Side Letter: Rivendell rumbles, Hostplus in early, TSG goes global

A big name buyout house on your CV doesn't guarantee spin-out success. Here’s today's brief, for our valued subscribers only.

Just happened

Trouble in Rivendell

Rivendell Partners, a Hong Kong-based firm founded by ex-Carlyle and Morgan Stanley execs is facing serious problems. According to two sources close to the firm, in the last year eight out of Rivendell’s 11 staff have left the firm. Among them are co-founder and head of Vietnam Bang Trinh, chief operating officer and operating partner Carl Harris and director Steve Wong. No comment from the firm, but according to the sources, it has been unable to hit a first close since it began fundraising in 2017, originally targeting up to $500 million. The firm also had to shift its strategy – dropping Vietnam and focusing solely on Greater China mid-market buyouts. As one Hong Kong-based placement agent tells PEI: “Having some track record in a big-name firm does not always lead to a successful fundraise.”

Flexing up

Aussie superannuation fund Hostplus has tapped Flexstone Partners, an affiliate of France’s Natixis Investment Managers, to launch a US private equity emerging managers programme. Over the next three years, Flexstone will commit to US mid-market managers’ first, second or third funds on behalf of the A$35 billion public pension.

Its appetite for emerging managers appears justified: CEPRES analysis of around 4,700 investments made by 444 buyout funds from 2009 to 2016 found second-generation funds typically have the highest level of performance on a gross pooled IRR basis, delivering 27.8 percent, compared with 26.1 percent for debut funds and 24.3 percent for fund three and beyond.

London still calling

TSG Consumer Partners has chosen London for its first office outside the US. The firm, which counts Scottish beer brewer BrewDog among its investments, deployed a third of its 2015-vintage TSG7 fund overseas, mainly on the continent, according to a statement. The firm plans to invest around $1 billion in Europe, the FT is reporting (paywall). See how TSG’s latest $4 billion haul for its TSG8 programme stacks up against other consumer-focused funds here.

Essentials

Soft(Bank) on governance? As SoftBank prepares to get back on the road with a follow-up to its colossal Vision Fund, questions are being raised about the vehicle’s governance. The Economist reports that relations with Saudi Arabia’s Public Investment Fund, which provided $45 billion of the first Vision Fund, are reportedly strained due to  “PIF’s (privately expressed) dismay about the Vision Fund’s governance” (paywall). One major cause for concern? Key-person risk: the fund’s three-person investment committee consists of Son and two of his employees – effectively making him the sole decision-maker – and PIF can only veto investments of more than $3 billion.

BlackRock extends its reach. PEI Media owner Bridgepoint has agreed to sell risk management platform eFront – a familiar name to those in PE – to asset management giant BlackRock for an EV of $1.49 billion (BlackRock paid $1.3 billion for the equity). It will be combined with BlackRock’s existing tech platform Aladdin. “Technology and illiquid alternatives are two pillars of BlackRock’s growth, and this transaction provides a unique opportunity to accelerate our positioning in both,” said BlackRock CEO Larry Fink. The deal will return 4.8x to investors in Bridgepoint Europe IV, PEI understands.

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

Inside tip

We’re at the BVCA’s chair’s dinner this evening; drop me a note on toby.m@peimedia.com if you will be there.

Dig deeper

Want more data? There are more than 6,700 institutions in our database, including Flexstone PartnersHostplus, and Equistone from today’s Side Letter.

He said it

“When you start the argument saying that you need to lobby the government, you’ve already lost the debate. You have to go back and get the community on your side.”

At the Infrastructure Investor Global Summit in Berlin, InstarAGF head Gregory Smith stressed the way to combat the asset class’s poor perception among the public was to reach out to them directly.


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Today’s letter was prepared by Toby Mitchenall, Isobel Markham, Carmela MendozaAdam Le and Alex Lynn.


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