Natixis eyes co-investments, secondaries through $6.7bn FoF merger

Flexstone Partners is set to launch its debut global co-investment fund next year.

Natixis Investment Managers is planning to raise global co-investment and secondaries vehicles following the merger of its three fund of funds units.

The Paris-headquartered asset manager announced on Thursday that it had combined its three regional funds of funds – Geneva-based Euro Private Equity, Singapore-based Eagle Asia Partners and New York-based Caspian Private Equity –  to form Flexstone Partners with $6.7 billion in assets under management.

“We plan to raise towards the end of 2019 a global co-investment fund capitalising on the strength of these three entities,” Flexstone chief executive Eric Deram, who was previously founder and managing partner at Natixis’s Euro Private Equity, told Private Equity International. “With our existing co-investment funds, the total fund size is about $700 million – we look to increase that a bit for our global fund.”

The unit is also mulling a global secondaries fund and discussions are in the early stages, he added.

The merger is part of Natixis’s 2020 plan to increase its assets under management in alternatives and to offer global products and solutions to its existing investors. Following the merger, the three entities will have a combined team of more than 40 across the offices.

“This is a growth story,” Deram said. “As an investor there is a scale that you need to be to access the best GPs and LPs.”

Flexstone will retain all existing teams following the merger and plans to recruit more investment and support staff in the next year, Deram said, noting that the firm has no plans to change its fund relationships, commitments or dedicated accounts.

Flexstone makes primary, secondaries and co-investments in the small and mid-cap segments in Europe, the US and Asia. The team has backed managers including CDH InvestmentsBaring Private Equity Asia and Andera Partners, according to PEI data.

Its Europe-focused fund of funds Euro Private Equity held a €199 million first close on its sophomore secondaries vehicle Select Opportunities II in July. Deram said the firm expects to hold a final close on its €250 million target by June next year.