Partners Group is one of the secondaries world’s biggest players, amassing $11 billion for the strategy since 2011 and coming fifth in the Si 30 ranking last year. It is merging its secondaries and primaries teams, Secondaries Investor learned earlier this month.
We caught up with Andreas Baumann, global head of the firm’s private equity secondaries and primary business, and Adam Howarth, co-head of integrated investments for North America, about what this means for the secondaries strategy.
Here are five things we learned:
1. There are no job cuts
“Bringing it all together just makes more sense in terms of co-ordinating resources and work streams,” Howarth said. No one will lose his or her job under the changes, Baumann added.
2. The changes will only affect private equity
Partners Group invests in real estate and infrastructure secondaries. The dynamics of these are “quite different” to private equity and Partners doesn’t see the need to combine its teams in those sectors, according to Baumann. Underwriting real estate secondaries is more akin to direct deals, he said, while infrastructure is a much smaller universe with a very different market environment.
Partners’ direct private equity business also remains unaffected.
3. Partners wants to become a one-stop shop
Secondaries firms increasingly need an edge to be able to get access to dealflow, and to price and win deals, as we outlined in an editorial about the stapled deal process on BC Partners’ latest fundraise. Partners wants its GPs to think of it first when they have problems they need solving, and give it first dibs on potential opportunities.
It’s also a two-way street, Baumann explained. The firm often invites GPs into its own dealflow, hoping to be first in line when those GPs also have something to share.
“How can we help them, offer them a part of our dealflow, make customer introductions for their portfolio companies, come up with acquisition ideas for those companies,” he said. “More and more the secondaries space has moved away from the traditional limited partnership sale and purchases to more of a solution provider to GPs,” he said.
4. This isn’t totally new
Underwriting a secondaries deal can often involve situations where there is significant undrawn capital, and having a primary view on the GP is very important, Baumann said. As such, the firm’s teams sit next to each other in “every office around the world”.
About 70 percent of Partners’ secondaries deals have been with managers with which it has existing primary relationships, Howarth added. “We don’t want to take for granted that just because we can write a large primary cheque, that we’re always going to be the partner of choice,” he said.
5. The move won’t affect how Partners raises secondaries capital
The firm will continue to offer dedicated secondaries funds and its Global Value series, which invests in direct, secondaries and primary private equity opportunities. The last in that family closed in 2015 on around €1.2 billion.