct a thorough analysis of the current landscape, identify key opportunities, and develop a strategic approach. I'll outline my thought process and recommendations in the following sections.

Step 1

Clarifying Questions (5 mins)

• Looking at the current market conditions, I'm thinking there might be significant volatility and uncertainty. Could you provide more context on the specific market dislocations we're seeing and how they're impacting the secondaries market?

Why it matters: Determines the focus areas for our strategy refinement Expected answer: Increased volatility in public markets leading to valuation gaps in private markets Impact on approach: Would prioritize strategies that leverage valuation discrepancies

• Considering StepStone's position in the market, I'm curious about our current secondaries strategy. Can you share more about our existing approach, including target sectors, deal sizes, and types of transactions we typically pursue?

Why it matters: Helps identify areas for improvement or expansion Expected answer: Diversified approach across sectors, mid-market focus, mix of LP and GP-led transactions Impact on approach: Would look for opportunities to refine or expand our current focus

• Given the evolving landscape, I'm wondering about our competitive positioning. How do we currently differentiate ourselves from other secondaries investors, and where do we see the most intense competition?

Why it matters: Informs how we can further differentiate and capitalize on our strengths Expected answer: Strong GP relationships, data-driven approach, but facing increased competition in mid-market Impact on approach: Would focus on leveraging unique strengths and exploring underserved niches

• Thinking about our investor base, I'm curious about their appetite for risk and return expectations in the current environment. Have we seen any shifts in investor preferences or concerns that might influence our strategy?

Why it matters: Ensures our refined strategy aligns with investor expectations Expected answer: Increased caution, but still seeking opportunities for attractive risk-adjusted returns Impact on approach: Would balance opportunistic investments with risk mitigation strategies