Brazilian investment firm Patria Investments believes its acquisition of Abrdn’s European private equity business will bring in a host of secondaries opportunities.
Nasdaq-listed Patria has become the new owner of Abrdn’s European private equity business as it seeks to build out its mid-market alternatives offerings in the domestic market, affiliate title Private Equity International reported.
The news closely follows Secondaries Investor’s report in September that the firm was planning to widen its secondaries business.
Patria’s acquisition includes all European and global private equity funds, listed private equity trusts and mandates managed or advised by Abrdn private equity, representing approximately $7.8 billion of fee-earning AUM. It will also include its 55-strong investment and operations staff, according to a statement.
“We were very much attracted by what they do because they’re focused on the mid-market,” Marco D’Ippolito, managing partner and chief corporate development officer of Patria, told PEI. “I believe that the mid-market is the most interesting piece in [secondaries]. I believe that you can build portfolios that are uncorrelated, and you can generate alpha versus the secondary benchmark.”
Patria expects to tap Abrdn’s unique primaries position – with over 150 GP investment relationships currently and more than 250 fund advisory board seats – for deal origination, according to D’Ippolito.
“When you have an integrated model, your ability to generate GP-led opportunities and co-investments opportunities plays out very well. We believe that this model is a winning model.”
While this approach doesn’t just belong to Abrdn, D’Ippolito noted that operating in the mid-market puts investors in an advantageous position to be competitive bidders and generate uncorrelated returns.
“When you think about the M&A programme for a firm like ours, what we’re paying attention to is how can we add either product, channel, geography or capability. In this particular case, we’re catering to local investors that want to have global exposure,” D’Ippolito said.
Abrdn has about half of its NAV in primaries, mainly in small and mid-market specialist managers with a sector or regional focus. The remaining half is split between Europe and US secondaries, including GP-leds, continuation funds and spin-outs, and Europe co-investments, according to Patria’s shareholder presentation materials.
In July this year, Abrdn sold its US private markets business to HighVista Strategies as part of its plan to exit non-core businesses that no longer align with its product offering, according to a statement.
Patria’s total acquisition for Abrdn’s European PE business is worth £100 million ($122 million; €115 million). Patria would pay £60 million in cash at closing, with a further payment of £20 million over two years after the completion of the sale in 2024, according to a statement. A final £20 million would be paid after three years, subject to the performance of the business.
Abrdn under Patria will be called Global Private Markets Solutions, and will be led by D’Ippolito.
Patria is one of largest alternatives investment firms focused on Latin America, with $28.2 billion of assets as of end-June. It invests across private equity, real estate, infrastructure, credit and public equities, and currently manages $1.3 billion of fee-earning AUM through feeder funds that direct Latin American capital to global private markets.
Patria joins a number of asset managers that are looking to break into the secondaries market. This year, it has emerged Blue Owl Capital and Luxembourg-headquartered buyout firm Astorg have launched continuation fund strategies with both firms bringing on external hires to bulk up capabilities. Salt Lake City-based real estate investment manager Bridge Investment Group acquired mid-market secondaries player Newbury Partners in April, and Brookfield Asset Management tied up with niche secondaries group DWS in February. Brookfield has since said it may consider acquiring a secondaries firm to further bolster its offering, Secondaries Investor reported.
– Madeleine Farman contributed to this report