Side Letter: PEI buys PEHub, Chinese GPs, Carlyle strikes oil

Campbell Lutyens wants to help Chinese GPs raise more capital in a regulation-restricted environment. Here’s today's brief, for our valued subscribers only.

Just happened

Welcome to the fold

As of yesterday, PEI Media – publisher of Side Letter – welcomed a fine selection of brands into its stable, including PEHubBuyouts and Venture Capital Journal (VCJ). We look forward to working with our new colleagues and pushing the envelope in terms of providing PE insight and intelligence.

Hong KongCampbell in a China shop

Campbell Lutyens has hired Charlie Yan, a former Ping An and Fosun executive, to focus on China from the firm’s Hong Kong office. The placement agent and advisor is eyeing the country’s nearly 25,000 registered PE managers who may find it harder to raise RMB from domestic investors following regulations introduced last April.

The firm has already helped Hong Kong’s Ascendent Capital collect $365 million for its 2012-vintage Fund I, which is focused on Greater China, and CITICPE reach the $2.2 billion hard-cap for its third and largest China-focused flagship last year. It’s also assisting Beijing’s Genesis Capital with its second fund.

LACERA slims down

LACERA’s giant $1.1 billion secondaries sale last year slashed 38 GP relationships, allowing staff to focus on managers they consider more important. The sale – picked up by Blackstone’s Strategic Partners unit – had a net asset value of $805 million and unfunded commitments of $255 million spread across the funds, LACERA documents show. With buyout funds trading at close to par last year (around 3 percent discount to NAV, Greenhill data show), chances are we’ll see more $1 billion-plus portfolios on sale in 2019.


Emerging talent. Two of the five largest funds raised in March are debut offerings – and they’re both over $1 billion. Arcline Investment Management – founded by former Golden Gate Capital managing director Rajeev Amara – secured $1.5 billion while Novalpina Capital – led by former TPG Europe chief Stephen Peel – pulled in €1 billion.

Support for first-time managers has been mixed; less than a third of respondents to our LP Perspectives 2019 survey said they’ve backed new managers. In the US Los Angeles City Employees’ Retirement System and the California Public Employees’ Retirement System have been keen supporters of emerging managers and plan to allocate more capital.

Staking claims. Distressed debt firms are branching out into a new strategy: litigation funding. Our colleagues at Private Debt Investor say such firms are taking an interest in claims that are too big for specialist litigation finance providers to swallow. The tough environment for distressed investors amid low interest rates and record-low defaults has forced them to “adapt or die”.

Four Carlyle funds better than one? The equity capital for Carlyle Group’s purchase of an almost $5 billion minority stake in CEPSA, Europe’s largest privately-owned oil and gas company, will come from four of the firm’s funds: Carlyle International Energy Partners I and II, Carlyle Partners VII, Carlyle Europe Partners V and co-investors, a source familiar with the deal tells us. This is common for Carlyle, especially when an investment spans several geographies or sectors. The firm doesn’t have a policy on how it splits deals between funds and the ultimate split for CEPSA is yet to be finalised, the source adds.

Dig Deeper

Want more data? There are more than 6,700 institutions in our database, including Campbell LutyensLACERACarlyle GroupAscendent Capital and Genesis Capital from today’s Side Letter.

Inside Tip

We’ll be at a breakfast seminar hosted by one of the biggest buyers in secondaries tomorrow morning. Anything you want us to ask? Let us know.

He Said It

“The domestic market has been slightly hindered in terms of LP capital, but the UK is a good place for private equity investing and long-term opportunities are still plentiful.”

Mark McDonald, global head of private equity at DWS, keeps a stiff pre-Brexit upper lip at an industry conference in London.


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