In recent months, the rising tide of the stock market has permitted institutional investors whether public pension or sovereign wealth fund the ability to take their gains and move on. Private equity firms or the new moniker alternative asset providers sell stakes in their management company to large institutional investors for a variety of reasons. Examples that come to mind are the Blackstone Group, Silverlake, CVC Capital Partners, TPG and Providence Equity, selling firm stakes to pensions and sovereign wealth funds.
In many instances, these sovereign funds are limited partners in the management firms’ funds. The enticement of knowledge transfer and being the first to be included in a new fund commitment is alluring for a pension fund. For a private equity firm, their reasons for capital raises seem endless; however, first and foremost to provide money to expand their business. Other credible reasons could be a liquidity event for the owners, securing long-term limited partners for future funds or strategic partners for unique deals where government help is necessary.
When does a public investor exit their firm investment? One thing is that public funds want to capture return for their illiquid holding. A remedy for this includes the private equity firm going public, offering liquidity to current investors.
Lock-up provisions have prevented institutional investors from selling their ownership interests in private equity firms.
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Atlas Merchant Capital LLC and Singapore’s GIC Private Limited acquired just under a 25% equity stake in Dresher, Pennsylvania-based Ascensus, the largest independent recordkeeping services provider, third-party administrator, and government savings facilitator in the United States. San Francisco Genstar Capital LLC and New York-based Aquiline Capital Partners LLC were the sellers of the shares in Ascensus and will maintain control over the company.
Atlas Merchant Capital LLC was founded by Bob Diamond and David Schamis. Diamond is the former group chief executive of Barclays plc.
GIC is an investor in Alight Solutions, a provider of human capital solutions.
Barclays acted as the lead financial advisor and J.P. Morgan acted as financial advisor to Ascensus in connection with this transaction. Willkie Farr & Gallagher LLP acted as legal counsel to Ascensus.
Debevoise & Plimpton LLP acted as legal counsel to Atlas Merchant Capital and Sidley Austin LLP acted as legal counsel to GIC.
In 2015, JC Flowers sold Ascensus to Genstar Capital and Aquiline Capital Partners.
The Value of Research: Skill, Capacity, and Opportunity
This article is sponsored by S&P Dow Jones Indices.
How much should a portfolio manager be willing to pay for research? The question is of importance to any manager, but has become particularly pertinent since newly imposed European rules require that the costs of investment research—previously offered by many investment banks as an in-kind consideration in return for brokerage business—be unbundled from trading.
Unfortunately, attempts to determine a fair value for research in the most general circumstances are doomed to fail. Even if we only consider direct recommendations to buy or sell certain securities, the value of such recommendations to a portfolio manager will vary according to the absolute size of positions taken in response. Instead, we provide a framework for estimating relative research values across markets and constituents, under certain stylized (but reasonable) assumptions.
REPORT: The Value of Research: Skill, Capacity, and Opportunity
Malaysia’s Khazanah Nasional Berhad is prepping to declare more than 1 billion MYR in a dividend payout to the Malaysian government for 2019. Khazanah Nasional is undergoing a significant strategy shift to focus more on domestic assets, while selling off venture tech investments, overseas real estate, fund investments, and other non-strategic assets. The wealth fund also plans to scale back its overseas presence in markets such as San Francisco and London.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]
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