Goldman Sachs, Landmark Partners and AlpInvest Partners are helping mid-market firm Ridgemont Equity Partners make a clean break from its former parent, Bank of America.
The three firms are buying out Bank of America’s stake in funds on its balance sheet that the Ridgemont team has managed since the group began the process of spinning out in 2010, three people with knowledge of the transaction told Private Equity International. Ridgemont is the bank’s former private equity group known as Bank of America Capital Investors.
The 2010 spin-out was “cashless”, with “no purchase of assets”, according to one person, and gave the Ridgemont team a management contract to manage out roughly $1.5 billion of private equity assets on behalf of the bank. Ridgemont also had some cash from the bank for new deals.
The balance sheet assets will be housed in a fund created specifically for the deal, and the three secondaries firms will become limited partners in the fund.
Bank of America and Ridgemont declined to comment. No financials were available for the deal.
The deal is good for the bank and the firm – Bank of America will further reduce its exposure to private equity, a process it has undertaken over the past few years because of regulations limiting the ability of financial institutions to invest in private equity.
Ridgemont gets a clean break from the bank as it works to raise its first investment vehicle as a fully independent firm. As part of the deal, the three secondaries firms had to make primary commitments to Ridgemont’s first fund, one person with knowledge of the deal said.
Ridgemont Equity Partners I is targeting $675 million and had collected about $409 million as of Wednesday, according to the firm’s Regulation D filing with the US Securities and Exchange Commission.
Ridgemont is led by Travis Hain, Trey Sheridan and Walker Poole. The firm has been busy deal-making since the spin-out, last year buying a majority stake in Gallus BioPharmaceuticals, a maker of clinical and commercial-grade biological products.