Ex-Goldman boss raises $1.7bn war chest for cross-border deals

Cornell Capital Partners II has already made three investments, representing roughly a quarter of its portfolio, founder Henry Cornell told PEI.

Cornell Capital, a US private equity firm founded by Goldman Sachs Merchant Banking’s former vice-chairman Henry Cornell, has closed its second fund above target.

The New York-headquartered firm held a final close on $1.7 billion for Cornell Capital Partners II, exceeding its $1.5 billion target, Cornell told Private Equity International. The close brings the firm’s assets under management to $5.9 billion, including co-investment capital.

The new fund is about 28 percent larger than its 2017-vintage predecessor, according to PEI data. It will continue to target the consumer, industrials, business and financial services sectors, with an eye towards cross-border opportunities between the US and Asia.

Fund II has already made three investments, representing roughly a quarter of the fund’s portfolio, Cornell said. It will seek returns similar to that of its predecessor, which is on track to deliver a net internal rate of return in the mid-20s and a 2-2.5x multiple of invested capital.

The fund attracted commitments from roughly 25 investors, including Middle Eastern and Asian sovereigns, insurance companies, US pension funds, family offices and high-net-worth individuals. This “curated group” can help in sourcing dealflow while Cornell Capital provides them with co-investment opportunities, Cornell said.

“We provided a dollar and a quarter of co-invest in Fund I for every dollar of investment and so far in Fund II, we’re providing over $2 of co-invest for every dollar of fund investment,” he said, adding that co-investments have enabled Cornell to “muscle up” into bigger transactions such as its $1.7 billion acquisition of Talcott Resolution Life Insurance in 2018.

Fund II’s close coincides with the appointment of Allen Chu as head of Asia in Hong Kong, Cornell added. Chu, who had been working as a Singapore-based service provider and adviser to asset managers since his departure from Dymon Asia Capital in 2018, will work alongside former Asia head Joyce I-Yin Hsu, who transitions to Asia chair. Chu worked alongside Hsu and Cornell at Goldman Sachs between 1994 and 2002.

The firm last year appointed Emily Mason, a former director at KKR and marketing executive at Silver Point Capital, as head of investor relations; and Charles Buaron, a former principal at Oak Hill Capital, as a managing director overseeing industrials and business services. It now has more than 20 investment professionals between New York and Hong Kong.

Cornell, who launched the eponymous firm in 2013, identifies as an “old-school investor”. He advises those hoping to navigate today’s global instability to over-equitise upon purchase and maintain a conservative capital structure so the balance sheet can fund acquisitions. Cornell Capital, for its part, has 3.9x leverage firm-wide.

“Don’t play financial engineer,” he added. “You’re an industrialist – you’re buying businesses.”