Deal-by-deal shop Morningside nears final close on debut fund

The GP-leds specialist firm, which is run by three former CPP Investments professionals, has been raising a fund focusing on single-asset opportunities.

Morningside Capital Management, a GP-led specialist firm run by former CPP Investments professionals, is closing in on wrapping up raising its first fund after years of investing on a deal-by-deal basis.

The Toronto-headquartered firm has raised around three-quarters of the target of Morningside Vintage Secondary Fund – a dedicated fund focusing on single-asset deals, according to a source familiar with the fundraise. Morningside plans to hold the final close in April.

The fund’s target is unclear. Secondaries Investor understands that subsequent funds are expected to target the sub-$500 million range.

Morningside declined to comment for this article.

The firm has already completed one deal that had been warehoused and moved into the fund and is set to complete a second deal for the fund, according to the source. Upon completion of that deal, the fund would be around 20 percent deployed.

The fund’s strategy is understood to focus on so-called “trophy assets” with top-quartile GPs. It will focus on North America and Europe and plans to underwrite to a 15 percent to 20 percent internal rate of return and a 1.5x to 2x multiple on a net basis.

Upon close, the vehicle is expected to have around 20 LPs – all Canadian institutional investors – including pension funds and wealth management platforms, Secondaries Investor understands. Quebec-based funds investment platform Majestic Asset Management lists Morningside Vintage Secondary Fund on its website.

The fund is also understood to have a novel structure that is half the length of a traditional 10-year private equity fund.

Morningside was founded in 2013 by Henry Zhang, a founding member of CPPIB’s private equity secondaries programme. The firm has two other partners: Tori Buffery and George Weekes, both of whom had also worked at the Canadian pension giant prior to joining Morningside.

The firm operates across GP-leds secondaries, portfolio financing and GP financing, according to its website.