DC Advisory is banking on an increase in appetite for GP-led transactions in the smaller end of the market as it builds up its advisory team.
The investment banking arm of Japanese financial services conglomerate Daiwa Securities Group has grown its secondaries advisory group to six people after the hire of an associate and analyst, one from Adams Street Partners and another from Milan-based Heritage Holdings who joined in the last month.
The larger buyside firms are increasingly focusing on smaller transactions for various reasons, including challenges in executing syndicated deals and for diversification reasons, managing director Sabina Sammartino told Secondaries Investor.
Appetite for diversification is driving the shift from GP-leds to LP portfolios. For sponsor-led transactions, DC is noticing a trend from the buyside of achieving diversification through smaller tickets, she said.
Mid-market GP-led deals can give buyers looking to differentiate themselves or build a track record of leading or co-leading deals opportunities harder to find in the larger end of the market, according to Michael Wieczorek, who joined as an MD from Elm Capital last year.
“As those groups look to raise successive funds, there will be a greater requirement for them to demonstrate their differentiation,” Wieczorek said. “That comes through the ability to lead and co-lead and differentiate [themselves]. That will become ever-more important and it’s the smaller deals that give investors that opportunity.”
Sammartino and Wieczorek declined to comment on the number of deals the group is working on or plans to take on each year. To source deals, the group says it will leverage its M&A relationships and personal senior relationships with sponsors.
“We have good visibility on the activity that we have across the M&A platform, so we know from our perspective what assets are of interest to sponsors to potentially take liquidity or potentially look for capital raising solutions,” Wieczorek said.
The group has three managing directors, including Ludovic Douge, who joined from French placement agent and advisory firm Jasmin Capital this year and is based in Paris.