When I visited BEX Capital‘s then Parisian headquarters in 2018 for what would turn out to be a 90-minute conversation with its founder and managing partner Benjamin Revillon, one thing stood out to me: this was a man who had not only found a niche within the secondaries market, he was also someone who was generous with his time and very transparent.
“I really have to check what you are going to write,” Revillon said to me halfway through the interview, conscious that he was telling a journalist more about his firm’s secret sauce than he probably should. We agreed to PEI Group’s standard terms of engagement.
Revillon, who passed away on Sunday after struggling with illness, was a pioneer in the business of acquiring secondhand stakes in funds of funds and secondaries funds. His firm has grown from managing a €50 million debut vehicle in 2015 to raising a $765 million fourth flagship last year. Today the firm has $1.3 billion in assets under management.
At the time of the firm’s BEX Fund II, which closed in 2018 above its €80 million target, Revillon himself said the €120 million the firm raised was too small for the market opportunity. In the preceding year to when we spoke, Revillon said his firm had seen $3 billion-worth of fund of funds and secondaries fund opportunities.
It’s tricky to gauge the size of the secondaries market for fund of funds and secondaries funds. None of the major intermediaries include data for such trades in their volume reports, suggesting it’s either too small a data point to include, or that firms engaged in this part of the market don’t engage with the intermediaries’ surveys.
For what may seem like a niche and complex strategy, BEX’s approach is surprisingly logical: investors in funds of funds and secondaries funds want to be able to manage their portfolios in the same ways as investors do in direct funds. Why not capitalise on the diversified, high-quality nature of these assets and buy them at a discount to their intrinsic value to boot?
Not every secondaries buyer has been able to execute on this strategy. Larger firms wanting to acquire stakes in a fund of funds or secondaries manager’s fund can find themselves locked out because the seller sees them as a direct competitor and doesn’t want to give them a “look into their kitchen”, Revillon told me. As such, BEX benefits from reduced competition in its part of the market, he added.
It’s worth noting that BEX isn’t alone in its subsector: Newport Beach-based Montauk Triguard, for example, acquires stakes in secondaries funds and raised its first fund in 1999.
Under Revillon’s leadership, BEX appears to have been a pioneer in at least two other ways. One was relocating its headquarters from Paris to Nice on the French Riviera in 2018 – a move that seems like a no-brainer in the post-covid era of Zoom calls and remote working. When I had asked Revillon whether he felt the relocation would move BEX out of the dealflow stream, he replied that on the contrary, flight connections from Nice were as good – if not better, when taking into account the city’s proximity to its airport – as anywhere in Europe, with direct flights even to New York. And in any case, evaluating fund of funds secondaries did not require the firm to be based in Paris any more than in Nice.
The other area is its development of social responsibility-themed ‘X-shares’, disclosed upon the final close of its Fund III in 2019. This special share class was free from management fees and carried interest, and was available for non-governmental organisations and major non-profit foundations. Toby Mitchenall, editor of impact and sustainability-focused affiliate title New Private Markets, noted that BEX’s X-share model was a “refreshingly simple and elegant” one that other firms should follow.
In a note prepared prior to his death, Revillon wrote that he was “immensely proud” of the business he had helped build. We couldn’t agree more with his sentiment.
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