News & Analysis

Whitehorse raises $400m to invest in GP management companies

The firm is responding to demand from GPs for capital to help manage their balance sheets, according to partner Michael Gubbels.

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Whitehorse Liquidity Partners has raised a fund aimed at helping general partners fund their operations.

Liquidity Partners GP Solutions Opportunities Fund closed on $400 million, exceeding its target of $350 million, according to a statement from the Toronto-headquartered firm.

The fund will make preferred equity investments in GP management companies, an extension of a strategy that Whitehorse employs out of its flagship vehicles, Secondaries Investor understands.

“GPs are increasingly seeking ways to access capital outside of traditional sources and to manage their own balance sheets,” said partner Michael Gubbels in the statement. “We are pleased to be able to meet this need through our flexible structured solutions.”

Whitehorse is expecting an increase in demand for preferred equity financing from GPs and LPs due to the “challenging geopolitical and macroeconomic environment”, added managing partner Yann Robard.

It is not clear which investors backed the vehicle. The LP base includes global insurance companies, pension plans, financial institutions and investment managers, according to the statement.

Whitehorse has raised four flagship preferred equity funds since its founding in 2015, collecting around $7.5 billion, according to Secondaries Investor data. It is in market targeting as much as $6 billion for its fifth fund.

Secondaries Investor reported in June 2020 that injecting liquidity into GP management companies is one of four pillars to Whitehorse’s strategy. The firm also provides preferred equity to allow LPs to generate liquidity from their portfolios without having to sell; purchases portfolios outright before splitting them into preferred and common equity tranches and syndicating the common equity; and offers fund-level liquidity to GPs to invest in portfolio companies.

Preferred equity deal volume increased by 41 percent in the first half of this year compared with a year ago, from $3.6 billion to $5 billion, according to research by Evercore.