Duff & Phelps hires PEI Funds professional for new secondary advisory business

Duff & Phelps hired Trevor Blake, formerly of secondary shop PEI Funds, to work on the firm’s secondary advisory business, the firm confirmed for Buyouts.

Blake joined Duff & Phelps in March as a senior associate. He works with Dexter Blake (no relation), managing director and business lead for the firm’s secondary-market-advisory group. The business, launched in the past year, is part of Duff & Phelps’s portfolio-valuation practice, spokeswoman Blynn Austin said.

Trevor Blake worked at PEI Funds from 2012 to February 2017, his LinkedIn profile says.

Duff & Phelps has historically been opportunistic helping clients with secondary- advisory work, Austin said. The firm has an interesting angle in that it already provides fairness opinions and valuations and can provide that type of work for limited partners who want to sell PE interests, a source with knowledge of the firm said.

“The biggest thing with secondaries is that you rely on GP audits on the existing portfolio” for valuations, the source said.

Valuation disagreements arose in one of last year’s largest secondary-restructuring processes, involving First Reserve. The energy PE giant tried to restructure its 11th fund, buying out LPs that wanted to sell and allowing others to roll with the GP into a new structure.

The firm, working with intermediary Lazard, proposed to value the assets in Fund XI with a reference date of March 31, 2016. Some LPs disagreed with the valuation reference date because they didn’t want to sell at the market low, sources told Buyouts last year.

The deal eventually collapsed after it generated about $88 million of existing LP sales on a minimum sale threshold of $175 million with a $400 million ceiling.

In that case, the GP, First Reserve, rather than LPs, hired the secondary adviser Lazard. But the situation illustrated the kind of valuation disagreements that can arise.

Other secondary-advisory shops in the market include Greenhill Cogent, Park Hill Group, Credit Suisse, UBS, Evercore, Setter Capital and Campbell Lutyens, among others.

PEI Funds, meanwhile, has been roiled by a court battle between two senior members of the firm. The firm has seen a string of departures since last year, including partner Gunnar Fremuth, who sued firm CEO Chuck Stetson last year. The suit claimed Stetson improperly seized control of the firm from the other partners. Stetson denied the accusations.

The firm had planned to raise a new fund but never moved forward, according to court documents.

Action Item: Reach Dexter Blake at +1 973-775-0069.

Photo of Trevor Blake courtesy of LinkedIn