Bregal Sagemount co-founder on ‘complexity’ plays

PE firm’s co-founder cites complexity in the compliance space as a reason for investing in consultancy Optima.

Bregal Sagemount has provided growth capital to Optima Partners, which offers compliance advisory services to asset managers, the firm recently announced.

The PE firm’s ties to Optima date back several years, founder and managing partner Gene Yoon told Private Funds CFO. It started because Optima partnered with Options Technology, a former Sagemount portfolio company and technology provider for private funds companies, which entailed the pair making business referrals to each other.

Both firms even shared an office in London, Yoon said.

The investment deal also stemmed from good timing.

“They were looking for a capital partner to make a significant growth investment,” Yoon said.

Discussing the investment rationale for Optima, Yoon noted there has been “increasing complexity around numerous global and local regulatory bodies and regimes.”

He said they can be addressed with the application of technologies to respond to problems that stem from those complexities.

Yoon touched on how Optima can benefit PE firms, citing its repeated experience in handling challenging situations, and noted that one of the firm’s favorite investment themes is in response to increasing complexity.

“So, they can bring that knowledge to bear in various situations,” he added. Examples span from the highest level – strategy and planning, for example – down to “the nitty gritty” for Form ADV filings, he said.

Yoon also expressed interest in Sagemount becoming an Optima customer, but he deferred to his firm’s compliance department, noting that “they have to make their own arm’s length decision.”

Optima founder and CEO Jonathan Saxton told Private Funds CFO that Sagemount’s investment can help it expand its existing services and to add more. Saxton said that clients have requested more services, citing ESG support as an example.

The company has experienced revenue growth of over 50 percent in each of the past two years, Saxton said, also noting that it has turned profitable. Optima has more than 1,000 clients and added several hundred to its list in 2022 alone, the CEO noted.

Optima is based in the US, but it also has presences in the UK and in Hong Kong. Its international footprint has been beneficial because of compliance knowledge in more than one location, Saxton noted.

The PE firm’s investment in Optima is its last from its Bregal Sagemount III, Yoon said. The fund had its final close in March 2020 at $1.5 billion, according to Private Equity International data.

While Yoon declined to disclose Sagemount’s equity stake and Optima’s valuation, he hinted at the dollar amount invested.

“I think it’s safe to say we put in well over a hundred million into the business for significant growth investment,” he said.