Side Letter: Pamplona’s liquidation plans; Vista’s $250m vote of confidence; Arizona gets selective

A lack of clarity around Pamplona Capital Management's plans to distance itself from Russian capital underscores the complexity of such a task. Plus: Vista has received a $250 million vote of confidence from a public pension, and why Arizona State Retirement System could become more selective. Here's today's brief, for our valued subscribers only.

Just happened

Pamplona’s predicament
In early March, Pamplona Capital Management said it was “redeeming” the $2.7 billion investment made in its funds by LetterOne, an investment firm linked to sanctioned Russian oligarch Mikhail Fridman. Last week it went a step further, announcing that it had received board approval to liquidate the three funds in which LetterOne has an interest.

The exact nature of this process, described by Pamplona as “irrevocable,” remains unclear, with the statement leaving plenty of room for ambiguity. While noting that the wind-down could involve the sale of direct investments, it also cited the sale of LP interests to third parties as an alternative “wind-down mechanism”. The “transfer of limited partner interest on the first portfolio company” was to take place on Friday 25 March, it added.

In some ways, the statement raises more questions than it answers. For example, how does a secondaries sale – which would bring in one or more new LPs – square with a complete wind-down of the three funds? Was the statement intended to leave the door open for the creation of a continuation vehicle backed by new investors? And will LPs be given the chance to sell their stakes before the disposal of assets begins? Side Letter put those questions to Pamplona. The firm declined to comment further.

A lack of clarity is not wholly unexpected; after all, these are largely uncharted waters and there may not be an obvious, immediate solution to the problem. Though Pamplona is unlikely to be the only firm whose LP base is impacted by sanctions, this situation is likely to be one of the most complex examples, given the extent of the pair’s relationship. The wider industry will be watching how this plays out with interest.

Oregon’s seal of approval
Vista Equity Partners has received a $250 million vote of confidence from Oregon Investment Council after a difficult period for the private equity firm and its founder, affiliate title Buyouts reports (registration required). Oregon’s commitment to the tech giant’s eighth fund is significant in the context of Robert Smith’s admission of tax evasion in 2020. LPs have been watching closely to see which institutions – especially public organisations – back Vista’s fund in the wake of that controversy. Public pensions are especially sensitive to any hint of reputational issues, as they must answer to elected boards, politicians and taxpayers.

Vista’s Fund VIII is targeting as much as $20 billion, with an expected first close in April. The GP is offering a six-month management fee holiday for LPs who commit before the first close, starting at the date of the close.

Automation before democratisation
PE is not prepared for the requirements of scale that will come with its democratisation. That’s according to Adam Harrison, chief commercial officer of investment platform Titanbay, who told delegates at last week’s Invest Europe Investors’ Forum that GPs have so far benefitted from an environment where demand exceeds supply. “There’s been no commercial imperative from the industry really to look at the processes of investing and to make it a friendly and simple user experience,” he said.

One way PE firms can facilitate access at scale is by examining the regulatory, administrative and operational elements of private markets investing, and finding ways to automate them. “If you consider the regulatory environment today, it is quite complex, and it’s also very different from country to country,” Harrison said. “And it’s also changing – it’s quite fluid. For a wealth manager to actually be on top of that regulatory environment, if they have clients across 10 jurisdictions, that is a huge exercise.”

Fundraising platforms are at the forefront of PE’s push down market, as Private Equity International explored in last month’s deep dive.


Proceed with caution
Arizona State Retirement System has been advised to tread carefully in today’s heady fundraising and dealmaking environment. At a 25 March meeting, the $52.3 billion pension’s consultant, NEPC, told staff to be highly selective when making any future PE commitments. NEPC noted that while there is an elevated level of entry multiples across geographies, sectors and segments of the market now, the record level of dry powder – about $2.98 trillion of it – will undoubtedly lead to a further expansion in deal multiples. ASRS already had reason to be a touch less active on the commitment front: like an increasing number of its peers, the programme is already 11.5 percent allocated to PE, well over its 8 percent target.

Dig deeper

LP meetings. It’s Monday, so here are some LP meetings to watch out for this week.

29 March

30 March

Today’s letter was prepared by Alex Lynn with Rod JamesHelen de Beer and Michael Baruch.