Side Letter: TA Associates’ heirloom, CalPERS gears up, 3i’s 31.3x return

GP interest firms are lining up to buy stakes in other managers, but for some PE firms, selling a stake is akin to selling the family jewels. Here’s today's brief, for our valued subscribers only.

Just happened

Keeping it in the family

Buying stakes in other private equity firms may be the flavour du jour, but don’t go knocking on TA Associates’ door. The growth-focused firm hasn’t sold a piece of its GP and has no plans to do so, managing partner Ajit Nedungadi (pictured) said at a roundtable breakfast in London last week. “If you’ve got a family watch as an heirloom, do you go sell it?” Nedungadi said, referring to the firm’s partnership structure in which seats are “gifted” to high performers and not bought. With $14 billion being sought for GP interest strategies this year, the likes of Dyal and Petershill will be hoping other GPs aren’t as sentimental.

CalPERS shifts attention to co-investments

CalPERS is getting ready to implement a brand new plan, three years after suspending its co-investment programme. The pension could put it in place as early as the end of this year, according to discussions at its board meeting on Monday. It will focus on teaming up with its existing group of 30 core managers. CalPERS is also set to expand its core manager group to help reach its 8 percent target PE allocation. While a lot of discussion has focused on the new Pillar III and IV strategies, those are not on the “front burner” right now, investment advisor Meketa’s Steven Hartt told the board.

3i’s single-asset Action

3i said last week it had agreed a deal to provide liquidity to LPs in its 2006-vintage Eurofund V, whose sole remaining asset is discount retailer Action. Sister publication Secondaries Investor has since learned the deal involved the UK private equity firm backing the process itself in what’s known as a single-asset restructuring. LPs were given the option to sell their holdings to a vehicle backed by 3i and some co-investors, or roll into the vehicle themselves. The deal priced at a 12 percent premium, a source told Secondaries Investor, and exiting investors realised a whopping 31.3x gross multiple.

Essentials

Level 20’s new CEO. Gender diversity-focused industry body Level 20 has appointed Pam Jackson as chief executive. The former PwC partner takes over from Jeryl Andrew who’ll retire at the end of the year. Jackson, who was the first ever female partner in PwC’s corporate finance team, takes the helm at a time when women represent 30 percent of the UK’s PE professionals but just 10 percent of senior leadership.

Not so fast, infra GPs. Is it skill or luck? GPs will never tell. The market is hot for infrastructure right now, but LPs at sister publication Infrastructure Investor’s Hong Kong Summit last week threw cold water on giving managers full credit for good investments. One conference-goer asked whether good market conditions are masking not-so-great investments. “When the market goes south, we’ll see the real value and skills that GPs have,” he said.

Inside tip

Attending SuperInvestor in Amsterdam this week? Give PEI senior reporter Rod James a shout – he’ll be there and is keen to meet up.

Dig deeper

Mass PRIM commits. Massachusetts Pension Reserves Investment Management Board has agreed to commit $175 million across two private equity vehicles. Here’s a breakdown of the $76 billion US pension’s alternatives exposure. For more information on Mass PRIM, as well as more than 5,900 other institutions, check out the PEI database.

He said it

“We’re ready now, we’re ready later; 
And hope that you will call; 
To partner with an equity check; 
Would make me (at least) feel tall.”

Hellman & Friedman’s Patrick Healy turns to poetry to woo a takeover target, described by the FT (paywall).


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Today’s letter was prepared by Isobel MarkhamAdam LeRod JamesAlex LynnPreeti Singh and Jordan Stutts.


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