- Jeff-Baehr-led RueOne launched this year
- Online platform offers investors “a la carte” direct, co-investment stakes
- RBS vet Stephen Frangione tapped as COO
Dyal Capital Partners Founder and Managing Director Jeffry Brown has left the firm, according to Neuberger Berman spokesman Alex Samuelson.
Brown’s departure, which his LinkedIn profile says occurred in September, was part of a phasing out and was not a surprise to limited partners, according to a source with knowledge of the situation. Brown, who led the firm’s business-services platform, was succeeded by former Goldman Sachs and Deutsche Bank executive John Dyment, Dyal said in a 2015 press release.
On Wednesday, RueOne Investments, an online private-markets deals platform, named Brown chairman.
‘Fan of disruption businesses’
Dyal, which is part of investment bank Neuberger Berman’s private equity platform, specializes in acquiring minority positions in the management companies of PE and hedge funds. The firm is marketing Dyal Capital III with a $2.5 billion target.
Brown was not considered a key man on the fund, according to New Jersey Division of Investment documents.
Prior to founding Dyal in 2011, Brown was a managing director at PE firm SeaCap Partners and a member of Bear Stearns Asset Management’s senior management team.
“I was always a fan of disruption businesses, which Dyal was,” Brown told Buyouts. “RueOne is sort of the first of a number of corporate and mutual fund board announcements that you’ll see about me. That’s a pretty natural transition.”
RueOne is a web-based platform that allows investors to take individual stakes in private-market assets, typically on a direct or co-investment basis. “Instead of offering private equity funds or real estate funds to our client base, we offer a la carte deals,” founder Jeff Baehr told Buyouts in an interview.
Much like a GP, RueOne will build a portfolio of private companies. According to Baehr, LPs in RueOne deals will likely include small institutional investors and family offices.
Baehr said the firm officially launched on Wednesday, though it’s been assembling its platform for the better part of the past year. In July, RueOne said it hired former Royal Bank of Scotland Managing Director Stephen Frangione as partner and chief operating officer.
One of Brown’s primary roles as chairman will be assisting RueOne with its corporate governance, ensuring deals are structured in a manner best-suited to the long-term interests of its investors.
“The early data that we see is very promising. We have tremendous interest from a very large number of investors of all sizes and type,” Brown said. “The deal pipeline is likewise starting to grow pretty nicely. If we have happy sub-advisers, providing product, and happy investors, everything seems to work out.”
Typical RueOne deals could include co-investments alongside general partners in the private equity and real estate sectors. When it takes a direct stake in a company, RueOne works with an operating partner to manage the asset and splits its deal fees accordingly.
“There’s different fees with different deals, and it depends on the asset class,” Baehr said. “Everything’s on a transaction-by-transaction basis.”
For example, on a PE asset, RueOne may charge a 1 percent management fee and collect 20 percent of the investment’s profit over a preferred return. The operating partner would take a 50 percent share of the management fee and carried interest.
“If it’s a co-investment type of opportunity, going through RueOne will never cost more than it would by going through our partner,” Baehr said. “At the very worst, investors would never pay any more than they would [had they co-invested alongside a private equity fund].”
The firm is raising capital for two deals totaling $11 million in size, according to its website. Both deals are for U.S. real estate assets.
Action Item: For more information about RueOne, visit www.rueone.com
General view at national highway B471 near Dachau, Germany, on August 24, 2016. Photo courtesy Reuters/Michaela Rehle