Side Letter: Ian Charles’ $1.5bn playbook, ILPA on sub lines, Advantage’s one-and-done

Sports franchises are going to need capital and this former secondaries investor plans to take it to them. Here’s today's brief, for our valued subscribers only.

Just happened

A fresh playbook

Ian Charles

In sporting parlance, Ian Charles (pictured) may have timed his run beautifully. The long-time partner of secondaries heavyweight Landmark Partners and co-founder of advisory firm Cogent Partners is currently raising a $1.5 billion fund under a new banner to take stakes in sports industry businesses (Adam Le broke the story this morning). Three things jump out:

  • His new firm – Arctos Sports Partners – comprises an impressive-looking bench of around 12 professionals. At least three are former Landmark execs, as well as well as staff from Partners Group, TPG, Warburg Pincus, Goldman Sachs and Accel Partners. One of Arctos’s partners, Jordan Solomon, spent time at McKinsey, the National Basketball Association and was an executive vice-president for sports at Madison Square Garden.
  • Goldman Sachs Asset Management‘s GP interests business – the Petershill Funds – is an anchor investor. Arctos has currently raised about one-third of its target for Fund I.
  • Sports franchises have been at the sharp end of the economic effect of the coronavirus pandemic. There will be no shortage of otherwise healthy businesses that have seen revenue essentially stopped for an as yet unspecified period. Arctos will seek to “partner with owners and leagues to increase liquidity and financial flexibility for ownership groups,” according to documents. Not that the founders could have predicted the effects of covid-19 when they sketched out the strategy, but the virus could well make their proposition a lot more compelling.

ILPA on sub line transparency

This exploration of how ILPA is thinking about LP liquidity in relation to subscription credit line exposure garnered a lot of interest on sister title Private Funds CFO when editor Graham Bippart broke the story, and it is now available to PEI subscribers. It matters, because there is currently much hand-wringing among GPs, LPs and credit facility providers about how well positioned LPs are to deal with slowing distributions and continued or increasing capital calls (there is even disagreement in this opaque market as to whether capital calls have increased). ILPA’s current consideration is whether there needs to be more transparency for LPs into ongoing credit line usage.

Advantage Partners

Japanese mid-market firm Advantage Partners has just held a one-and-done on its sixth buyout fund, hitting its ¥85 billion ($790 million; €726 million) hard-cap after five months in market (press release here). Three investors dropped out along the way citing covid-19 problems, said a source with knowledge of the fundraise, but Fund VI was still over-subscribed.

He said it

“Into the vacuum, well before the ‘all-clear’ sign has been called on this downturn, must flow private capital.”

Blackstone president and COO Jon Gray writes in the Financial Times (paywall) that private capital must be allowed to play its role – a vital one – in the survival of businesses and the revival of economies amid the coronavirus pandemic. Earlier this year, before the pandemic, Gray talked to PEI about the growing ill feeling towards private capital and what needed to be done about it.

Dig deeper

StanCERA’s insight

Institution: Stanislaus County Employees Retirement Association
Headquarters: Modesto, United States
AUM: $1.99bn
Allocation to alternatives: 24.37%
Bitesize: $10m-$50m

StanCERA has committed $15 million to Insight Venture Partners XI, according to the pension’s April 2020 meeting minutes. The venture capital fund invests in the TMT sector across North America, Asia-Pacific, and Western Europe. The $1.99 billion pension fund has a 6 percent target allocation with a sub-asset class target of 4 percent to buyouts and 2 percent to venture capital.

For more information on StanCERA, as well as more than 5,900 other institutions, check out the PEI database.

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Today’s letter was prepared by Toby Mitchenall, and Carmela Mendoza.

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