GP stakes are not so rare any more. Instead of opting to invest in a general partner’s funds, an increasing number of firms are directly purchasing minority, non-voting ownership positions in GPs’ underlying management companies. Up to now, a handful of key players (including Dyal Capital Partners, Goldman Sachs AIMS Group and Blackstone Alternative Asset Management) have played significant roles in developing the standard. Not surprisingly, these groups all stem from much larger, diversified firms with deep relationships and expertise in a range of areas related to alternatives. Regardless, GP stakes deals are becoming increasingly common, with more and more firms betting heavily on the strategy and expecting long-term returns.
Read on to learn more about firms involved in the fascinating and quickly-growing world of GP stakes.
GP stakes investors – prime grade
At the heart of GP stakes, a select group of firms have continued to push things forward. These active GP stakes investors were relatively early adopters of the strategy and they remain heavily involved in shaping things today.
Blackstone Alternative Asset Management
Also known as: BAAM
Location: New York, NY
Parent company: Blackstone
Year of first GP stake fund: 2013
Active funds: Strategic Capital Holdings
Number of GP stakes investments: 11
Blackstone's Alternative Asset Management group (also referred to as BAAM) is the world's largest discretionary investor in hedge funds and is responsible for the firm's GP stakes deals—in addition to special situations, seeding, registered products and customized and commingled portfolios. Their initial vehicle for GP stakes came in at $3.5 billion and the team is said to be in the process of raising at least $3.3 billion for its second GP stakes fund.
See Blackstone's profile preview.
Dyal Capital Partners
Also known as: Dyal
Location: New York, NY
Parent company: Neuberger Berman
Year of first GP stake fund: 2012
Active funds: Dyal Capital Partners I, II, III, IV
Number of GP stakes investments: 37
Dyal Capital Partners is a firm that is dedicated to acquiring minority equity stakes in established alternative asset managers' companies diversified by investment strategy and geography. Despite initially targeting $6 billion for their upcoming fund (Dyal Capital Partners IV), they are expected to raise more than $7 billion.
The firm was founded in 2010 and operates as a subsidiary of Neuberger Berman Holdings. Tracing its roots back to predecessors founded in the early 1980s, NB Private Equity is recognized as one of the oldest PE investment firms and has managed PE separate accounts and commingled funds for institutions globally. Since its inception, NB Private Equity has been an active PE investor managing investor commitments across primaries, co-investments, private debt, other direct PE strategies and secondaries.
See Dyal Capital Partners' profile preview.
Goldman Sachs Alternative Investments & Manager Selection Group
Also known as: GS AIMS Group
Location: New York, NY
Year of first GP stake fund: 2007
Liquidated funds: Petershill I
Active funds: Petershill II, Petershill Private Equity
Number of GP stakes investments: 14
Goldman Sachs Alternative Investments & Manager Selection Group is an investor in private equity funds. The firm offers fund-of-funds, co-invests in direct investments, and provides liquidity and portfolio management solutions to existing PE investors via the secondary market. The firm's comprehensive global PE program seeks to construct a diversified PE portfolio and considers each potential investment's strategy, geographic focus, competitive advantages and return profiles, including how a particular opportunity may affect the portfolio's volatility and risk.
See Goldman Sach's profile preview.
Notable newcomers
Newcomers have been popping up more regularly, with many trying to differentiate themselves through their deal structuring or by targeting firms at earlier stages of development. Sixpoint Partners, for example, has spawned a “private equity seeding platform” with a $200 million fund. The strategy is being led by Jeff Lavoie—a veteran of Dyal—who will focus on spinout managers and structure deals with a “defined path to exit,” as opposed to the permanent capital structure typical of GP stakes. Newly formed Meteor5 Capital is also bringing a novel approach with a focus on first-time managers; instead of establishing a stake in the entire GP, Meteor5 only takes a stake in the manager’s first two to three funds. We expect to see more innovation on this front, as seeding has traditionally been more difficult for private market strategies than hedge funds given the structure of the vehicles involved.
Bonaccord Capital Partners
Location: New York, NY
Upcoming fund: Bonaccord Capital Partners I
GP stake fund size: $1B*
Parent company: Aberdeen
Bonaccord Capital Partners is comprised of a team from Guggenheim Partners and is targeting a $1 billion debut GP stakes fund. Reportedly, the firm has raised more than $228M so far.
See Aberdeen's profile preview.
GP Interests
Location: New York, NY
Upcoming fund: GP Interests Fund
GP stake fund size: $750M*
GP Interests is a private equity firm that seeks to acquire minority stakes of private equity sponsors. The firm seeks to invest in companies operating in the information technology and financial services sectors, targeting a GP stakes fund of $750 million.
See GP Interests' profile preview.
Meteor5 Capital Advisers
Location: New York, NY
Upcoming fund: GP Interests Fund
GP stake fund size: $125M*
Meteor5 invests in new private equity managers seeking strategic advice and development capital prior to raising funds from institutional investors. The team plans on using its $125 million fund to fuel new managers' first two or three funds.
Sixpoint Partners
Location: New York, NY
Upcoming fund: GP Interests Fund
GP stake fund size: $200M*
Sixpoint Partners is a global advisor focused on a diversified set of services and solutions for the middle-market private equity industry, including a recent foray into GP stakes. The firm created a “private equity seeding platform” with a $200 million fund. Core areas of focus include primary fund placement and advisory, secondaries placement and advisory and co-investment placement across a wide range of industries, strategies and geographies.
See Sixpoint Partners' profile preview.
*Target size
Honorable mentions
Though they may not be as active as our prime GP stakes investors, this group includes firms who were involved at pivotal times in the development of the strategy or otherwise deserve a mention. For instance, in 2016, Affiliated Managers Group (AMG) purchased remaining holdings in GS AIMS Group’s Petershill fund for $800 million. This transaction reportedly provided a 22% premium to Petershill’s investors, resulting in a 15% annualized return over the fund’s life—marking an important turning point in the history of the GP stakes strategy.
Affiliated Managers Group
Location: West Palm Beach, FL
Year founded: 1993
Firm type: LP consultant, asset manager
Ticker symbol: AMG
Affiliated Managers Group (AMG) is a publicly traded provider of investment management services. Notably, the firm invests directly in GP stakes deals, rather than through a fund structure. The company serves mutual funds, institutional clients and high net worth individuals in the United States. It also offers investment products in various investment styles in the institutional distribution channel, including small, mid and large capitalization value and growth equity and emerging markets.
See AMG's profile preview.
AlpInvest Partners
Location: Amsterdam, Netherlands
Parent company: The Carlyle Group
Turnover has caused problems for AlpInvest, resulting in several failed attempts to establish their GP stakes business (including recently losing the head of their fund-stakes effort). The firm has apparently cancelled their plans to buy minority positions in GPs (for now, at least).
See AlpInvest Partners' profile preview.
Asset Management Finance
Location: New York, NY
Year founded: 2004
Firm type: Specialized finance
Acquired by: Credit Suisse (2008)
Asset Management Finance is a provider of capital to asset management firms. The company offers up-front capital in exchange for a limited-term, expiring interest in a firm's future revenues.
See Asset Management Finance's profile preview.
Rosemont Investment Partners
Location: West Conshohocken, PA
Year of first GP stake fund: 2000
Liquidated funds: Rosemont Partners I, Rosemont Partners II
Active funds: Rosemont Partners III, Rosemont Private Equity Fund
Number of GP stakes investments: 23
Rosemont Investment Partners is one of the earliest investors to acquire stakes in asset managers. Unlike most major players in the GP stakes game, the firm emphasizes minority investments in open-end fund strategies (as opposed to closed-end funds). Rosemont has accrued substantial expertise in this area, with a relatively long history in investing in asset and wealth management companies.
See Rosemont Investment Partners' profile preview.
GP stakes recipients
Managers receiving GP stakes investments boast industry-leading performance. Of the more than 250 closed-end funds raised by managers with GP stakes-backing analyzed in a recent analyst note, 35% were in the top quartile of their peer group in PitchBook Benchmarks. Furthermore, only 19% of those funds were in the bottom quartile. Below, you can see a sampling of some of the firms that have received GP stakes investments along with some key data points.
Clearlake Capital
Location: Santa Monica, CA
Firm type: PE/Buyout
Total investments: 129*
Exits: 32
Largest recent fund size: $3.6B
GP stake first sold in: 2018
Stake purchased by: Dyal Capital Partners, Goldman Sachs AIMS Group, Landmark Partners
Clearlake Capital Group is a private equity firm which specializes in turnarounds, reorganizations, buyouts, carve-outs, recapitalizations, leveraged finance and divestitures. It prefers to invest in small and medium-sized companies operating in the media, technology, industrials, energy and consumer sectors.
See Clearlake Capital's profile preview.
Francisco Partners
Location: San Francisco, CA
Firm type: PE/Buyout
Total investments: 229*
Exits: 90
Largest recent fund size: $3.9B
GP stake first sold in: 2018
Stake purchased by: Goldman Sachs AIMS Group, Blackstone Alternative Asset Management
Francisco Partners is a global private equity firm that focuses on investments in the communications, security, financial technology, healthcare, internet, software, systems or hardware, other technology and technology-enabled business sectors.
See Francisco Partners' profile preview.
H.I.G. Capital
Location: Miami, FL
Total investments: 548*
Exits: 198
Largest recent fund size: $3B
GP stake first sold in: 2016
Invested in by: Dyal Capital Partners
H.I.G. Capital is a private equity firm that also specializes in management buyouts, turnarounds, real estate and recapitalization. The firm prefers to invest in B2B, B2C, IT, healthcare industries and materials and resources.
See H.I.G. Capital's profile preview.
Littlejohn & Co.
Location: Greenwich, CT
Total investments: 135*
Exits: 53
Largest recent fund size: $2.84B
GP stake first sold in: 2016
Invested in by: Goldman Sachs AIMS Group
Littlejohn & Co is a private equity firm that invests in companies operating in the logistics, industrial equipment, packaging, chemical, automotive, equipment, food, food processing, electronics, healthcare, plastic, aerospace, defense, distribution, infrastructure and consumer product sectors.
See Littlejohn & Co's profile preview.
Providence Equity
Location: Providence, RI
Total investments: 588*
Exits: 205
Largest recent fund size: $1.3B
GP stake first sold in: 2012
Stakes purchased by: Dyal Capital Partners, Florida State Board of Administration
Providence Equity Partners is a private equity and asset management firm, that invests in the media, entertainment, communication, education and information industry sectors.
See Providence Equity Partners' profile preview.
Silver Lake
Location: Menlo Park, CA
Firm type: PE/Buyout
Total investments: 323*
Exits: 119
Largest recent fund size: $15B
GP stake first sold in: 2015
Stake purchased by: Dyal Capital Partners
Silver Lake Management is a private equity firm that invests in technology enabled industries. The firm operates and invests across four strategies: Silver Lake Partners, Silver Lake Sumeru, Silver Lake Kraftwerk and Silver Lake Waterman. It also invests in middle market and large-cap companies through recapitalization, leveraged buyouts, growth capital and PIPEs.
See Silver Lake's profile preview.
Vista Equity Partners
Location: San Francisco, CA
Firm type: PE/Buyout
Total investments: 314*
Exits: 47
Largest recent fund size: $11B
GP stake first sold in: 2015
Stake purchased by: Dyal Capital Partners
Vista Equity Partners is a private equity firm headquartered in Austin, Texas with additional offices in San Francisco, New York and Chicago. The firm invests in a wide range of industries, emphasizing IT and B2B solutions. The firm prefers to invest in management and leveraged buyouts, minority investments, acquisitions, growth financings, recapitalizations or restructurings, spinouts or divestitures and secondary transactions.
See Vista Equity Partner's profile preview.
*Total investments includes add-ons
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