AlpInvest seeks at least $500 mln to buy GP minority stakes

AlpInvest Partners is targeting at least $500 million for a fund that will buy minority stakes in GP management companies, sources told Buyouts.

The fund is in the market now, said one LP who has heard the pitch. The fund is focused solely on minority stakes in private equity firms, sources said.

The fund could go higher depending on market demand, another source said.

Carlyle Group-backed AlpInvest’s plans to buy minority stakes in PE firms have been evolving over the past few years. Starting in 2016, sources said AlpInvest might target more than $1 billion for a fund to buy minority stakes. The Wall Street Journal reported in October 2016 the firm was targeting $1.5 billion to buy GP minority stakes, but that did not appear to be an official fundraising goal at the time.

Last year, the person leading AlpInvest’s push into the minority-stake strategy, Marek Herchel, left to join MLC Private Equity. Herchel was head of North America fund investing, but was also leading AlpInvest’s initial push into the GP-minority-stakes business, sources told Buyouts at the time.

The focus on the minority stake sale strategy shifted to Sean Gallary, a managing director who leads AlpInvest’s partnership team. Herchel hired Gallery last year. Gallary has been out more recently meeting with prospective limited partners about the fund, sources said.

Buying non-control stakes in private equity firms has become a popular strategy with a handful of firms, led by Neuberger Berman’s Dyal Capital Partners and Goldman Sachs’s Petershill Group. Dyal has been targeting $5 billion for its next fund to buy GP minority stakes, after closing its third such fund in February 2017, Buyouts previously reported.

Action Item: Check out AlpInvest’s Form ADV: http://bit.ly/2sBkDZN

Photo of Sean Gallary sourced from AlpInvest website