Meet John Grayken. He is the founder and owner of Lone Star Funds, one of the biggest and most successful private equity real estate businesses in the world. He is also a self-made multi-billionaire, and many in the industry have read about him – but few have encountered him. That is because, as is well documented, he is an intensely private man. In 2009, this publication calledhim “shy.” In 2016, business magazine Forbes called him “shadowy.”
While he avoids publicity, his firm often cannot. Lone Star makes many headlines, and they are not always positive. It has bought assets competitors find too sensitive, and usually following widespread distressed situations. While many of Lone Star’s peers now focus on growth strategies, Grayken’s business sticks to guns originally crafted to benefit from the RTC and Savings and Loan crisis in the 1980s and 1990s.
Investors love this consistency. Lone Star’s vehicles have attracted high-profile US pensions such as the California State Teachers’ Retirement System, endowments like Howard Hughes Medical Institute (HHMI) and sovereign wealth funds such as Abu Dhabi Investment Authority, often on a repeat basis.
They have benefited from positive performances from all but one of Lone Star’s 21 funds to date. Grayken would not discuss track record, but it is understood from other sources that its flagship Lone Star Fund and Lone Star Real Estate Fund series, which account for more than $80 billion of the $85 billion Lone Star has raised since its inception in 1995, have regularly hit their 25 percent gross IRR and almost 2x equity multiple performance targets, as many a US pension fund document will verify. That is almost three decades of strong returns.
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