Aptean investment highlights trend of GPs holding treasured assets longer, Clearlake buys majority stake in WhiteStar from Pine Brook, Hedge fund Blue Mountain considers liquidity options

Clearlake acquires WhiteStar from Pine Brook and Blue Mountain Capital is exploring liquidity options for illiquid investments.

Happy Thursday!

Hope your week is going well. What’s going on out there these days?

A theme we have revisited from time to time this year is the trend of GPs trying to find ways to hold treasured assets longer than their private equity funds allow. Most GPs expect to hold assets for three to five years, to exit them and return capital in fairly quick succession.

But for certain investments, GPs believe they have more room for growth and look for ways to increase their hold periods. A recent example of this trend is Charlesbank’s investment in Aptean, which provides enterprise resource planning and supply chain technology.

Charlesbank joined TA Associates and Vista Equity as investors in the company with its investment announced Tuesday. The investment valued the company at $2 billion, Milana Vinn wrote on PE Hub. As part of the Charlesbank investment, TA also will reinvest new equity in the company, Milana wrote. Read Milana’s story here.

TA and Vista jointly invested in Aptean in Feb. 2019 to become equal partners, acquiring Aptean out of a separate Vista fund that initially invested in the company in 2012, Milana wrote.

So here we have examples of both TA and Vista reinvesting in an existing investment. For Vista, the firm was able to deliver proceeds to LPs in the older fund that invested in Aptean in 2012, and still extend its hold period in the company.

We’ve seen examples of this all year, with firms partially exiting investments to deliver proceeds to LPs in older funds, and extending their hold periods. Part of what drove the trend was the high priced valuation environment, especially in tech. Along with looking for ways to hold certain assets longer, GPs also have to choose between buying something new, and the uncertainty that comes with that, or reinvesting in a company they know and have helped grow.

“If you take this angle or perspective that there’s more uncertainty about where we are in the economy – and if you’re trying to reduce your risk – finding something you know well makes sense,” Ian Fowler, co-head of Barings Global Private Finance Group previously told Buyouts earlier this year. “Especially if you think there’s more meat on the bone.” Read our deep dive on this long-hold trend here.

One question is will this trend continue in the completely altered markets from the coronavirus lockdown? Hit me up with your thoughts at cwitkowsky@buyoutsinsider.com.

Hedge: Whenever a secondary deal pops up these days, it’s big news. Hedge fund Blue Mountain Capital, which last year decided to wind down its flagship fund, is exploring liquidity options for illiquid investments.

The intention of the process is to keep the illiquid investments in the organization, rather than spin them off, sources told me. Evercore is working as secondary advisory on the process.

Blue Mountain was acquired by bond insurer Assured Guaranty last year for $160 million. It’s not clear to me if the secondary process is part of Blue Mountain’s orderly winding down of its flagship, $2.5 billion Credit Alternatives fund. Read the story here on Buyouts.

Hedge funds have not represented a major part of the secondaries market in recent years. For a time, hedge funds were notable sellers on the market as their limited partners looked for ways to exit the pools.

Top Scoops
Founders First Capital Partners launched a $100 million program to provide capital to minority-led and underserved businesses.

The initiative seeks to help diverse managers “not only just by providing capital, but helping them gain relationships with large organizations to grow their business,” FFCP CEO Kim Folsom told Teddy Grant on Buyouts. The program also will help businesses “transform and improve their revenue models. It’s really difficult for them to get substantial capital for job creation.”

The $100 million is a credit facility provided to Founders First by Community Investment Management, a debt provider led by managing partner Jacob Haar. Read the story here.

Have a great day! Hit me up as always with tips n’ gossip, feedback or just to chat at cwitkowsky@buyoutsinsider.com, on Twitter or find me on LinkedIn.