• Private equity giant KKR has hired Emilia Sherifova, the top technology officer at Northwestern Mutual, to develop a data-driven approach she says will play a "central role" in KKR's next stage of evolution. 
• Private equity executives are seeing data strategy as a way to analyze investments and juice returns.
• Blackstone said last February it had created a data platform to support decision-making. Matt Katz, hired from Point72 Asset Management in 2015, heads up data scientists who work with the firm's dealmakers.
•  Data insights help create opportunities and avoid mistakes, said Patrick Davitt, an analyst at Autonomous Research who covers KKR.

Private equity giant KKR has hired Northwestern Mutual's chief technology officer to develop ways for the firm to scour data for investment ideas.

Emilia Sherifova will be based in New York and have the title "chief information and innovation officer," a broader role than her predecessor. She replaces CIO Ed Brandman, who retired in December after 11-1/2 years at KKR. 

The private equity industry is starting to pay more attention to data when deciding where to invest and how much to spend, with firms hiring data scientists to glean insights into buying patterns and broader economic trends. Firms have access to vast amounts of information from companies they own, including customer purchase receipts and occupancy rates. 

"There is enormous potential to leverage cutting edge technology and data in a transformative way for this industry and I am very excited to drive this for KKR," Sherifova said in a statement, adding that a data-driven approach will play a "central role" in the firm's evolution. 

Firms can see better returns if they put their data in one place that is easy to use for their investment professionals, said Patrick Davitt, an analyst at Autonomous Research who covers KKR and other private equity firms.

"It creates opportunities and helps you avoid mistakes," said Davitt. 

Last February, Blackstone said it had built its own data platform to support investment decision-making. Matt Katz, who Blackstone hired from Point72 Asset Management in 2015, now leads a team of data scientists who serve as a resource to deal teams and help Blackstone-owned companies improve operations. 

Sherifova will also help manage the firm's internal IT and make sure systems are up to snuff. KKR offered little detail on Sherifova's job responsibilities outside of a bare-bones press release.

One investment banker who works closely with private equity firms told Business Insider that he expected her role to include identifying trends in the investment due diligence process and aiding in the growth strategies of companies that KKR owns.

When asked about this possibility, a KKR spokeswoman did confirm that one of Sherifova's "key goals" would be to harness data to identify investment opportunities, "connecting the dots across the business and ultimately maximizing returns." 

Some smaller firms are offering data science as a product to help private equity firms make decisions. 

San Francisco-based Two Six Capital has two managing partners, nine data scientists and engineers and four advisers. The firm seeks co-investment opportunities alongside private equity and handles investment due diligence and operations improvement post-purchase, offering data analysis to inform judgment calls.  

Ian Picache, who co-founded the firm in 2013, said the private equity industry has been a laggard when it comes to data science. 

"The biggest technology advancement in private equity was the Excel spreadsheet, which came out in 1986," Picache said. "We thought there were a number of different ways to inject technology into the private equity process."

How KKR will change its own process going forward is yet to be seen, but the firm's recently-retired CIO offered some insight into where Sherifova may focus her efforts in a 2014 interview.

Brandman's biggest technology challenge, he told financial technology news site WatersTechnology, was the "rapid expansion of the business ... especially into new alternative asset classes, and creating a high-touch service model," while his IT wish list included a "fully integrated public and private data for the ultimate set of analytics." 

KKR's co-chief operating officers, Joseph Bae and Scott Nuttall, pointed to Sherifova's experience with "software development, digital transformation and operations management" in the statement announcing the hire. They said she has shown the value technology can create in "multiple industries." 

Sherifova spent 2-1/2 years at Northwestern Mutual. Before that, she held technology leadership positions at two startups: LearnVest, a personal finance company, and PulsePoint, an ad tech firm aimed at growing audiences for marketers and publishers. 

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• $1.2 billion JW Asset Management is quietly raising money for a pure-play cannabis fund.
• The fund is targeting approximately $50 million over the next six months, but will accept money each month, said Jason Klarreich, JW's CFO.
• JW is one of the largest investors in the cannabis industry, with $600 million in assets on a mark-to-market basis, said Jason Wild, JW's president and CIO. 

New York City-based JW Asset Management, a $1.2 billion healthcare and pharmaceutical-focused fund, is quietly raising money from both new investors and its existing investor base for a pure play cannabis fund. Called JW Growth Fund, the fund will target both public and private equity investments in the sector, said Jason Wild, the president and chief investment officer of JW Asset Management.

The cannabis fund will be managed by Wild, and Jason Klarreich, JW's chief financial officer, will be involved as the fund's CFO. While the fund will raise money each month  — it'll be structured like a hybrid between a private equity and hedge fund — the fund is targeting approximately $50 million over the next six months.

"Our goal is to turn it into a billion plus over the next few years," said Wild. 

JW has already quietly become one of the largest investors in the cannabis space, with approximately $600 million in assets across the US and Canada on a mark-to-market basis as of April 30. Wild said the fund has been investing in cannabis since 2014, and it was an early investor in the behemoth cannabis cultivator Canopy Growth. 

Read more: Citigroup is considering working with pot companies as banks figure out ways to chase a $75 billion market

Wild also serves as the chairman of TerrAscend, a cannabis company with operations both in the US and Canada. JW has a sizeable investment in TerrAscend through its main fund. 

The pure-play cannabis fund is seeking a minimum investment of $500,000, with a 1-year lockup and a 2% management fee, according to a deck shared with prospective investors that was reviewed by Business Insider. Bank of America Merrill Lynch will act as the fund's prime broker, according to the deck, and Deloitte will audit its returns. 

A spokesperson for Bank of America said that it acts as a clearing broker, not as a prime broker. Klarreich clarified that Cowen acts as an introducing broker that works with Broadcort, a Bank of America Merril Lynch subsidiary that acts as a custodian for institutional investors. 

JW's cannabis fund will be unique in that it's based within a wider fund with a healthcare and pharmaceutical focus, rather than in a firm set up specifically to target the industry. 

Because JW's investor base is mostly high-net-worth individuals and family offices, they're free to invest in "plant-touching" US cannabis companies — unlike asset managers backed by pension funds or insurance companies who don't allow cannabis investments since marijuana is federally illegal in the US.

But the purpose of the cannabis-specific fund is to provide a platform for investors — including institutions — that will eventually want to get in on the sector. 

"We think that as the cannabis industry matures, you'll see investors gravitate towards investing in funds," said Klarreich. "We wanted to have a vehicle that was focused in the space so that it would be a pure-play for someone looking to make an investment in cannabis rather than having it mixed in with our general healthcare fund." 

While the fund will be focused on US opportunities, Wild said they and won't shy away from investing in Canadian companies. But they'll skip companies "heavily focused on cultivation," which Wild said has less dependable margins than retail and branding. 

Read more: A New York private equity firm founded by JPMorgan and Guggenheim veterans is raising the largest-ever fund dedicated to the booming marijuana industry

"We've seen lots of deal flow with things like dispensaries and brands," said Wild. He mentioned a previous investment TerrAscend made in the California and Nevada-based Apothecarium dispensary chain as the types of deals the fund would seek. 

To both Wild and Klarreich, the fund's edge lies within its management team and its long track record of delivering returns. JW's main healthcare and pharmaceutical fund has posted audited annual returns above 25% for the past two decades, said Wild. 

Cannabis is a "very competitive space," Klarreich said. "We enter things with a longer-range approach and a more open-ended spectrum in terms of what we see as the opportunity."

Wild characterized the fund's approach as "long-term greedy," which means, in other words, "don't be greedy."

This story has been updated. 

• Read more:
• Canopy Growth's CEO is pushing back against activist investors and says there's a 'like 0%' chance the landmark Acreage Holdings deal doesn't go through
• CBD companies were courted hard by a unit of US Bank — but they got ghosted despite having a 100% legal business
• Marijuana retailer Curaleaf is snapping up Cura Partners for $949 million in the largest US marijuana merger to date as a wave of consolidation sweeps the industry
• Top cannabis investors reveal where they're placing bets, but say there's 'pain to come' in the crowded CBD space

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• An executive of an oil-and-gas company that Warburg Pincus just backed is the brother of one of the private-equity firm's energy-focused managing directors, Business Insider has learned.
• The unusual situation, a potential conflict of interest, meant that Warburg managing director David Habachy could not be involved in decision-making on the deal, according to a person familiar with the matter. 

Private equity firm Warburg Pincus had to work around an unusual complication when pursuing a $1 billion oil-and-gas deal  —  one of the private-equity firm's managing directors is the brother of a top executive at the company Warburg wanted to back.

To avoid potential conflicts of interest and abide by firm policies given the uncommon circumstances, Warburg executives consulted with legal and compliance staff and then decided to remove Houston-based David Habachy, a member of the firm's energy team, from all decision-making on its recent deal, a person familiar with the matter told Business Insider.

That meant he was not involved with steps like management evaluation and negotiating terms with the company where his brother is chief operating officer. 

Warburg last week said it would provide $1 billion alongside smaller private equity firm Kayne Anderson Capital Advisors to WildFire Energy I LLC, a company being launched by two former executives of an oil explorer bought by Chesapeake Energy five months ago.

Private equity firms have been seeking steady cash flow from companies that are already producing a stream of oil and gas, as opposed to those that are drilling to find it. 

WildFire CEO Anthony Bahr and COO Steve Habachy spent the past several months speaking with private equity firms to negotiate the deal. The relationship between the WildFire COO and Warburg's David Habachy has not yet been reported.

It is notable because private equity is an industry where reputation is critical and firms generally shy away from doing any deals that would even give the perception of a conflict in investment decision-making. 

"The default would be to avoid that type of deal flow," said Gregory Brown, a finance professor at University of North Carolina who studies private equity.

"It certainly raises the bar on the type of diligence you do. You would want to be extra careful with (communicating the deal to investors) to make sure they are fully aware of the circumstances." 

Warburg, which has more than $65 billion in assets under management, has firmwide policies saying that neither the firm nor any individual can put their interests in front of the funds, and that fiduciary responsibilities to investors are paramount, the person familiar with the matter said. 

The brothers' relationship created early familiarity that provided "nice momentum,"  said the person familiar with the matter. Warburg then did the same due diligence as it does on any transaction, the person said, reviewing WildFire's track record of investments, the technical expertise of their management team, and checking references.  

After seeking guidance from legal and compliance about the family tie, Warburg executives took David Habachy off of the deal, according to the person familiar with the matter, who declined to speak publicly. 

Warburg made a "conscious decision," the person said, noting that David Habachy did not participate in management evaluation, negotiating the terms, and final decision-making. Nor will he help manage the company going forward, while at least two of his Warburg colleagues will sit on the board of directors of WildFire, the person said. 

Neither of the brothers responded to a request for comment. 

WildFire will focus on purchasing shale acreage that is already producing oil and gas, a business that has traditionally produced steady stream of cash flows and is attractive to private equity because of its predictable nature.

"If [a company is] producing already, you don't have the risk of a dry hole," said Mark Solomon, a Texas lawyer who has represented private equity and energy firms. "You already know what the production has been for some time. And based on geology, you can make good assumptions for how long it will produce at that level."

Oil prices, however, tend to fluctuate and are based on many factors, like global demand and trade talks. This has meant that investors in oil and gas tend to be private-equity firms with deep expertise in that sector, so that they understand the ebbs and flows and know how to manage the investment.

Before launching WildFire, its CEO and COO were executives at Wildhorse Resource Development Corp, which oversaw drilling throughout Eagle Ford in Texas. Chesapeake bought the company for almost $4 billion in February.  Since then, one of Wildhorse's co-founders, Jay Graham, has started an energy startup, Spur Energy Partners, with financing from private-equity firm KKR & Co. The energy firm will develop oil and gas acreage in the Permian Basin. 

Bahr and Habachy, who parted ways with Graham, were pursued by a number of private equity firms.

Solomon, the lawyer, said private equity deals where there is a sibling on both sides didn't happen often, but that there was nothing wrong with that sort of situation so long as it was disclosed and there was no preferential treatment in the transaction.

David Habachy, the managing director at Warburg, previously worked at Kayne Anderson, the private-equity firm that is providing financing alongside Warburg for WildFire. He worked there between 2008 and 2017 and left as a managing director, according to his LinkedIn profile. Steve Habachy, the chief operating officer of WildFire, previously worked as an executive at WildHorse Resource Development. Both went to college and graduate school at the University of Texas at Austin.

Terms of the financing arrangement were not disclosed. 

It was not the first time a private-equity firm has managed a possible conflict of interest stemming from a relationship between brothers. In 2017, Blackstone told The Wall Street Journal that its then chief operating officer, Tony James, was not involved in decisions related to a company Blackstone co-owned purchasing a software company that his brother's firm had been invested in. His brother's firm also invested personal wealth for James. 

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• The disgraced New York financier Jeffrey Epstein invested $30 million in Second City Capital Partners I, a private-equity fund also backed by the husband of California Sen. Dianne Feinstein, Richard Blum, among 38 other limited partners.
• The investments by Epstein and Blum were disclosed in public documents reviewed by Business Insider and confirmed by people familiar with the fund. 
• It's unclear whether Epstein was aware of Blum's investment in Second City, or vice versa. But the multimillionaire convicted sex offender has a long history of using money to cultivate relationships with powerful political figures. 
• A spokesman for Feinstein said that she has never been in contact with Epstein and "has no knowledge, ownership or control of any of those holdings."
• Epstein's St. Thomas, US Virgin Islands-based Financial Trust Co. employed the wife of former US Virgin Islands Gov. John de Jongh as a vice president and officer for a decade — including during the majority of de Jongh's time in office.

Jeffrey Epstein invested $30 million in a private-equity fund alongside the husband of California Sen. Dianne Feinstein, demonstrating the extent of the disgraced New York financier's ties to political movers and shakers, according to public documents reviewed by Business Insider. The initial investments took place two years before allegations that Epstein paid minors for sexual favors became public.

Records show that Epstein and Feinstein's husband, Richard Blum, were both investors in Second City Capital Partners I, a $100 million fund founded in 2004 by the Samuel Belzberg, the late Canadian businessman who was behind Gibralt Capital Corp. and Belzberg & Co. The fund was directed by Belzberg's son-in-law Strauss Zelnick, a well-known media investor who was briefly floated last year as a potential CEO of CBS.

The fund had approximately 40 limited partners in total, according to a Securities and Exchange Commission filing. Many of these investors were not disclosed, but since Epstein's investments made up nearly one-third of the $100 million fund, the two entities associated with him were disclosed in public filings.

A $30 million investment on behalf of the billionaire Leslie Wexner

An SEC disclosure form shows that Second City Capital I received a total of $30 million in 2004 from two entities that share an address with Epstein's US Virgin Islands headquarters: COUQ Foundation, a nonprofit Epstein uses to fund science-related projects, and an entity called YHS LLC.

Two sources familiar with Second City Capital Partners confirmed to Business Insider that both investments were made by Epstein on behalf of Leslie Wexner, the billionaire founder of the L Brands, who is the only publicly known client of Epstein's purported services as a money manager to the hyperwealthy.

Tax returns for COUQ Foundation show that the nonprofit first made a $3.8 million investment in Second City Capital Partners I in 2004. By 2008, it was worth $7 million; COUQ Foundation transferred its interest in the fund to a nonprofit associated with Wexner that year. 

Epstein conducted 'little to no due diligence' before investing, according to a source

A source familiar with the fund confirmed that Epstein also invested $20 million on Wexner's behalf through YHS LLC. The source said Epstein mostly communicated through his longtime attorney, Darren Indyke, who also invested his own money into the fund, according to the SEC filing. This source also said the COUQ Foundation's total investment was $10 million, more than was disclosed in its tax returns.

Epstein's investment was noteworthy, the person said, because after being referred to the team at Second City Capital Partners, he did little to no due diligence before forking over the $30 million investment.

In addition to his investment in the fund on Wexner's behalf, Epstein directly coinvested an additional $20 million of his own money alongside Second City Capital Partners I into a debt-warrant instrument in a company called ID Biomedical, the person said. 

The size of Blum's investment more than doubled in 3 years

Feinstein's connection to Second City Capital Partners is documented in her voluminous financial-disclosure forms from 2004 to 2010. Feinstein's husband, Blum, is the sole owner of a limited partnership called Blum Family Partners, which in turn invested between $250,001 and $500,000 in Second City Capital Partners I in 2004, according to public filings. By 2008, the investment had grown to somewhere between $501,000 and $1 million before going back to the lower range in 2009 and 2010.

"Senator Feinstein has no knowledge, ownership or control of any of those holdings," a spokesman for Feinstein said in a statement. "She has no involvement whatsoever in her husband's financial and business decisions. The senator's assets are in a blind trust, which has been the case since her arrival in the Senate. The senator had never had any contact with Mr. Epstein."

Second City Capital Partners' parent company, Belzberg & Co., and Blum Capital did not respond to requests for comment. A representative for Wexner declined to comment.

Read more:A sexual misconduct allegation from one of Jeffrey Epstein's victims sparked a quiet war between two of America's most powerful lawyers. Now it's about to blow up.

Second City Capital Partners I invested in a variety of public and private companies, including energy, mining, real-estate, and electronics companies. Epstein's involvement was first reported by Bloomberg.

According to Feinstein's financial disclosures, Blum's investment in the fund persisted for several years after  allegations against Epstein became public in 2006. It's unclear whether Blum was aware that Epstein was an investment partner.

It's likewise unclear whether Epstein was aware of Blum's investment in Second City. But the multimillionaire sex offender has a long history of using his money to cultivate relationships with powerful political figures. He famously ferried former President Bill Clinton around on his private jet and became close to Lawrence Summers, the former Harvard University president and US treasury secretary, around the time he pledged to donate $30 million to Harvard.

The wife of the governor of the US Virgin Islands was an officer in Epstein's company

Epstein's penchant for mixing business and politics extended to his adopted home in the US Virgin Islands, according to corporate records obtained by Business Insider. Epstein's Financial Trust Co., which he formed on the island of St. Thomas, US Virgin Islands, in 1998, employed Cecile de Jongh, the wife of former US Virgin Islands Gov. John de Jongh, as a vice president and officer for a decade — including during six of John de Jongh's eight years in office.

The records show that Cecile de Jongh joined Financial Trust Co. as its secretary and a member of its three-person board of directors in 2003. That same year, she identified herself as an "executive" for the Financial Trust Co. in a Federal Election Commission filing related to a donation to a local congressional candidate.

In 2005, she was identified as the company's treasurer in corporate filings, and beginning in 2006, she was listed as a vice president. For several years, the board consisted of Epstein, de Jongh, and Ghislaine Maxwell, the British socialite who has long been accused of (and has denied) luring young girls into Epstein's human-trafficking network.

In 2007, the year after Epstein was first charged in Florida for solicitation of a prostitute, he was replaced on the board by Indyke. Maxwell, who would eventually be named in Epstein's controversial nonprosecution agreement as a "potential co-conspirator" in his crimes, was replaced by a local accountant.

Epstein returned to the company as president after his release from jail in 2008.

A lawyer representing Epstein did not respond to a request for comment.

Financial disclosures can't be located

De Jongh remained on the board through 2012, when Epstein established a new company, Southern Financial LLC. John de Jongh was elected governor of the US Virgin Islands in 2006 and served two terms.

During that time, the Financial Trust Co. received benefits from the US Virgin Islands Economic Development Commission, according to the commission's annual reports. After he left office in 2015, de Jongh was arrested and charged with embezzling public funds; the charges, which did not relate to Epstein or the Financial Trust Co., were later dismissed.

Cecile de Jongh has been previously described in public reports as an "office manager" for Epstein, but her roles as Financial Trust Co.'s vice president, secretary, treasurer, and director were not widely known.

Cecile de Jongh did not return a phone call and a text message seeking comment. John de Jongh did not return a message seeking comment sent through his attorney. According to the supervisor of the US Virgin Islands Department of Elections, the financial-disclosure forms John de Jongh filed during his time as governor, which may have shed more light on his wife's role in Financial Trust Co., could not be located.

Do you have a story to share about Epstein's finances? Contact this reporter by email at bpeterson@businessinsider.com or Twitter DM at @BeckPeterson. Encrypted messaging available upon request.

SEE ALSO: Hedge-fund giant Glenn Dubin and his wife, Eva, told Jeffrey Epstein's probation officer they were '100% comfortable' with the sex offender around their kids. New documents show the extent of the billionaire couple's relationship with Epstein.

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• Blackstone has raised a massive fund to invest in infrastructure, but analysts are focused on the challenges that come with deploying $14 billion in capital.
• Business Insider spoke with a person familiar with Blackstone's strategy who said the firm is targeting long-term, billion-dollar-plus deals in North America.
• Competition for assets is stiff and funding plentiful as investors see infrastructure as an alternative to low-yielding fixed-income products.
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Blackstone has amassed $14 billion to invest in infrastructure, which means it is primed to be the No. 3 investor in the asset class globally, but analysts are wondering how the private equity giant will go about spending all that money. 

With interest rates relatively low, investors on the hunt for yield have poured more money into infrastructure as an alternative to fixed-income products. But that has caused stiff competition and driven up prices for infrastructure deals. 

"The question is, 'What do you buy?'" Glenn Schorr, an analyst at Evercore ISI who covers Blackstone, told Business Insider. "In infrastructure, there just aren't that many bridges, tunnels, wind plants and electric facilities. And they don't turn over that often."

When Blackstone held its second-quarter earnings call last week, Schorr had asked about what infrastructure opportunities were out there, noting that they could be challenging to find. Blackstone COO Jon Gray called it a "fair question."

Since January, the firm has announced two investments. Gray pointed to a "couple other" large opportunities Blackstone was looking at, but did not disclose names. 

"It is a competitive space," Gray said on the call, "By playing where the air is thinner, which is really the competitive strength of our infrastructure business, we've got a better competitive dynamic." 

Business Insider then spoke with a person familiar with Blackstone's efforts who said that the infrastructure fund has been targeting investments of more than $1 billion and will have a North American focus. By focusing on bigger deals, Blackstone will be going head-to-head with a small number of players who have deep pockets. 

Currently, Blackstone has about 20 percent of its fund deployed, and plans to put the rest to work over the coming two to three years, the person said.

At Blackstone, a team of more than 35 are working the phones to find investments in industries that span energy, transportation, communications, water and waste, the person said.

The field vying for multi-billion dollar infrastructure deals is narrower than for smaller deals, this person added, naming only GIP and Brookfield as infrastructure investment firms "in the same zip code."

GIP and Brookfield are No. 1 and No. 2 in terms of overseeing infrastructure investments, according to Preqin data. 

Others such as KKR and Morgan Stanley have large infrastructure funds as well. KKR closed a $7.4 billion infrastructure fund last year, while data from Preqin shows Morgan Stanley overseeing $4 billion. 

Blackstone will handle infrastructure deals principally in North America and is looking for long-term investment opportunities with a timeline of two decades or more, the person said. That's in contrast to a traditional private-equity business which can buy and sell companies in a five-year time period.

There is a "massive" set of potential infrastructure deals that fit those parameters, this person said. And Blackstone would only need to do two or three deals a year to deploy its capital. 

Although Blackstone's infrastructure fund started in 2017, the firm has been involved in various kinds of investing in the sector over 15 years through other funds.

Still, Chris Kotowski, an analyst at Oppenheimer, flagged Blackstone's relatively brief history in infrastructure fundraising. Blackstone in 2017 announced its intention to raise $40 billion in infrastructure funding and has been hitting up investors, from pension plans to insurance companies, ever since. 

"I'm not sure exactly what their approach is going to be," said Kotowski. 

The infrastructure fund's first deal came in January, when it acquired a controlling stake in the oil and gas pipeline company, Tallgrass Energy. In March, it announced an investment in marine terminal operator Carrix, which owns SSA Marine and operates more than 250 port and rail locations worldwide. Blackstone characterized the investment as growth-oriented and did not disclose the exact financial terms, though the source familiar with Blackstone's strategy said they fit within the firm's more than billion-dollar focus. 

Bankers told Business Insider that the level of capital flowing into infrastructure funds should be seen as a sign of opportunity for global investment, not a constraint.  

"Overall, there is a lot of capital coming into the space," said Michael Comisarow, managing director leading Credit Suisse's infrastructure initiative. "But there is a reason for that. There have been a lot of assets to chase." 

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• Elizabeth Warrenwants to wage war on private equity. One group is sure to benefit: the small club of lobbyists and advocates representing the industry and its investors on Capitol Hill.
• Warren wants to impose a 100 percent tax on the fees private equity firms charge for managing a company and change bankruptcy law to protect American workers who lose jobs in buyouts.
• The industry is racing to illustrate the good that private equity firms do. Some lobbyists see Warren's plan as an in for investors in private equity firms, or "limited partners," to also push for change.
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Elizabeth Warren has waged war on private equity, and the small cadre of industry lobbyists and advocates on Capitol Hill may be the big winners. 

 Historically, advocacy for the industry has been relatively low-key, with firms like The Carlyle Group, KKR and Apollo Global Management lobbying in Washington around issues like disclosure that don't have much mainstream appeal.

But that has changed now that Warren, a long-time Wall Street critic and 2020 presidential hopeful, has jumped into the fray. She's proposing a 100 percent tax on the hefty fees private equity firms charge for managing a company once they buy it, and changes to bankruptcy law that she says would protect American workers who lose their jobs in a buyout.

Within hours of Warren unveiling her plan on July 18, lobbyists were on the phones with clients and reporters discussing whether the "Stop Wall Street Looting Act" had any legs. Others issued press releases and dug up statistics to argue that Warren's plan would cause more harm than good by curtailing an industry they say has created millions of jobs and helped communities.

The American Investment Council, an industry advocacy group, issued a statement the same day Warren unveiled her plan, saying that private equity is an "engine" for growth — especially in Massachusetts, Warren's home state. 

Read more: KKR is creating a new role overseeing its data strategy as private equity giants bet high-tech analysis will give them an investing edge

The Democratic senator's bill is generally seen as unlikely to make it through Congress, but the proposal jump-started long-running criticism from large investors known as "limited partners," about the firms where they put their money. The plan has also taken private equity onto a national stage, opening up the business to a fresh round of criticism and re-writing playbooks of the public policy advisors, lawyers and lobbyists who have been arguing for changes for years. 

With Warren's plan likely to be a key talking-point in the 2020 primaries, limited partners like pension funds, foundations and insurance companies are also seeing fresh ammunition to raise issues with money managers at the large private equity shops, industry insiders say.

Some investors have argued that private equity firms should be required by the Securities and Exchange Commission to provide more detailed disclosures about their investments, ideally on a quarterly basis, and to report conflicts of interest. They have also engaged with policymakers in Congress and private equity firms directly about their disclosure concerns. 

That's taken on more prominence after the collapse of Dubai-based private equity firm, Abraaj, Mustafa, Abdel-Wadood, whose executives were arrested in April on charges that they defrauded investors, including the Bill & Melinda Gates Foundation. Prosecutors said they inflated fund performance and used investor money for personal use. The firm's former managing partner pleaded guilty last month. 

Warren's bill has created more awareness of "transparency challenges" in private equity, said Chris Hayes, senior policy counsel to the Institutional Limited Partners Association (ILPA), a trade association comprised of big private equity investors. 

"We appreciate the fact that folks are realizing this industry needs to be improved," he said, adding that changes can be made that preserve the "long-term health" of the industry.

Read more: Blackstone raised $14 billion to invest in bridges, tunnels, and wind plants. Now comes the hard part: Spending it.

Hayes said he is speaking with investors about Warren's proposal and discussing next steps about how to respond. Other industry insiders say the proposal could encourage more collaboration between Warren and limited partners pushing for more transparency. 

"I think it gives them a potential champion of their interests ... with a fairly prominent public profile that there hasn't been before," said Michael Hong, a partner at Davis Polk & Wardwell who has represented private equity firms and some of their investors. 

"It would seem to suggest that there is now an audience" for their issues to be heard by Congress, he said. "I view it as an emboldening of their efforts."

Warren, through her office, issued a statement to Business Insider highlighting that her proposed bill aligns with investors' interests. 

"The Stop Wall Street Looting Act will require private equity funds to disclose standard information about their returns, their fees and the effects of their investments to empower limited partners to make good investments that are consistent with the goals and values of their investors" she said.

Paolo Mastrangelo, a public policy advisor at Holland & Knight who has represented private equity investors, said the Warren proposal could give limited partners a bargaining chip and encourage the private equity industry to make changes that satisfy both sides in order to head off more lawmaker involvement.  

"It will push window open a bit to give them more reason to say 'OK, now we have these more extreme proposals from these senators and other folks who don't really understand the industry," he said. "You are going to have some investors and [private equity firms] being like, 'Oh, this is going to drive a discussion to where we don't want it to go.'" 

The need for increased advocacy has been been anticipated by the American Investment Council, the primary trade association of large private equity firms with members like Blackstone, KKR and Apollo.

The association, led by an advisor to Mitt Romney's 2008 and 2012 campaigns, hired three new staff members in January as it geared up for the presidential election. Now, there are three registered lobbyists on its staff of 11, with others including communications professionals and researchers.

The organization expressed skepticism about private equity investors' outright endorsement of Warren's bill. 

"I would be surprised if ILPA members supported Senator Warren's extreme bill because it will hurt their returns," said CEO Drew Maloney. "Private equity continues to be the best performing asset class to pension funds, and our members work closely with our investors to achieve these strong results."

Other advisors who represent private equity include law firms like Akin Gump Strauss Hauer & Feld and Brownstein Hyatt Farber Schreck and lobbying shops Harbinger Strategies and Cypress Hill. Representatives there did not respond to requests for comment. 

Tom Spulak, a public policy advisor at King & Spalding who has been monitoring Warren's bill, said that Washington has until now generally not given much attention to private equity firms.

"I do think that to a great extent, perception is reality in Washington," he said. "If other people think this is a problem, you might find other members of Congress getting onboard."

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• Leon Black is reaching out to investors of his large private-equity firm, Apollo Global Management, about his relationship with the disgraced financier Jeffrey Epstein, according to a letter sent Wednesday.
• Epstein, who was arrested last month and charged with trafficking girls as young as 14 for sex, had served as director of Black's family foundation. He has pleaded not guilty.
• Black had remained silent on the matter despite media reports. Now, as large investors in Apollo express concern about reputational damage, he is stressing that Epstein never did any business with Apollo.
• Click here for more BI Prime stories.

The billionaire private-equity guru Leon Black is finally speaking out about his relationship with the disgraced financier Jeffrey Epstein after investors in Black's private-equity firm, Apollo Global Management, expressed concern about whether the firm would be affected by their ties.

In a letter to investors Wednesday evening, Black stressed that Apollo never did any business with Epstein, who was arrested on sex-trafficking charges last month, and that the pair's professional relationship was confined to Epstein's role as director of Black's family foundation, which Black said lasted from 2001 to 2007.

Black also said that he donated money to certain charitable organizations with which Epstein was affiliated and that Epstein made contributions to charities that were meaningful to Black, though he did not specify which ones.

"Neither Mr. Epstein nor any company controlled by him has ever invested any funds managed by Apollo," Black wrote in his letter.

The missive came after Apollo's second-quarter earnings call Wednesday, when the analyst Ken Worthington questioned Black about his relationship with Epstein, noting that investors had raised concern about the matter and that he had received "an elevated number of questions" about associated risk.

"I guess first, is there any link between Apollo and Epstein? Two, how is Apollo managing the fallout from potential executive ties to Epstein? And is it possible at all to ring-fence exposure here?" he said.

The Apollo investor California Public Employees Retirement System had also expressed some concern about Black's ties to Epstein, according to reports. CalPERS issued a statement to Bloomberg saying it took news of the relationship "very seriously," as it did any issue, like reputational risk, that might affect a firm's ability to be successful.

On the call, Black said it would not affect the performance of Apollo.

He also read a memo he circulated to his employees last week saying, among other things, that he was "completely unaware of" and "deeply troubled" by the conduct subject to criminal charges brought against Epstein.

Epstein was arrested July 6 on charges of trafficking dozens of girls, some as young as 14, for sex in the early 2000s. He has pleaded not guilty.

Since then, questions have swirled in the business community about how Epstein, a tax adviser and investor, made his money and who may have known about what he is now charged with. Black is just one of a list of rich and powerful men who have been associated with Epstein. There has been no evidence that Black is tied to any wrongdoing.

Black's Wednesday-evening letter said that a recent press report suggested he encouraged other Apollo executives to consider using Epstein for their personal tax or estate-planning matters. (On Wednesday, Bloomberg reported that Black allowed Epstein to pitch his services to executives.)

"I never promoted Mr. Epstein's services to other Apollo senior executives, and no other Apollo employee ever engaged Mr. Epstein or used his professional services," Black said.

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• Neuberger Berman, the financial giant that owns the brand of Martha Stewart, is expanding its team of data scientists in a bid to attract and retain investor dollars.
• Leading the charge is Mike Recce, the financial giant's chief data scientist who the firm hired from Singapore sovereign wealth fund GIC in 2017.
• This expansion in data comes as investors are demanding more granular insights into how their money is being put to use. 

Mike Recce wants to check out your job postings. 

He's not looking for work -- he joined $300 billion asset manager Neuberger Berman in 2017 as chief data scientist from Singapore sovereign wealth fund GIC and likes his job.

Rather, he wants to understand what the openings say about the direction of your company. 

"We analyze the nature of how a company is hiring," says Recce, of his data team at Neuberger Berman. "This lets investors understand [a company's] relative health."

This type of analysis is important to Neuberger when it's evaluating what companies — both public and private — it should invest in. Even after that, Recce continues to dig up data when measuring the performance of an investment. 

As firm executives looks to the future, it is betting that data will play an increasingly significant role in attracting and retaining investor dollars. 

Ever since Recce joined the financial giant, the data unit has expanded from just Reece himself to nine total in little more than two years. The firm is now looking to add even more talent, posting a job ad on LinkedIn earlier this week for a New York-based data scientist. 

"We are continually growing," says Recce.

The team supports all of Neuberger Berman's 560 investment professionals across the firm, including in equity, fixed income and alternatives. But private equity -- where data is hard to come by -- is where the team is especially helpful, says Tony Tutrone, head of alternatives at the firm.

Of Neuberger's $75 billion private equity arm, its Dyal unit, which buys minority stakes in private equity firms, is its most well known business on Wall Street. It also owns the smaller but glamorous Marquee Brands, which manages brands including Martha Stewart and Bruno Magli. 

"Data has always been a challenge in the private markets," says Tutrone, noting that public companies report their data on quarterly basis. 

To fill in the void, the firm has compiled its own data set for the private markets, which has entailed purchasing data -- like aggregated job postings and anonymized credit card transactions -- from outside vendors. At the same time, it has relied on its own information about the companies it owns. 

"Just the information we have on how industries are performing and how economies are performing... we can see things others won't for months," Tutron says. 

To be sure, Neuberger Berman isn't the only firm beefing up its data prowess. 

KKR announced last month that it hired the top technology officer from Northwestern Mutual and said that a data-approach to investing will play a central role in the firm's evolution. Meanwhile, Blackstone has also gone quant, hiring Matt Katz from Point72 Asset Management to lead a data team informing the firm's investment decision-making. 

The trend comes from a fundamental shift in the relationship between firms and their investors, Tutrone says. 

These days, he observes, investors who cough over capital to spend in the private markets aren't willing to stand by idly and wait out their returns.

That's different from when Tutrone started his career at Lehman Brothers in 1986 as an investment banker. Back then, all investors generally asked for was the names of the companies private equity firms would invest their money in, some high level information on what the companies did and their performance. 

"In the old days the relationship was different," he says, of investors' relationships with their money managers. "They just wanted the [private equity firm] to give them back more money than they gave them originally. Now, they are demanding much, much more."

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• For the first time ever, private equity giant KKR is rolling out a formal analyst program that it will fill with college graduates. 
• Many private equity firms traditionally only hired people after they spent a couple years honing their skills at investment banks. Hiring out of college puts PE head-to-head with banking. 
• PE has been pushing to recruit earlier and earlier to battle fierce competition for young talent, both within the financial sector and from hot areas like tech. 

KKR has jumped into the undergrad recruiting game, joining some other big private equity firms in a race to lock down the best young candidates before they graduate.

The move is noteworthy — private equity firms have traditionally hired people after they spend a couple years honing their skills as analysts at investment banks. But the industry has been pushing to recruit earlier and earlier, and this opens up more select spots for the most talented undergrads to get hired into six-figure PE jobs.

KKR told Business Insider that it is hiring about a dozen full-time analysts straight out of college to start at the 1,200-person firm in 2020.

"We don't want to limit ourselves and that's why we feel it's important to identify multiple avenues to access talent," Bola Osakwe, director of human resources at KKR, told Business Insider. "We feel we are an apprenticeship business and an organization where you learn best on the job."

Overall competition for junior talent across industries is fierce, turbocharged by added competition from tech companies. And as private equity firms have grown into asset management giants, they also increasingly have the resources to build their own training programs and recruit analysts straight from college themselves.

KKR had tested out recruiting analysts straight from college in 2013 and made hires in 2014 and 2015, but it never had a formal program until now.

More than a dozen people Business Insider interviewed over the past month, ranging from hiring executives at private equity firms, to financial industry recruiters and career advisers at business schools, all reported more resources being put toward college recruiting by private equity firms.

That builds on a trend in recent years of private equity firms extending offers for associate-level positions to analysts at investment banks almost as soon as they start work after college, nearly two years ahead of their official start date, business school advisers said. Investment banks meanwhile have pushed back by making special efforts to retain talent, like promoting top analyst performers to the associate level earlier.

"It's really heated up," says Todd Carson, a career adviser at The Wharton School at the University of Pennsylvania. "They are identifying top students at Wharton undergrad, for example, and trying to recruit them right away, before letting them go to Goldman Sachs."

KKR said it has reached out to as many as 75 schools through a "variety of tools" to access candidates, though it did not specify how many schools it is visiting on-campus or which ones it has targeted. Starting next summer, analysts will get to work alongside KKR's lines of investment professionals in divisions they selected in their applications, spanning across credit, real estate, infrastructure and private equity. 

Despite the ramped-up college outreach, private equity firms that already were hiring undergrads have not significantly expanded the size of their analyst programs, making them incredibly competitive for applicants.

Blackstone, which has had an analyst program since at least as far back as when its president Jon Gray joined the firm in 1992, has been attracting more undergrad applicants for a small pool of jobs. There, of the 23,991 applications lodged in 2019, only 90 people started as first-year analysts.

Blackstone says applications for its analyst program surged 61 percent between 2018 and 2019, and interest in their analyst program at the college level show no signs of abating for this year's round.

"We are going earlier and wider," says Paige Anderson, head of Human Resources at Blackstone. "We fundamentally believe that if we attract people at a college age and train them, we can develop them into great investors and great leaders in the firm."

Blackstone in 2013 launched a program where women sophomores could spend a couple days at the firm during the academic year and get acquainted with its people. It started another program in 2016 for diversity hires.

Bain Capital, which staffs more than 1,000 people, first started college recruiting a little less than a decade ago — and this year is shaping up to be the busiest recruiting year yet, said Susan Levine, who oversees the firm's hiring in North America.

Bain has already received as many as 450 applications for Bain's 2020 analyst program, quadruple the number of applications as the first year it started college hiring.

By October, Levine and about 15 of Bain's investment professionals will decide who will work as an analyst in North America after graduating next summer.

Despite all the work, there will only be about five or six accepted. As for what it takes to stand out as a candidate?

"We are looking for people to be very well-rounded," Levine said. "We aren't just looking for people who receive perfect grades or 800s on their SATs. In addition to looking at academic achievement, we are looking for people who have been leaders, who have participated in clubs, whether it is dance, sports or other activities. We also gravitate toward people who have done well in their community."

To be sure, many firms in the industry are sticking with the more traditional approach.

The Carlyle Group, for instance, recruits college students only rarely as investment analysts, but does recruit analysts for Washington, D.C.-based fund management and accounting roles. 

For those roles, it holds meet and greets with students at a range of schools, including George Mason, Virginia Tech, Howard University and William & Mary.

The goal is to inform a broader population of people about a possible career in private equity and let them know about Carlyle, which employs more than 1,775 people overall.

"What [we're] trying to do is develop and engage relationships and let them know there is a potential here in the private equity, alternative asset management world," said James Cherubim, head of talent acquisition at the firm, about the D.C.-area outreach. “A world they don't perhaps know as well compared to the banks."

Smaller firms also appear on college campuses, though their approach is more targeted. For example, Two Six Capital, a firm that seeks co-investments alongside private equity firms, seeks students in data science and engineering clubs at Ivy League schools, as well as Stanford and Berkeley.

Whatever happens, Patrick Curtis, who runs the financial careers website Wall Street Oasis, said that he expects the early recruiting trend to continue to catch on.

"It should start moving more down market," he said.

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• Private equity firms are asking some of their top associates to forego business school and stick around to help manage capital, industry recruiters said.  
• Firms have been raising massive funds north of $10 billion and still have a lot of cash to spend. Keeping young hires on longer can help firms source deals or run acquired companies, recruiters said. 
• There's a need for more "quasi-senior-level" people, said Adam Kahn, a headhunter who works with big private equity firms on staffing needs.
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Private equity firms often send associates on their way after two or three years. But with firms raising record capital and megafunds north of $10 billion becoming more common, top associates are being asked to stick around to help put that money to use, industry recruiters said. 

That's a departure from what typically happens after associates enter into two- to three-year programs at PE firms. Once that time is up, firms nudge many associates out the door — either asking them to leave, or writing them a recommendation to business school, sometimes with the promise of a vice president-level job after graduation. 

With big investors piling into alternatives like private equity in a hunt for yield, a new path appears to be opening for people to rise the PE ranks. Firms are finding that they need more staff to manage massive funds once they raise them, five recruiters who specialize in PE placements told Business Insider.

Firms need more "quasi-senior level" people who can "run a deal and put the money to work, or maybe source it," Adam Kahn, a recruiter who was included on Business Insider's 2019 list of Rising Stars of Wall Street headhunting, said in an interview at the Manhattan office of recruiting firm, Odyssey Search Partners.

The associates that are kept on are being transitioned to responsibilities that are client-facing, as opposed to the number-crunching that defined their earlier years, recruiters said. 

Such associates will wind up spending an extra year at that level before being up for a promotion to vice president, or at least a title change to senior associate, which reflects a position with post-MBA responsibilities, Kahn said. 

To be sure, the number of those kinds of roles is limited, and at this point there has been no wholesale overhaul of the typical PE career path, including nabbing an MBA along the way. 

When asked about associate-level roles, four big private equity firms either declined comment or did not respond to a request for comment. 

See more: Blackstone raised $14 billion to invest in bridges, tunnels, and wind plants. Now comes the hard part: Spending it.

Private equity firms are also steering associates increasingly toward working at a company the firm owns, Kahn said. The experience of working with management of the company, he said, is perceived by firms to be more valuable than business school.

"There is a lot of capital sloshing around looking for returns," said Andrea Auerbach, global head of private investments at Cambridge Associates, an advisor to institutional investors. Auerbach said there is between  $500 billion and $600 billion of so-called dry powder  — or investor money raised but not deployed — in the United States alone. 

And Blackstone meanwhile is reportedly in the process of raising the biggest private equity fund ever, which is said to be capped at around $25 billion.

That said, huge fundraisings are not the only reason some private equity firms are trying to keep associates from going to business school. Also at play is an effort to retain top talent, "given the costs of recruiting more senior post-MBA talent in a competitive marketplace," said Kelly Sugrue, a recruiter at Dore Partnership who works with private equity firms.

See more: KKR has quietly started hiring college seniors. Here's what it says about how private equity is battling banks to fill 6-figure jobs.

Some big private equity firms are also working on putting more resources towards undergraduate recruiting. 

Associates are not the only positions the massive fundraisings have affected, says Alexis DuFresne, a recruiter at Whitney Partners. More senior positions have been added, too. 

"To grow these large funds in the first place, fundraising and support roles are more important than ever," said DuFresne, noting that firms are hiring at at the director and vice president level to beef up investor relations. 

Noah Schwarz, a recruiter at Korn Ferry who makes senior placements, said firms are even making room for more partners in their organizations, which he said is rare.

Among these new positions are "operating partners"— often hired from big tech firms — who oversee technology systems across companies the PE firm owns, Schwarz said.

"With more capital, you need more people to deploy that capital," he said.  

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• MIT Media Lab director and tech investor Joichi Ito is the latest person revealed to have financial ties to Jeffrey Epstein.
• Ito admitted in a letter on August 15 that he was financially connected to Epstein starting in 2013, but added, "In all of my interactions with Epstein, I was never involved in, never heard him talk about, and never saw any evidence of the horrific acts that he was accused of."
• Ito said that Epstein helped fund MIT Media Lab "through some of the foundations that he controlled," and was also involved in Ito's investment funds. "I also allowed him to invest in several of my funds which invest in tech startup companies outside of MIT," he said.
•  In the wake of this admission, at least two high-profile employees at MIT Media Lab have quit.
• Visit Business Insider's homepage for more stories.

Joichi Ito, the director of MIT's Media Lab, a prominent lab known for its innovative work in a variety of tech-related fields, recently made a startling admission: He had known New York-based financier Jeffrey Epstein since 2013, had accepted funding for MIT's Media Lab from Epstein, and had allowed Epstein to invest in his tech-focused investment funds outside of MIT.

Epstein was arrested July 6 on suspicion of sex trafficking minors. He was being held without bail awaiting trial on charges of conspiracy and sex trafficking. On August 10 Epstein died by suicide while being held at Manhattan's Metropolitan Correctional Center.

In response to the news of Ito's financial ties to Epstein, at least two scholars connected to MIT have very publicly quit; both specifically cited Ito's ties to Epstein as the reason for their exits, The New York Times reported on Wednesday.

"As the scale of [Ito's] involvement with Epstein became clear to me, I began to understand that I had to end my relationship with the MIT Media Lab,"associate professor Ethan Zuckerman wrote in a blog post on August 20.

According to Zuckerman, who refers to Joichi Ito as "Joi," the relationship with Epstein involved a variety of financial connections. 

Read more: All the tech moguls who have been connected to Jeffrey Epstein, the elite wealth manager who died in jail while awaiting trial on sex-trafficking charges

Those connections include, "a business relationship between Joi and Epstein, investments in companies Joi's venture capital fund was supporting, gifts and visits by Epstein to the Media Lab and by Joi to Epstein's properties."

Ito founded and heads an investment company named Neoteny that funds a variety of tech-related startups. Neoteny's website lists the following companies in its investment portfolio.

According to financial records uncovered by The New York Times, at least $200,000 was donated by Epstein to MIT. It's unclear the extent to which Epstein provided funding for MIT Media Lab or to Ito's outside investments, and it's unclear if any of the $200,000 donations to MIT went to the Media Lab.

Neither Ito nor MIT responded to a request for comment. He remains director of MIT Media Lab.

SEE ALSO: The life of Jeffrey Epstein, the convicted sex offender and well-connected financier who died in jail awaiting sex trafficking charges

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• Private-equity firms have been casting a wider net for undergraduates. Through recruiters, academic advisers, and PE hiring executives, as well as public sources like LinkedIn, Business Insider gathered some of the schools outside the Ivy League where private equity is scouting future stars. 
• That push into undergrad outreach and recruiting reflects a battle for talent at the associate level — and marks a pivot from the more traditional route of private-equity firms hiring young people only after they do a stint in investment banking.
• Big PE firms are keeping analyst hiring small but receiving massive numbers of applications. 
• Some schools said they were seeing noticeable undergraduate PE recruiting for the first time ever. Schools have also built out programs in recent years to prepare students for careers in the industry. 
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Many private-equity firms rarely hire straight out of college — traditionally opting to take their pick of associates after they spend a couple years at investment banks. 

But as competition for talent heats up and timelines to hire associates compress, big PE firms, including KKR, Blackstone and Bain Capital, are ramping up college outreach and casting a wider net.  

These firms hit up many of the usual suspects — Harvard,  Columbia, and other Ivy League schools — but others, including Southern Methodist University (SMU), Boston College, and the University of North Carolina, are getting a piece of the action. 

And some colleges have been positioning for the shift by building specialized undergrad programs and making overtures to PE firms big and small. 

Through insiders such as recruiters, academic advisers, and PE hiring executives, as well as public sources like LinkedIn, Business Insider gathered some of the schools outside the Ivy League where private equity is scouting  future stars. 

Read more: KKR has quietly started hiring college seniors. Here's what it says about how private equity is battling banks to fill 6-figure jobs.

We put together a look at what some colleges are doing, and a firm-by-firm glance at where the biggest PE shops have been recruiting. 

To be sure, many firms are largely still refraining from recruiting undergraduate investment analysts, and outreach and programs at schools do not ensure promises of actual placement. And firms are keeping hiring classes small — even some of the bigger names hire only a handful of people — so the field is extremely competitive. 

Bain Capital, for one, started college recruiting a little over a decade ago but has told us that this year is shaping up to be its busiest undergraduate season ever. The Carlyle Group, though, recruits analysts for only non-investment positions — namely, fund management and accounting. 

'A noticeable change'

The outreach reflects private-equity firms' push to diversify their ranks, as well as an effort to beat competitors to promising talent early on, insiders said. Firms are also taking advantage of technology like webinars to hit a wider variety of schools. 

"There has been a noticeable change this year with the really large PE shops starting to recruit college grads and starting internship programs," William Maxwell, a finance professor at the Cox School of Business at SMU, told Business Insider.

SMU is one school where PE firms, including KKR, have been looking, a process for which Maxwell has clear line of visibility, given his role overseeing an honors program dedicated to alternative asset management. He said about 50 students from the program go into investment banking ever year, but private equity is increasingly showing up at the doorstep.

Read more: Private equity firms used to send junior staff off for an MBA. Now they're keeping some around to help spend all the money they've raised.

"Some firms are determined to get first shot," he said. 

Shawn Munday, a finance professor at the University of North Carolina at Chapel Hill's Kenan-Flagler School of Business, has observed a similar scene. Private-equity firms such as Blackstone, Roark Capital, and Falfurrias Capital are showing up at UNC to directly recruit undergrads, he said.

"As a result, we've adapted to stay in front of this trend," Munday said.

Over the past four years, UNC has added a curriculum for undergraduates about the buy side, including courses covering how to evaluate deals and model leveraged buyouts. The school also offers boot-camp training, giving students the opportunity to source deals and build cases to invest for a UNC portfolio fund. 

Amy Donegan, an undergraduate career adviser at Boston College, said that three years ago, the school did not see any noticeable PE undergraduate recruiting. This year, four PE firms — Broad Haven, Summit, Vista Equity Partners, and TM Capital — are slated to recruit on campus in the fall. 

"A lot of the students coming into these positions out of undergrad have the technical skills they need anyway," Donegan said, adding that they have quant-heavy resumes, with skills in data analytics and Python. 

Read more: Elizabeth Warren's attack on private equity could have a surprising group of backers: Investors in private equity

And last year, Kansas State launched a program focused on preparing undergraduate students who want to become analysts either at an investment bank or private-equity firm.

"We are offering a new class in portfolio management and giving students a stronger, more in-depth look at the valuation process," Ansley Chua, a finance professor at Kansas State, said.

The Kansas State program seats 10 people, and some smaller PE firms have hired Chua's students, though he would like to double the program's size and place students at larger firms in cities like New York and San Francisco.

Chua said he has been in touch with alumni members, including Paul Edgerley, a senior adviser at Bain Capital who has hosted students at the private-equity firm in Boston for informational sessions. (Edgerley and his wife, Sandra, contributed $20 million to the school earlier this year.)

KKR has been recruiting for a 2020 analyst class. The firm is hiring about a dozen people after having reached out to as many as 75 schools.

Schools include: Southern Methodist University, Carnegie Mellon, Howard University, University of Michigan, Baruch College

Number of employees: 1,200 people

Application statistics: TBD for the new analyst program, which is hiring about a dozen people.

Read more: KKR is creating a new role overseeing its data strategy as private equity giants bet high-tech analysis will give them an investing edge

Bain Capital will hire five to six people for its analyst class.

Schools include: Vanderbilt University, University of Notre Dame, Boston College

Number of employees: More than 1,000

Application statistics: 450 applications and counting for the 2020 analyst class. Bain typically hires five to six people per analyst class.

Read more:'Some of the conversations we had in 2006 we are having again': Bain and Carlyle are teaming up in rare deal that private equity has been reluctant to do since the financial crisis

Blackstone receives tens of thousands of applications for an analyst class of 90.

Schools include: Cooper Union, William & Mary, Villanova University, Vassar College, University of North Carolina

Total number of employees: Nearly 2,500 

Application statistics: 23,991 total applications in 2019 for a 90-person analyst class.

Read more: Blackstone raised $14 billion to invest in bridges, tunnels, and wind plants. Now comes the hard part: Spending it.

The Carlyle Group hires analysts for fund management and partnership accounting divisions from mainly DC-area schools.

Schools include: George Mason, William & Mary, University of Maryland, Virginia Tech, James Madison, George Washington, Howard University, Georgetown University

The Carlyle Group recruits analysts for non-investment positions — namely, fund management and accounting. 

Number of employees: More than 1,775

Application statistics: Not disclosed

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• Private-equity giant The Carlyle Group said on Tuesday it agreed to buy a majority stake in HireVue, a company that makes video and artificial-intelligence software for employers to screen job applicants. 
• Carlyle can provide HireVue access to its technology advisers and introductions to Carlyle-owned companies that are possible customers.
• HireVue counts more than a third of the Fortune 100 as customers, including Intel, Goldman Sachs, and Hilton.

Private-equity giant The Carlyle Group is betting that big companies will increasingly adopt artificial intelligence to help make hiring decisions. 

The firm said on Tuesday it had agreed to purchase a majority stake in HireVue, a company that lets employers screen job applicants through video interviews and recorded question-and-answer sessions designed to detect strengths and weaknesses. 

Financial terms were not disclosed, but Carlyle will control HireVue's board. The existing shareholders Technology Crossover Ventures (TCV), Granite Ventures, and Sequoia Capital will remain as minority investors, the companies said in a joint statement.

The deal comes as big companies are increasingly looking to remove bias from hiring decisions and find new ways of reaching qualified job applicants. 

HireVue, founded in 2004 in Salt Lake City, has raised over $90 million in venture capital investment and counts more than a third of the Fortune 100 as customers, including Hilton, Goldman Sachs, and Intel. It says it uses  25,000-plus data points when screening applicants, including whether or not they smile, body language, and word choices. The software claims to reduce the time it takes to hire a candidate by 90% on average, while leading to better hires overall with improved diversity.

Read more: Elizabeth Warren's attack on private equity could have a surprising group of backers: Investors in private equity

Goldman Sachs changed its approach to college recruiting in 2016 and has said it used HireVue rather than first-round interviews on undergraduate campuses to attract a broader array of candidates beyond Ivy Leaguers. 

Patrick McCarter, the cohead of Carlyle's technology, media, and telecom group, said he was so impressed with the software that he reached out to HireVue CEO Kevin Parker earlier this year through a mutual connection at TCV. From there, a May breakfast meeting was scheduled in Palo Alto, California, where the pair discussed HireVue's future. 

For HireVue, Carlyle has an existing network of technology advisers and 277 Carlyle-owned companies, at least some of which they hope to convert to HireVue customers. Carlyle isn't yet a HireVue client itself, but that may soon change, McCarter said. 

Already, Carlyle has made HireVue introductions to several of its own companies, and HireVue has provided demos of its product, according to a person familiar with the matter. The private-equity firm also intends to tap its relationships with consulting, law, and accounting firms, this person said.

Read more:Private-equity giant Carlyle just used an unusual approach to clinch a big-time music deal with Rascal Flatts and Taylor Swift

One adviser HireVue may find helpful is Terry Myerson, a former senior Microsoft executive who led the development of Windows, Surface, Xbox, and Exchange. Myerson joined Carlyle last year as an operating executive and works with its companies on developing and executing technology strategies. 

The existing management team at HireVue will stay intact, Parker said, with additional board seats to be given to Carlyle executives. Exactly how many and who will assume responsibilities has yet to be determined. 

The equity capital for the investment will come from Carlyle Partners VII, the firm's largest-ever fund at $18.5 billion, which began investing last summer. The fund's focus is on majority and strategic minority investments throughout the US.

Goldman Sachs acted as exclusive financial adviser to HireVue. 

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• Goldman's recent decision to expand its private-investing business has raised eyebrows at the private-equity behemoth Blackstone, sources told Business Insider.
• Blackstone is one of the biggest fee payers to Wall Street, and the firm is annoyed Goldman would compete more directly for deals.
• As of now, Blackstone's grumblings haven't resulted in any lost business for Goldman, though that could change.

Goldman Sachs' latest strategy pivot is already raising hackles with one of its largest clients. 

Executives at Blackstone, the world's largest alternatives-investment platform, are concerned that Goldman's recently announced plans to combine a number of private-investing teams and circle the globe raising tens of billions of dollars will put the two firms into more direct competition, according to three people with knowledge of their thinking. 

One source with direct knowledge of the matter said some dealmakers were seriously questioning the future of Blackstone's relationship with the investment bank. Another said he was annoyed. A third said Blackstone execs have used Goldman's plans as an excuse to try and poach talented workers. 

Another person familiar with the situation said Goldman had managed conflicts with Blackstone in the past and didn't think its latest plans would damage the longstanding relationship. To the extent dealmakers are irritated, it would be tamped down and managed, the person said. So far, Blackstone's grumbling has not resulted in any known business repercussions, with the chatter confined to private circles. 

"Blackstone has a terrific relationship with Goldman Sachs," a Blackstone spokesman said. "We expect to continue to do significant business with them going forward."

And yet Blackstone isn't the only buyout fund alarmed by Goldman's recent plans. Other firms are bracing themselves to compete more fiercely across private-equity, real-estate, and private-credit markets, according to a banker at a rival firm who has heard from clients about this particular issue.  

Read more: 'It's good to be Rich': Meet the Goldman Sachs banker who has built a private investing empire that goes head-to-head with Blackstone — and you've probably never heard of him

Courting conflicts with clients 

Private-equity and real-estate execs are annoyed that Goldman would pursue a plan to compete more directly for deals, even as its top-ranked investment-banking division views the same firms as a source of M&A and capital-raising fees, the people said. The industry is among the biggest payers of fees to Wall Street, with Blackstone and Carlyle ranking second and third since 2014, at $2.1 billion and $1.7 billion, respectively, according to Refinitiv.  

The concern is all the more acute because of Goldman's position on Wall Street of having a buyout arm and Blackstone's decision to sell its advisory business several years ago, in part, to avoid conflicts of interest. 

Goldman CEO David Solomon addressed the topic after the Wall Street analysts Glenn Schorr of Evercore ISI and Christian Bolu of Autonomous Research raised it on the firm's July conference call. Both analysts said they expected Goldman to increasingly come into conflict with clients.  

"I can say that there are issues from time to time that come out of this business model, but we're focused on striking the right balance and have proven over the long period of time that I think we can do this consistently," Solomon said. "We are talking to our clients and listening to our clients." A Goldman spokeswoman declined to comment beyond his remarks.

That Goldman would court conflicts with clients isn't new. The bank has operated a private-investing business since 1991 and ranks as one of the largest alternative-asset managers in the world. 

Read more: Goldman Sachs is considering a shakeup of its alternative-investing units as part of a plan to simplify the bank's strategy

But with less money under management, particularly in private equity, Goldman often avoided the largest deals (an exception was when it raised a $20 billion fund just before the crisis) or sought coinvestments. The Volcker Rule caps how much the firm can use its own money for such investing. And a real-estate business treated more favorably under post-crisis banking regulations ran aground during the financial crisis, undercutting what could have grown into a larger competitor to Blackstone. 

Hundreds of billions in 'dry powder'  

Goldman's fundraising is expected to add the kind of firepower that would make it more active in going after the larger deals in which Blackstone and a few others have enjoyed success. Julian Salisbury, a partner trusted by Solomon for his investing views, now oversees a real-estate business seen internally as an attractive growth opportunity. 

By some measures, Goldman's push couldn't have come at a more unwelcome time for the private-equity industry. Investors are pouring money into private markets and competition is already fierce.

As much as $500 billion to $600 billion of "dry powder"— or unused money raised from investors — has already been amassed in the US alone, according to Cambridge Associates, an adviser to institutional investors. Adding another deep-pocketed investor to compete for multibillion-dollar deals adds yet another challenge to deploying capital.

"One of the competitive advantages the larger private equity firms believe in and tout is that because they have access to larger pools of capital, both themselves and their LPs, they can be competitive in a certain size bracket of the market where the preponderance of firms cannot," according to one banker who works with Blackstone and asked for anonymity to preserve relationships. The banker added that there was only a handful of firms that could write massive checks. "And so, if Goldman Sachs is another entrant into that party, then yes, no one is going to welcome them in." 

Read more: Goldman Sachs execs are jockeying for control of the firm's lucrative private investing units after a plan to merge it — and the stakes couldn't be higher

A history of conflict 

In the past few months, Blackstone has also gone after some of Goldman's top talent, according to people with knowledge of its strategy. The private-equity behemoth had its eye on a half dozen or so Goldman employees and succeeded in poaching one — Dan Oneglia for distressed-debt trading — before a senior Goldman exec intervened to ask Blackstone to back off, one of the people said.  

The detente occurred even though Goldman sought to head off any conflict with Blackstone, according to people with knowledge of their efforts. In one instance, a Goldman banker called a Blackstone exec to give them a heads up about the coming strategy announcement and ease any fears they might have about the bank's plans, one of the people said. 

As two of Wall Street's most powerful firms, the companies have a history of conflict. Last year, they locked horns after finding themselves on opposite sides of a credit-default-swap trade related to the homebuilder Hovnanian Enterprises. The disagreement got to a level where it was a conversation topic at a March 2018 lunch between Blackstone President Jon Gray and then-Goldman CEO Lloyd Blankfein, Bloomberg reported last year. Two months later, Blackstone bought a big chunk of Goldman's position to help the investment bank exit most of its trade.

Read more: Meet the Goldman Sachs execs tasked with building the firms' new Blackstone-esque private-investing unit — and pumping up the bank's flagging stock price

More broadly, there's a rich history of conflict between investment banks and their clients. In 2004, buyout funds complained when JPMorgan Partners and Credit Suisse's merchant-banking arm beat out KKR and Blackstone for the pharmaceutical company Warner Chilcott in what The Wall Street Journal called a "hotly contested auction." In 2005, Goldman advised the New York Stock Exchange in its merger with Archipelago Holdings despite owning a big stake in Archipelago. And in 2012, Goldman advised the pipeline company El Paso Corp. in its roughly $23 billion takeover by Kinder Morgan Inc. despite holding a big stake in the energy company. 

With highly lucrative fees at risk, JPMorgan spun out its buyout arm, while Credit Suisse shrunk its ambitions. Goldman Sachs did neither. 

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• The Carlyle Group is partnering with Patrick Doyle, the former CEO of Domino's Pizza known for turning around its business by overhauling its recipe and implementing new technology like online ordering. 
• Doyle, 56, is now a private-equity investor and will help Carlyle identify multibillion-dollar deals in the consumer and retail sectors. 
• Doyle spoke with Business Insider about how companies could improve operations and said they would increasingly benefit from the use of voice technology. 

Patrick Doyle is best known for fixing Domino's Pizza's reputation as "cardboard crust,"lifting its stock price by changing its recipe and implementing tech changes like online ordering. 

Doyle, 56, who stepped down as Domino's CEO last year, now wants to apply what he learned at the pizza chain to a new role as a private-equity investor.

The Carlyle Group, one of the biggest private-equity firms, announced on Wednesday that it had struck up a partnership with Doyle in an effort to land multibillion-dollar deals in consumer and retail sectors in North America and Europe. 

Read more: Private-equity giant Carlyle is taking a majority stake in a startup that uses AI to judge how much you smile in interviews — and it could be the future of recruiting

After spending some time vacationing in Montana last year, Doyle told Business Insider that he started speaking with firms at the beginning of 2019 and ultimately settled on Carlyle. 

Going forward, Doyle will work exclusively with Carlyle to identify companies valued up to $10 billion that are prime for acquisition, and then help try to buy them in part with his own personal wealth. 

Doyle declined to specify how much money he'd be putting up but said it was "very significant and it is a measure of my commitment to this." 

Doyle is looking at targeting companies that can benefit from technological innovation, and one trend he sees developing is the use of voice technology, he said.

Read more: Goldman Sachs' push into private equity is ruffling feathers at Blackstone — and it might be a sign of big client skirmishes to come

Touch screens, like those on mobile phones, will be viewed a decade or two from now as "humorous" and "not a natural way to interact with technology," he said.

Buying things with the sound of your voice is just easier, he said. 

"I think we're going to see it growing quickly over time, getting things brought to people's homes or offices," Doyle said.

In joining Carlye, Doyle follows a well-trodden path of executives being tapped to help private-equity firms source deals. 

Such arrangements between former corporate executives and private-equity firms have become common place as investors pour money into the private markets, valuations tick up, and firms roll out industry experts in bidding contests to stand out beyond price.

In today's market, as private-equity firms have billions in dry powder — or capital raised but not used — the roles are important as investors hammer firms about where they are putting their money and what teams they have on their rosters to land the best deals. 

Read more:Goldman Sachs execs are jockeying for control of the firm's lucrative private investing units after a plan to merge it — and the stakes couldn't be higher

"For the [investors], it used to be a nice-to-have," Andres Saenz, Ernst & Young's global private-equity leader, said of executive expertise in private-equity deals generally. "Now [the investors] are deliberately asking, who are you hiring? What are you doing? For fundraising, it's sort of mandatory that you have thought this through."

Unlike some other executives who work with private-equity firms as "executive partners," though, Doyle's role will not focus on improving existing portfolio companies but finding new ones. 

Doyle acknowledged the challenges of putting capital to work in a competitive market. But he believed that his insights from his tenure at Domino's would differentiate himself and Carlyle and that he could see himself investing in anywhere between two to four companies alongside the firm at a given time. 

"I'm on one public board, lead director at Best Buy — and that's it," he said. "I'm going to be focusing entirely on this and on potential acquisitions we can make together." 

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• The Massachusetts Institute of Technology accepted over $800,000 in donations from Jeffrey Epstein's foundations, according to a letter sent to faculty on August 23 by MIT president L. Rafael Reif.
• The admission comes amid multiple resignations from MIT Media Lab faculty who quit after learning of the Media Lab's director Joichi Ito's connections to Jeffrey Epstein. Ito reportedly accepted over $200,000 in funding through Epstein's charities.
• In an all-hands meeting held at MIT Media Lab on Wednesday, founder Nicholas Negroponte defended accepting funding from Epstein. "If you wind back the clock, I would still say, 'Take it,'"the MIT Technology Review reported on Thursday. 
• Visit Business Insider's homepage for more stories.

One of America's most prestigious schools, the Massachusetts Institute of Technology, accepted over $800,000 in donations from Jeffrey Epstein's foundations, and the founder of MIT Media Lab said in a staff meeting he would do it again if given the chance.

Epstein was arrested July 6 on suspicion of sex trafficking minors. He was being held without bail awaiting trial on charges of conspiracy and sex trafficking. On August 10 Epstein died by suicide while being held at Manhattan's Metropolitan Correctional Center.

"Over the course of 20 years, MIT received approximately $800,000 via foundations controlled by Jeffrey Epstein," MIT president L. Rafael Reif said in a letter sent to faculty in late August. A substantial portion of the funding came through MIT Media Lab and its director Joichi Ito, who admitted to accepting over $500,000 for MIT's Media Lab from Epstein. Ito also allowed Epstein to invest in his tech-focused investment funds outside of MIT.

On Wednesday, MIT Media Lab founder Nicholas Negroponte defended that decision during a Media Lab all-hands meeting. "If you wind back the clock, I would still say, 'Take it,'" he said, according to reporting by the MIT Technology Review.

According to the report, the meeting went off the rails at this point.

"A woman in the front row began crying," it says. "Kate Darling, a research scientist at the MIT Media Lab, shouted, 'Nicholas, shut up!' Negroponte responded that he would not shut up and that he had founded the Lab, to which Darling said, 'We've been cleaning up your messes for the past eight years.'"

The meeting reportedly ended soon after.

Negroponte told the Boston Globe, "Yes, we are embarrassed and regret taking his money."

He went into further detail in an email to Business Insider on Friday morning: "Given what we know today, since Jeffrey Epstein's arrest, even since the November 2018 Miami Herald story, nobody would or should have taken his money. Not even me. But wind the clock backwards, given what we knew then, I would have accepted his money now. I suppose my words can be checked by reviewing an audio or video tape, if there is one," Negroponte said.

Check out the full story on MIT Technology Review right here.

SEE ALSO: MIT Media Lab director admits accepting funding from Jeffrey Epstein for the Media Lab and for his investment fund

DON'T MISS: MIT took 'approximately $800,000' in donations from Jeffrey Epstein's charities, MIT's president says in apology letter

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• The Massachusetts Institute of Technology accepted millions in donations from Jeffrey Epstein's foundations and from donors directly connected to Epstein, including Bill Gates and Leon Black.
• MIT Media Lab, an elite group within MIT, was largely responsible for courting Epstein and arranging the donations, according to a New Yorker report. A series of emails unearthed in the report depicts a culture of concealing donations made by Epstein to MIT.
• Following the report, MIT Media Lab director Joichi Ito resigned. "After giving the matter a great deal of thought over the past several days and weeks, I think that it is best that I resign as director of the media lab and as a professor and employee of the Institute, effective immediately," Ito said in a letter published over the weekend.
• Harvard and other prestigious institutions also received large donations from Epstein.
• Visit Business Insider's homepage for more stories.

One of America's most prestigious schools, the Massachusetts Institute of Technology, accepted millions in donations either directly from or through connections to Jeffrey Epstein.

According to a report in The New Yorker, at least $7.5 million in donations were delivered to MIT by Epstein from major donors like Microsoft co-founder Bill Gates and investor Leon Black acting on Epstein's guidance.

Moreover, the leadership at MIT's elite Media Lab group was seemingly aware of the problems with accepting money from Epstein, a convicted sex offender, and sought to conceal that connection. In the wake of this news, MIT Media Lab director Joichi Ito resigned and MIT president L. Rafael Reif promised "an immediate, thorough and independent investigation."

Here's everything we know about the Jeffrey Epstein donation scandal currently ripping through one of America's most prestigious education institutions.

SEE ALSO: MIT Media Lab director Joi Ito resigns after New Yorker exposé shows he quietly worked with Epstein to secure anonymous donations

What's going on?

American financier Jeffrey Epstein was arrested July 6 on suspicion of sex trafficking minors. He was being held without bail awaiting trial on charges of conspiracy and sex trafficking. On August 10, Epstein died by suicide while being held at Manhattan's Metropolitan Correctional Center.

Epstein's arrest in July wasn't his first encounter with law enforcement.

In 2008, Epstein was convicted of soliciting sex from girls as young as 14-years-old. He served 13 months in a Florida prison before being released on probation.

A plea deal arranged by Alexander Acosta, then US attorney for Southern District of Florida, enabled Epstein to leave the facility and work from home up to 12 hours per day, six days per week. When Epstein was arrested in July on suspicion of sex trafficking minors, Acosta — who by 2019 was appointed US Secretary of Labor by President Trump — resigned. 

In the wake of Epstein's death, the federal case against him was dropped. But even with the case over, the fallout from the Epstein scandal continues.

Epstein was connected to some very powerful people, including Bill Gates, Elon Musk, Reid Hoffman, and Marvin Minsky.

In his career as a financier, Epstein befriended some of the world's most famous names: People like Bill Gates and Elon Musk, as well as lesser known names like MIT's Marvin Minsky and LinkedIn's Reid Hoffman.

Another such lesser known name: Joichi Ito, the now-former director of MIT's elite Media Lab group.

MIT's acclaimed Media Lab is known for its innovative work in a variety of tech-related fields. Its director, Joichi Ito, directly facilitated donations from Epstein's foundations into MIT through Media Lab.

In addition to his work at MIT, Ito founded and heads an investment company named Neoteny that funds a variety of tech-related startups which also received funding from Epstein.

"Regrettably, over the years, the Lab has received money through some of the foundations that he controlled. I knew about these gifts and these funds were received with my permission. I also allowed him to invest in several of my funds which invest in tech startup companies outside of MIT,"Ito wrote in an apology letter on August 15.

Following the New Yorker piece published over the past weekend, Ito resigned from MIT altogether.

"After giving the matter a great deal of thought over the past several days and weeks, I think that it is best that I resign as director of the media lab and as a professor and employee of the Institute, effective immediately," Ito said in the letter sent internally at MIT.

The Media Lab is credited with pioneering some of the most important tech innovations. But its cofounder added fuel to the Epstein fire.

Founded in 1985, the Media Lab is a research group within MIT dedicated to "mixing and matching" ideas from various disciplines such as design, art, media and computer science. The projects created at the Media Lab are often well ahead of their time, and the Lab is credited with being a pioneer in technologies like wearable computing, social media and robotics.

One of the Media Lab's cofounders is Nicholas Negroponte, who served as its director until 2000. 

After news of the Epstein connection to MIT's Ito surfaced, Negroponte reportedly attended an internal meeting in September and said that he had recommended Ito take the money and that he would still advise him to do so.

"If you wind back the clock I would still say 'Take it,'"Negroponte said according to a report in the MIT Technology Review.

Negroponte subsequently told the MIT Technology Review that his comments were referring only to the decision to take Epstein's money in the years following the 2008 conviction of soliciting sex with a minor. Negroponte said that he would not advise taking the money knowing that Epstein was facing new sex trafficking charges.

Internal emails from MIT Media Lab leadership published by The New Yorker depict a culture of secrecy surrounding Epstein's donations and general involvement with MIT.

Despite the fact that Epstein's name was listed as "disqualified" on an internal MIT list of potential donors, The New Yorker reports that Epstein's donations were still accepted by the university through loopholes. 

Moreover, a handful of internal emails that included Ito and Media Lab's former director of development and strategy, Peter Cohen, highlight the Media Lab's attempt to obscure donations from Epstein.

"Make sure this gets accounted for as anonymous," Ito wrote in an internal email to a member of his staff in reference to a donation from Epstein. "Jeffrey money, needs to be anonymous. Thanks," Cohen added.

In the wake of Ito's resignation and the New Yorker investigation, MIT president L. Rafael Reif announced an "immediate, thorough and independent investigation" of the company's donation history and practices. "We are actively assessing how best to improve our policies, processes and procedures to fully reflect MIT's values and prevent such mistakes in the future," he said. "Our internal review process continues, and what we learn from it will inform the path ahead."

• Strong Roots is a vegan frozen food startup that's just secured an $18.3 million Series A investment from private equity firm Goode Partners. 
• Goode Partners previously invested in brands like Supreme and La Colombe and has come into Strong Roots as it expands into the US market. 
• The company's 46-slide pitch deck brought in Strong Roots' first external investment. 
• Click here for more BI Prime stories.

Vegan frozen food is booming and this startup is riding that wave and making a rapid expansion into the US market. 

Irish company Strong Roots, founded in 2015, just secured $18.3 million in Series A funding from private equity firm Goode Partners, previously an investor in brands like Supreme and La Colombe. The fund raise will help the company expand into the US via distribution into 3,000 stores including Walmart, Wegmans and Whole Foods. 

The company expects retail sales of $50 million this year and is on track for sales of $300 million by 2023. Strong Roots products are already sold across the UK and Ireland and was founded by Irish entrepreneur Sam Dennigan.

"The market for plant-based food is a rising tide," Dennigan told Business Insider in an interview. "Previous frozen food needed disruption and we're glad to have investors who are ambitious and understand the scope of our business." 

You can see the 46-slide pitch deck that secured Goode Partners' investment here: 

SEE ALSO: We got an exclusive look at the pitch deck that OpenSpace, a startup using AI cameras for construction, used to raise $14 million from investors including WeWork

• Blackstone, with $545 billion of assets under management, has its hands in everything from real estate, to private equity, credit, and hedge funds. 
• Business Insider spoke with industry insiders, including recruiters, bankers, and competitors to compile a list of rising dealmakers at the private equity giant. 

It seems the Blackstone Group, with more than half a trillion in assets, owns just about everything.

Whether you're spending a night in a hotel or just going to the office, there's a good chance you're inhabiting space owned, at least in part, by Blackstone.

In real estate alone, the firm has $154 billion of assets under management, comprised of office, hotel, retail and residential properties.

Its ever-expanding portfolio of companies also includes businesses from mobile advertising to data analytics, to firms that create the world's roads, tunnels, and wind farms. 

Read more: Goldman Sachs' push into private equity is ruffling feathers at Blackstone — and it might be a sign of big client skirmishes to come

While everyone knows the bold-face names behind Blackstone's dealmaking prowess like CEO Stephen Schwarzman and his lieutenant Tony James, there's a younger generation of scrappy upstarts helping shape some of the firm's biggest deals. 

Business Insider spoke with industry insiders, including recruiters, sponsor bankers and competitors, to compile a list of rising dealmakers at Blackstone.

These professionals do not currently lead entire divisions at the firm, though some run smaller units. Most work alongside the firm's star players as a supporting cast, but their peers predict greatness ahead. Whatever their roles, sources expressed confidence that they may just become some of the firm's most successful dealmakers. 

[A quick note on methodology: the list reflects only dealmakers based in the United States and does not include investment professionals across Blackstone's lines of credit, hedge fund and insurance solutions.]

Eli Nagler, managing director in the private equity group

Nagler spent this summer in London where he and a Blackstone team completed the $27 billion sale of Refinitiv to the London Stock Exchange. 

Nagler is only 34 and was in on the ground floor of the final closing at Freshfields Bruckhaus Deringer, supporting the deal's lead, Martin Brand.

Nagler's name came up almost immediately when we started asking New York financial industry sources about who they would place their bets on to be the future of Blackstone. 

A graduate of Harvard Business School, Nagler joined Blackstone in 2007 and has been involved in a wide range of investments, particularly in the financial services and technology, media and telecom sectors. 

This includes the purchase of online payments company Paysafe Group for $3.9 billion and the sale of Lendmark Financial Services LLC to private equity firm Lightyear Capital LLC for about $600 million. 

Fun Fact: He also had his wedding written up in The New York Times in 2017 and it looks like both sides to the Harvard MBA power couple are on a fast-track to the top on Wall Street -- his wife, Miriam Tawil, is a managing director at Centerbridge.

Anushka Sunder, principal in the private equity group

No stranger to the pages of Business Insider, Sunder was recognized in our 2018 Rising Stars of Wall Street list. 

Sunder came up yet again in the list of names dropped by sources as someone who shows promise of rising the Blackstone ranks. 

A Harvard Business School graduate, Sunder began her career in investment banking at Goldman Sachs before moving over to TPG Capital as an associate. 

Ever since she joined Blackstone in 2013, Sunder has stayed busy working on investments in healthcare and technology sectors. 

She serves on the board of directors at JDA Software, a software and consultancy company Blackstone and other investors gave a $575 million equity investment.

She is also a director at Optiv, a cyber security solutions company Blackstone acquired in 2016. 

Sunder told Business Insider that her career advice is to develop your own style rather than imitate others, find people who invest in you, and to be determined and optimistic.  

David Kestnbaum, managing director in the private equity group

Kestnbaum has made a name for himself in Blackstone's "core" private equity investments, or deals that are low-leverage and low-risk. 

His nomination is also timely, having been behind some of Blackstone's most recent investments.

This includes Blackstone's 2019 recapitalization of SERVPRO, a franchisor of property damage restoration services, as well as the acquisition of PSAV, a large events planning company.

Kestnbaum was described by one source as one of Blackstone's younger managing directors who has demonstrated "a lot of influence," particularly in the firm's longer term investments. 

Kestnbaum never got an MBA. He received a BA in political science from the University of North Carolina at Chapel Hill and went straight into finance, joining the financial sponsor group at JPMorgan as an analyst and then serving as vice president at Vestar Capital Partners until he joined Blackstone in 2013.

David Kaden, principal in the tactical opportunities group

Kaden has been identified internally at Blackstone as a standout performer in a unit devoted to  deals that are time-sensitive, complex, or in dislocated markets where it believes risk is fundamentally mispriced. 

Called Tactical Opportunities or Tac Opps for short, Kaden's works with a group of about 60 colleagues to identify and execute such deals. 

In that effort, Kaden has been involved in a smattering of deals: Blackstone's acquisition of jewelry company Diamonds Direct, the financing of Vancouver-based mining company, Lundin Gold, and the acquisition of data classification provider, TITUS. 

Kaden's resume doesn't fit the traditional private equity path. Before joining Blackstone in 2015, he worked in the White House as director for International Economics on the National Security Council and National Economic Council.

He previously served as the assistant chief of staff to President Barack Obama and the CEO of the Federal Reserve Bank of New York. 

Kaden went to Yale Law School and then clerked with the Honorable Jose A Cabranes in the U.S. Court of Appeals for the Second Circuit, before joining the White House. 

Brian Kim, managing director in the real estate group

Kim is one of the more senior Blackstone members on our list of up and coming dealmakers. 

He is already the head of acquisitions and capital markets of Blackstone Real Estate Income Trust, which invests primarily in commercial real estate properties in a number of sectors, with a focus on providing current income to investors. 

Among the bigger deals Kim has been involved was the take-private and subsequent 2016 sale of Strategic Hotel & Resorts to China's Anbang Insurance Group for $6.5 billion. Another came a year before that, when Blackstone bought Manhattan's Stuyvesant Town for $5.3 billion. 

More recently, in 2018, his group made a $1.8 billion acquisition of Canyon Industrial Portfolio, a network of warehouses and distributions buildings throughout Dallas, Chicago, Baltimore, Washington, D.C., Los Angeles and Florida. 

Scott Trebilco, managing director in the real estate group

If you see Blackstone buying a hotel or resort, chances are Trebilco is involved. 

Another senior member of the real estate group, he focuses on new investment opportunities in the hospitality sector. 

Deals where he has taken the lead include a collection throughout 2018: the acquisitions of Turtle Bay Resort, Ritz Carlton Kapalua, and W Marriott San Antonio. 

At an October 2018 conference, he said Blackstone was buying more hotels than it's selling, but that he wants to be a "bigger net buyer."

This year, Blackstone sold Boca Raton Resort & Club to billionaire Michael Dell for $461.6 million. 

Here's hoping Trebilco can help keep up the Blackstone buying streak. 

Phillip Solomond, managing director in the infrastructure group

Blackstone just announced that it has raised $14 billion to invest in projects that improve the world's roads, tunnels, wind plants and other infrastructure projects.

Much of that work will fall on Blackstone veteran Solomond. 

Solomond joined Blackstone in 2008 after working at Morgan Stanley as an analyst in the real estate group, analyzing a variety of investment banking and private equity transactions. 

One of the big early deals he worked was the 2011 acquisition of Brixmor Property Group, an owner of neighborhood shopping centers, which Blackstone later took public in 2013. 

Around the same time period, he was involved in the recapitalization of mall company, General Growth Properties, helping it emerge from bankruptcy. 

This year, Solomond was involved in the purchase of a minority stake in Carrix Inc., the operator of ports and rail yards in more than 250 locations around the globe. 

It also looks like he'll get to see how one of the largest companies he helped buy has panned out: the 2014 acquisition of The Cosmopolitan of Las Vegas.

Blackstone is reportedly exploring the sale of the Cosmopolitan after buying it for $1.7 billion and then sinking another $500 million into finishing and renovating the property. Media reports say the hotel could have a $4 billion price tag.

Mark Burton, managing director in strategic partners

Burton joined Blackstone in 2014 to lead its real estate secondaries practice and hit the ground running. 

In less than two years, he acquired a massive portfolio of secondary real estate fund interests from the California Public Employees' Retirement System. 

The deal, valued at $3 billion, was the largest known real estate secondary transaction.

The momentum set the stage for Blackstone's fundraising for secondaries across a number of sectors, including infrastructure and private equity. 

In June, Blackstone announced that it had closed its eighth fund devoted to secondaries at $11.1 billion.

Prior to joining Blackstone, Burton was a managing director at H/2 Capital Partners LLC where he focused on distressed commercial mortgage investments. 

• Omega Advisors founder Leon Cooperman told attendees at an Alternative Investment Roundtable event in New York that now was not the time to invest in private equity.
• Cooperman, who is transitioning his hedge fund into a family office, said there were several headwinds for private equity, including an expectation for increased interest rates when many PE firms would need to sell out of their investments.
• That comes as some big hedge funds have been making more PE-like investments and the two industries battle each other for talent. 
• Click here for more BI Prime stories.

The latest move in the battle between hedge funds and private equity comes from a billionaire stock picker who represents the old guard of the hedge-fund industry.

The billionaire and Omega Advisors founder Leon Cooperman told attendees at an event in midtown Manhattan he thinks private equity, as it currently operates, is a "scam."

"They're getting very fancy fees for sitting on your money," Cooperman said at the Penn Club. PE firms have been raising massive funds and have amassed hundreds of billions of dollars in so-called dry powder that has yet to be deployed into investments.

Hedge-fund performance, meanwhile, has also been under scrutiny, thanks to the high fees that are typical of the space. Last year, the average hedge fund lost money, and the market has outpaced the average fund in 2019, according to Hedge Fund Research.

And the line between private equity and hedge funds has been getting more blurred. Some of Cooperman's hedge-fund brethren have been increasingly creeping into the private-equity space, with firms like Viking, Tiger Global, and Point72 investing in private markets and fighting PE firms for talent.

Large institutional investors, hedge funds' biggest clients, have also been pumping money into private equity, which has raised close to $432 billion in assets in 2018, with a large chunk of money that still hasn't been put to work. 

Cooperman, who made his money as a value investor in the public stock market, said he believes the market is "fully valued," making any deal expensive.

He noted that many deals being executed today have low interest rates for borrowing money — something he doesn't expect to be the case when private equity needs to sell out of their investments in seven to 10 years — and the fact the game is more crowded now. 

"It's no longer an undiscovered concept," he said. 

Read more: The booming private market has some hedge funds spreading into private equity's domain. Now a tug-of-war has broken out over talent.

According to Cooperman, who is transitioning his hedge fund into a family office, private-equity returns have been "aided and abetted" by the low-interest-rate environment that has followed the housing crisis. Without rates this low, he said, private equity returns would not be the same.

Low interest rates have "made the exit multiple much higher than the entrance multiple," he said, especially for large deals.

When a member of the audience, who said they worked at a private-equity firm, pushed back on Cooperman's outlook, he said that some smaller deals could still make sense, but the current projection for interest rates does not make large-scale deals a good bet. Many of those big deals, he said, ultimately enrich executives at the firm.

"I think leveraged buyouts to a degree are a giant case of insider trading," he said, referencing examples of public companies that then become private. 

Read more: We talked to 7 insiders about the $27 billion Refinitiv-LSE deal. Here's how one of the biggest data deals of the year came together.

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