Constitution Capital Partners has received a $600 million mandate from the Universities Superannuation Scheme (USS), to invest in North American middle-market private equity funds and make direct co-investments. Constitution also has sold a 10% firm equity stake to USS — the UK’s second-largest pension fund — and received a $150 million “warehouse line.”
An official announcement is scheduled for tomorrow morning.
Constitution is the former U.S. team of Standard Life Investments, which quit en masse late last October after being shut out of firm economics. Specifically, parent company Standard Life agreed to partially spin SLI out into an independent firm called SL Capital, by selling a 40% ownership stake to nine managers. None of those managers, however, were part of SLI’s Boston-based team – which was managing a $300 million North American fund-of-funds. Instead, they were all based in Edinburgh, where they oversaw a €900 million European fund-of-funds. The team complained to no avail – eventually opting to leave.
It took a few months to get Constitution up and running, but the team made sure to keep itself in front of general partners. “When we parted ways with SLI, we used our own credit cards to fly out and meet with Windpoint and Sun Capital and other firms we had investing with,” says Constitution managing partner Dan Cahill, who called in from Towerbrook Capital’s annual meeting in Pebble Beach. “We didn’t have any money behind us, but didn’t want that to mean we’d disappear.”
Cahill says that USS reached out to Constitution, and that the first handful of fund commitments and co-investments should occur within weeks. Constitution hopes to secure similar mandates from other institutions, and also is raising a separate fund-of-funds. Cahill declined to discuss the fund-of-funds (silly scared lawyers), or if that’s what “warehouse line” is being used for.
Talks with USS began in February, but did not close until late last week. In fact, Cahill emailed last Friday afternoon to apologize for being unable to attend our peHUB Shindig at Fenway Park. Seems he and his partners had scheduled an impromptu dinner at Grill 23.