Buyers emerge in innovative NEA secondary deal, Varsity Healthcare recaps newly created Emergency Care Partners
Happy Friday Hubskis!
It’s been a busy week, both on the M&A side and in fundraising and secondaries. Quick turnaround from the sluggish, steamy last weeks of August. If you’re in proximity of Hurricane Florence, good luck and stay safe.
Names: Goldman Sachs is lead buyer in a secondary process involving New Enterprise Associates. The firm is carving out a chunk of its portfolio of investments in startups and transferring them to a new firm to be managed by one of its GPs, who will leave NEA. The deal could be valued at more than $1 billion, sources said.
A buyer syndicate is forming around the deal, led by Goldman and including Hamilton Lane. A few other buyers will take smaller stakes in the deal.
The deal, which is not done, is another example among several of a high-profile GP using the secondary market to manage its portfolio and deliver liquidity to LPs in older funds. In this case, it appears it’s a secondaries-backed spinout. I’m not clear in this case if existing LPs have the option to roll their interests in the startups into the new firm, or if they will simply receive proceeds from the sale. I’m also not clear on pricing in the deal. If you know more about this deal, hit me up at firstname.lastname@example.org or use our super-secret, anonymous tip line on PE HUB.
These types of deals are not as common in venture capital as they are in private equity, where they are becoming almost a routine part of the experience. GP-led restructurings are, however, likely to become more routine in VC, one source told me.
Reporter Mark “The Professor” Boslet wrote about restructurings in VC in June. “Venture capitalists have to sell up the food chain or change their fund structures,” David York, CEO and managing director of Top Tier Capital Partners, told Buyouts’s sister publication VCJ. “These companies are outliving the lives of their backers.”
Watch out: Speaking of secondaries, I wrote this week about VSS’s settlement with the SEC over a secondaries deal. VSS and Managing Partner Jeffrey Stevenson failed to inform selling LPs that the value of the fund in which they were considering selling interests was likely going up, the SEC said. The rising valuation might have caused selling LPs to hold the assets rather than sell at the potentially lower valuation.
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