Great Point Partners makes 3.8x its money on Citra Health, AE Industrial looks to the stars as it builds space-tech platform, Volcker limits rolled back on some PE fund investing

PE secondary market activity seems to be building under the surface while Great Point Partners gets a hefty return on its sale of Citra Health Solutions.


Are you heading for a short week? Hope it’s going well.
Space: AE Industrial Partners is building out a space technology platform even as the coronavirus shut down much deal activity.

AE Industrial has been building out the platform called Redwire, which comprises three companies so far: Adcole Space, Deep Space Systems and Made In Space, all acquired during the pandemic, writes Karishma Vanjani on PE Hub.

Read more here.

Deal Surge: Activity in the private equity secondary market appears to be building under the surface, with the expectation that the lid will blow off and activity will pour out sometime after August.

Multiple sources told me over the past few weeks that they are in conversations with GPs about potential liquidity option transactions. This is all in preparation for the release of Q2 performance marks on funds, at which point the belief is buyers and sellers will be comfortable transacting off of that information.

Q2 information generally starts to be revealed in August and September as performance information lags for a time. Buyers and sellers on the secondary market have paused transactional activity as they wait to get a better sense of valuations. Some buyers believe second quarter marks could represent the “bottom” of the pandemic downturn, barring another economic lockdown.

The type of deals that are getting prepared for the great ‘secondaries’ reopening in the second half of the year are mostly GP-led liquidity processes like fund restructurings, according to my sources. Traditional LP portfolio sales may take a bit longer to get back on track because of pricing. GP-led deals, though, are creative ways to deal with older funds and their underlying assets. These are ways for GPs to manage assets longer while still delivering proceeds to fund investors.

“While a lot of deal activity has gone on pause, what a great time for GPs to go evaluate the financing needs in a portfolio, or put assets in a continuation vehicle,” one secondary buyer told me.

Group: Meanwhile, I’ve often heard about the gray area between single-asset secondary processes and coinvestments. Single-asset deals can look pretty similar to a coinvest, including the types of investors who take part in such deals.

What makes a single-asset process a secondary is the additional component of a continuation fund, which houses the single asset, potentially allowing the GP to reset fees and carried interest. It also gives investors in the original fund the option to cash out or roll their interests alongside the GP.

Credit Suisse formed a new unit that acknowledges the similarities of these two types of transactions, combining its secondary advisory group with its direct placements team into one unit called Capital Solutions. Read more here on Buyouts.

Top Scoops
Great Point Partners generated a 3.8x return on its sale of Citra Health Solutions, which provides tech to help healthcare providers and payers move to value-based care models, writes Sarah Pringle on PE Hub.

Great Point reached a deal last week to sell Citra to GTCR-backed Cedar Gate Technologies. The deal concluded a Cain Brothers-run process that ran through the downturn, Sarah writes. Read more here.

Have a great day! Hit me up as always with tips n’ gossip, feedback or just to chat at, on Twitter or find me on LinkedIn.