Goldman becomes latest shop to buy a stake in a PE firm

  • Goldman AIMS buys under 10 pct pf Littlejohn
  • Dyal invested in H.I.G., Silver Lake, Vista Equity
  • Hycroft has launched fund to buy PE firm stakes

Goldman Sachs Alternative Investments & Manager Selection Group, known for investing in hedge funds, acquired a minority stake in a middle-market private equity firm.

Goldman AIMS Petershill is buying a passive, non-voting, holding of less than 10 percent in Littlejohn & Co, a statement said. Terms weren’t disclosed.

Littlejohn is retaining all proceeds from the AIMS Petershill investment and none of the capital is being distributed, the statement said. The capital will be used to grow the firm’s core PE, special-situations and performing-credit strategies, the statement said.

Goldman AIMS has been an investor in Littlejohn’s committed capital PE funds for 17 years. In July 2014, Littlejohn closed its fifth fund at $2 billion. That was up by half from the $1.34 billion reached by Littlejohn’s fourth pool in 2010.

Littlejohn, Greenwich, Connecticut, invests in sectors including food and beverage, logistics, electronics/electrical and automotive. The firm typically makes equity investments of $50 million to $150 million.

Goldman AIMS is known for backing hedge fund managers, the Wall Street Journal said.

The firm’s Petershill II fund, which raised $1.5 billion in 2015, acquired a 10 percent holding in Fort Management LP in January. Petershill also bought a minority 10 percent stake in Caxton Associates LP in 2014, Reuters said at the time. The Goldman Sachs Asset Management unit is considering raising a fund specifically focused on taking stakes in PE firms, the WSJ said.

Succession issues likely spurred Goldman’s investment in Littlejohn, one LP said. Angus Littlejohn, a co-founder, served as chief executive from 1996 to 2011, his bio said. In January 2012, Littlejohn promoted Michael Klein, who had been president, to CEO. Brian Ramsay was named president. “Goldman is putting money in and is helping in the transition of the co-founders,” the source said.

Investing in PE

With its investment in Littlejohn, Goldman became the latest institution to buy a stake in a private equity firm.

Dyal Capital Partners, a unit of Neuberger Berman Group LLC, acquired a less than 15 percent stake in H.I.G. Capital earlier this month. The deal valued H.I.G. at $4.5 billion.

Dyal in July bought a minority stake in Silver Lake. Last year, Dyal also invested in Vista Equity Partners last year. Hycroft, in March, launched a fund to buy minority stakes in PE firms, Buyouts reported. 

California Public Employees’ Retirement System has bought stakes in Carlyle Group and in Silver Lake.

Performance data for Littlejohn’s fifth fund was unavailable. The fourth pool was producing an 11.2 percent IRR and 1.47x total value multiple as of March 31, data from Oregon Public Employees Retirement Fund shows.

Barclays provided financial advice to Littlejohn, while Jordan Murray, Kevin Schmidt, Peter Furci, Rafael Kariyev and Carrie VanFleet of Debevoise & Plimpton provided legal advice.

Littlejohn declined comment. Goldman could not be reached for comment.

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