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Ex-Silver Lake, Nasdaq chiefs target $2 bln for longer-hold fintech

  • Pool can reload capital after deploying $1 bln
  • Targets two to three platform investments
  • LPs can ask for distributions after 10 years

Glenn Hutchins, former co-chief of Silver Lake, and Robert Greifeld, who once ran Nasdaq, are raising as much as $2 billion for longer-hold fintech investments.

Several GPs including Blackstone Group, Carlyle Group, CVC Capital Partners and Cove Hill Partners have raised funds that enable them to hold investments longer than the PE standard of five to seven years.

One constant complaint about private equity is that the life of a fund — 10 years — forces GPs to sell companies relatively quickly, even when they foresee increased value from holding the company longer.

Blind-pool vehicle

Hutchins and Greifeld formed North Island this year. The firm recently started marketing a blind-pool vehicle targeting up to $2 billion from a select group of limited partners, according to people with knowledge of the firm. Park Hill Group is working on the fundraising process, the people said.

The firm does not have a website and scant information is available online. The firm filed a Form ADV in June, which shows North Island is owned primarily by Hutchins and Greifeld.

Another executive, Jeremy Henderson, is listed on the Form ADV as chief operating officer. Henderson worked at Societe Generale from 1991 to 2007, his LinkedIn profile shows.

North Island will target two to three platform companies with its first $1 billion; once that’s deployed, the firm can choose to reload capital, giving existing LPs right of first refusal to recommit back into the blind pool, the people said.

Hutchins and Greifeld plan to be intimately involved in the investments, the people said.

Meanwhile, the firm will hold investments up to 10 years, after which the firm will provide investors liquidity if they ask for it, the people said. Distributions could come through an initial public offering, which would allow North Island to retain its stake in the company.

The blind pool reflects the desire among many investors to have more flexibility to hold investments longer. “You’re not constrained by having an arbitrary fund life to deal with,” one of the people said.

North Island has already raised capital and made an investment. The firm earlier this year raised $618.7 million from 10 investors through a vehicle called North Island Holdings I to invest in Virtu Financial Inc. North Island alongside GIC and Public Sector Pension Investment Board invested $625 million in Virtu common stock to support the company’s $1.4 billion acquisition of KCG Holdings.

Cove Hill debut effort

Also earlier this year, former Bain Capital executive Andrew Balson raised more than $1 billion for the debut fund of his firm, Cove Hill Partners. Cove Hill Partners Fund I has a 15-year life, plus extensions. But it also has a mechanism by which the firm can hold individual companies indefinitely, Balson told Buyouts at the time.

“I have been involved in many businesses that continue to prosper and grow over really long periods of time, particularly once we have worked with the team to bring clarity to the business plan, added resources that need to be added, and made investments in the business to grow it,” Balson said.

“We wanted to create a vehicle that had flexibility to enable us to hold these special companies for as long as we believe the risk/return is attractive.”

Action Item: Check out North Island’s Form ADV: http://bit.ly/2A2zFIP

A pedestrian walks past the Nasdaq building in New York on April 30, 2010. Photo courtesy Reuters/Lucas Jackson