In its latest foray into passive alternative investing, private markets investment platform NewVest has established the Private Debt 50 index Fund, following the January debut of its first product, a private equity index fund.
With the latest rollout, New York-based NewVest has closed on a total of $220 million of capital for its first two flagship products, with $110 million raised for each fund. Fundraising will end once approximately 10 percent of the weight of the index, or 10 percent of the top private debt funds, have held their final closes.
The platform was founded by Edward Talmor-Gera, an academic who formerly worked as a placement agent in the Israeli institutional market. With this innovation, he aims to disrupt the traditional fund of funds market for alternatives using a passive structure. By offering a passive vehicle and dispensing with management fees, Talmor-Gera believes NewVest can offer better performing and cheaper alternatives to more traditional fund of funds.
The PD 50 includes 50 of the largest private debt funds, including those managed by Golub Capital, Bain Capital and Pemberton Asset Management, Talmor-Gera said in an interview with affiliate title Private Debt Investor. He said NewVest constructed its funds by looking at a universe of the top managers in private debt and private equity going back 15 years, using both proprietary data and data from other sources. NewVest culled the 50 components for each strategy from a selection of 230 managers, all of whom were receptive to being included in the index funds.
The new model “grows the pie for everybody”, Talmor-Gera said.
The funds are structured similarly to a fund of funds in terms of capital calls from underlying funds, with the platform eschewing management fees. There is no hurdle rate, with a 2-6 percent carry-based fee with a European waterfall structure. LPs get 100 percent of their capital back before they share a percentage of the returns above the 1X DPI with NewVest.
In addition to institutional investors such as the largest financial institutions in Israel, and insurance, pension, bank balance sheet, university endowments and foundations, the PD 50 has raised capital from family offices, and founders and senior industry professionals. They include the founders of Golub Capital, which won affialite title Private Debt Investor’s 2022 Lender of the Year award for the Americas, GIP and K1, among others.
“NewVest can be a solution for LPs who have never invested in private debt funds before, as well as for sophisticated and experienced LPs who can improve efficiencies and build more optimal portfolio construction strategies using a core-satellite approach,” which is just like public markets, Talmor-Gera said in a statement.
Talmor-Gera said NewVest has plans to eventually launch other index funds in infrastructure, impact and Israeli venture capital.
In January, NewVest said it had raised $150 million in a first close for its Private Equity 50 Index Fund. The PE 50 grants investors passive exposure to some of the 50 biggest funds in market, understood to include funds managed by Blackstone, TPG, Insight Partners, Clearlake Capital Group and Welsh, Carson, Anderson and Stowe.