Private equity execs warn of industry failures

Driving the news: KKR CFO Robert Lewin and Apollo president Jim Zelter issued the alarms earlier this week, in separate speeches at the Barclays Global Financial Services Conference.

• "You're going to see a number of GPs that are going to shrink in size, and some materially so," Lewin argued. "And given that they've got relatively high fixed cost bases, you could see some of those firms go away altogether. So I think organically you're going to see a fair bit of GP consolidation over the next five years."
• Zelter said: "I think there's many, many PE funds that are out there that have raised their most recent fund and don't realize it's their last fund," adding that he doesn't "expect a massive monetization cycle to hit."

Zoom in: Neither man predicted doom or shrinkage for their own firms.

• This may read like denial, but it's not.
• The big are likely to keep getting bigger, as they can afford to offer new products to limited partners that are seeking to limit their number of GP relationships. Some of this also may come inorganically, via big firms buying smaller ones.
• Expect that same dynamic to play out in venture capital.