The curious case of Deutsche’s secondaries programme

It was a job advert that didn’t seem quite right.

“Business Manager within Secondary Fund Investments. Deutsche Bank – London. In your role as Business Manager you’ll be working closely with Secondary SOF Senior Management/Global Chief Operating Office…”

The posting, which appeared on various recruitment websites in mid-October, was puzzling. Given that Deutsche’s secondaries unit had spun out just two months prior, why would the firm now be looking to staff up a non-existent team? The answer was simple: Deutsche was getting back into secondaries.

The man leading that effort turns out to be Mark McDonald, Credit Suisse’s former global head of secondaries. We caught up with him this week and learned he is planning to staff up in the US and Asia-Pacific, as well as Europe, and that he already has members in his team. If you missed it, you can find out more in our Q&A with him here.

McDonald’s appointment piqued our interest for two reasons. One, advisory to buyside moves are relatively rare. Jumping the other way is much more common, such as: Park Hill’s head of secondaries Jonathan Costello, who joined from Morgan Stanley Alternative Investment Partners; Rede Partners’ Dushy Sivanithy who joined from Pantheon; and Jarid Colucci, who left Goldman Sachs AIMS to join UBS. McDonald’s move to Deutsche is in fact a return: he had spent more than eight years at secondaries firms Keyhaven Capital Partners and Pomona Capital prior to Credit Suisse.

Two, the spin-out to form Glendower Capital in August suggested Deutsche was exiting secondaries. We now know this was not the case. In addition, Deutsche AM remains the regulated manager for the private equity secondary opportunities funds and has “ultimate regulatory responsibility for portfolio management, risk management and investor relations”, while Glendower remains the advisor to these assets, says McDonald.

An interesting point to note is that Glendower retains carry and partial management fees from the SOF programme, although regulatory responsibility for the portfolio resides with Deutsche AM.

Sources close to the firms stress that Deutsche and Glendower remain aligned partners. Anyone who has seen Glendower’s business cards will recognise a familiar shade of blue used in its logo. In fact it is almost exactly the same pantone Deutsche uses in its square logo – a deliberate sign of continuity, we understand.

Might things get awkward when they both hit the fundraising trail, let alone compete on deals? Glendower has already registered a vehicle – Glendower Capital SOF IV – in the Cayman Islands, according to a filing. McDonald declined to comment on fundraising, but said the firm was considering various options.

The secondaries world is both competitive and collaborative, as one source put it. We hope they’re right.

What do you think of Deutsche AM rebuilding its secondaries team? Let us know: adam.l@peimedia.com or @adamtuyenle