José Guzmán is a private equity investment officer at the New York City Retirement System, which has $190 billion of assets under management. Previously, he was an investment associate at Cerberus Capital Management, an equity research associate at Credit Suisse, and valuations associate at Morgan Stanley. Guzman holds an MBA from The Wharton School.
In this interview, he discusses the top investing trends happening in private equity, his career transition from a PE firm to a large public pension, and his involvement with organizations like SEO, which helps minorities pursue careers within alternative investments.
José Guzmán was named on Trusted Insight's 2019 Top 30 Private Equity, Venture Capital Investors. This interview has been condensed.
Trusted Insight: Can you tell us more about the New York City Retirement System investment team and your role within it?
Jose Guzman: The New York City Retirement System manages approximately $190 billion, and consists of 5 different plans: NYC Police Department, NYC Fire Department, NYC Teachers’ System, NYC Employees’ System, and the Board of Education. I work within the private equity team, and we manage approximately $20 billion, so it's almost 10 percent of the overall plan.
"In private equity, buyouts have been consistent. Fundraising last year was astronomical, but we're also seeing a lot more middle-market buyout funds come to market."
My role is to perform fund dividends on the different private equity strategies, which include buyouts, growth equities, special situations, and secondaries. Given that we are a public pension plan we may not be able to do direct investing, but New York City is considering doing co-investments alongside their GPs. We are going in that direction, but given our size, we're a little bit slower and more risk-averse.
Trusted Insight: What investment verticals have you picked up on in your two-plus years at the public pension plan?
Jose Guzman: In private equity, buyouts have been consistent. Fundraising last year was astronomical, but we're also seeing a lot more middle-market buyout funds come to market. Another interesting trend that we're seeing is in the secondary space. Within secondaries, another product that's evolved including GP restructuring. That has significantly grown over the past three years. We're seeing some opportunities in that space and that market continues to grow. In addition, we're looking to focus more on the middle market space to fill in the holes in our portfolio.
We have been focusing on other strategies because we have a very large portfolio and given our investment guidelines most of our investments are within buyouts. We haven't done much in the venture space and we haven't entertained it. It's just an area that given the size of this institution, and our investment guidelines, and the political dynamic we haven't invested in venture.
Trusted Insight: How vastly does your previous role at Cerberus differ from your role at a public pension?
Jose Guzman: The key differentiator is that when I was at Cerberus, I focused on doing company due diligence. I would look through the company's financials, assess the management team, assess the strategy, the market, look at HR, legal, and just really dig deep into a company. Here we're doing more fund due diligence. Instead of looking at a specific company we're looking at an investment firm like one of the larger, like TKR or Apollo. We'll do diligence on the firm, assess the team, the performance, the strategy, look at their infrastructure. It's a little bit more high level.
"I'm really involved with organizations like SEO, which help minorities pursue careers within alternative investments."
Another major difference is that it's a state political institution, so the way we execute here is a little bit different. It's a little bit slower paced and we have many constituents. Before it was very fast and we could move quickly and execute on any agenda.
Trusted Insight: What are the major lessons that can investor peers can learn from you?
Jose Guzman: This might sound cliché but have an open mind, take risks, explore opportunities because you never know where one opportunity could take you. I've done a few different things and holistically I've been able to get a great experience from each opportunity that could lead to something bigger in the future.
It’s important to continue to perfect your craft but also have an open mind and don't be afraid to take risks. When you pursue an opportunity that might seem a little risky or uncertain it could really lead to other amazing opportunities which you may not see at the moment. I know many people like certainty and they like to follow a particular path but sometimes exploring different things allows you to get multiple skill sets that could culminate into something very successful in the future.
Trusted Insight: Is there anything you'd like to add about NYC Retirement System or private equity investing?
Jose Guzman: When you're at a large institution, you have a responsibility to try to drive certain initiatives. I'm really involved with organizations like SEO, which help minorities pursue careers within alternative investments. I give back and provide guidance through a lot of the students and give advice on how to actually navigate the industry and potentially get opportunities. When you're in that seat you have the ability to really drive diversity and that's something that I've always tried to do by being involved in those organizations.
I'm also involved with MLT which helps minorities pursue higher education, predominantly MBAs. When you're at that level you can push those organizations and allow everyone to see that they're adding a lot of value because they impact people like myself. I've been fortunate to receive guidance from them and I've been able to move ahead as well. That's something that I personally support and I know that many people in the industry are supportive as well. We can continuously try to push, both ethnic and gender diversity.
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