Atlantic-Pacific Capital has launched a secondaries market business that will run sales of fund stakes for limited partners.
The secondaries push is part of a larger strategy by which the firm will help LPs manage their portfolios, including providing portfolio valuation services and future cash flow projections from funds, co-investments and secondary investments, Atlantic-Pacific said in a statement. The strategy is being run by the firm’s newly formed LP Advisory Group, headed up by four professionals the firm hired earlier this year.
The firm is looking to take advantage of an environment in which LPs are looking for ways to make their private equity programmes more manageable, including cutting down on manager relationships
The LP Advisory team consists of Michael Pilson, who was the director and senior portfolio manager in the private markets group at DuPont Capital Management; Kevin Imhoff, who most recently worked at Goldman Sachs; Alexander Mejia, formerly at Credit Suisse in the private equity customized funds group and John Pilson, most recently at Barclays Capital.
Atlantic-Pacific views the effort as a “full service” and “holistic” approach to portfolio management. Rather than simply intermediating secondary transactions, the firm will seek to provide LP clients with the “data set” based on comprehensive portfolio analysis that can allow these investors to “decide how to better and more effectively manage their portfolios on the go-forward basis”, according to Alex Leykikh, a partner with Atlantic-Pacific.
“Rather than seeking to simply execute a secondary disposition from the outset, our initial drivers are ‘let’s do the work, let’s give investors the data, let’s have them understand the value of what they own as well as the cash flow projections, and then let them make a decision’,” Leykikh said.
The firm is looking to take advantage of an environment in which LPs are looking for ways to make their private equity programmes more manageable, including cutting down on manager relationships. Several institutions, including the California Public Employees’ Retirement System, have sold off fund stakes in an effort to tighten up bulky portfolios.
“Broadly speaking, we’re seeing substantial interest from the LP community to better understand the underlying assets within their fund holdings,” Leykikh said. “Rationalisation through the secondary process has become an acceptable and efficient portfolio management and liquidity tool. Likewise, in some cases it’s prudent to sell an interest in the portfolio to invest in a new fund, or to support another existing manager. It’s just become a more widely developed practice.”
Secondary selling raises a host of legal concerns. For analysis see the upcoming “Active Portfolio Management” supplement in the June edition of Private Equity International.