Greenhill & Company has sold all its interests in its second in-house private equity fund, which closed on $875 million in 2005, for $45 million to some of the fund’s principals and unnamed investors advised by JPMorgan.
The sales price was consistent “with the carrying value of the asset on our most recent balance sheet”, Greenhill’s chief executive officer Scott Bok said in a statement.
The sale was part of an ongoing process Greenhill is pursuing to sell off all of its private equity holdings. That process started in 2009 when the investment bank spun off its Greenhill Capital Partners’ operations.
As part of the spin-out, Greenhill continued to manage the private equity unit’s four existing funds and held the investment portfolio, which had a fair market value at the time of $178.5 million.
Robert Niehaus, chairman of the private equity operations and head of the spin-out, said he was attempting to maximise the value of the funds over time. Greenhill planned to use the proceeds of the fund sales to fund share repurchases and dividends and reduce its debt load.
“We are pleased to have had the opportunity to realise immediate value from a significant portion of our principal investment portfolio through the sale of substantially all of our investment in a private equity fund we sponsored, rather than wait for the liquidation of the fund’s portfolio companies over a period of years,” Bok said.
Greenhill’s stated reason for shedding its private equity operations was to focus on its “core” competency of advisory work, but the work was also likely influenced by governmental regulations in the US and in Europe restricting the ability of financial institutions to own and operate private equity funds.