Kirchner Group, which provides asset management services to institutional investors, and operational and transactional support to companies, has partnered with Crestline Investors Inc. on a new initiative focused on acquiring, managing and investing in under-performing private equity assets, portfolios and funds. Crestline-Kirchner Private Equity Group will be led by W.B. (Bud) Kirchner, founder of Kirchner, which has offices in Montréal and Gadsden, Alabama.
Kirchner Group, today announced that it has partnered with Crestline Investors, Inc. (“Crestline”), an institutional alternative investment manager, to launch a new business unit on the Crestline platform. The Kirchner team will be the cornerstone of this initiative, called Crestline-Kirchner Private Equity Group, focused on acquiring, managing and investing in underperforming private equity assets, portfolios and funds. Crestline’s new business line will be led by W.B. (Bud) Kirchner, founder of the Kirchner Group and architect of its “Successor GP” Program.
This business complements Crestline’s industry leading position in hedge fund secondary investing and allows the firm to provide a full-service solution to institutions with underperforming private equity and hedge fund portfolios. It also adds significant opportunities for Crestline to deploy capital on behalf of its investors.
“We are pleased to welcome Bud and his team to Crestline and to add a powerful new business to our institutional platform,” said Douglas K. Bratton, President and Chief Investment Officer of Crestline. “The team brings to Crestline a 28-year track record of restructuring companies and has been successfully deploying its model across a series of portfolios ranging from early stage venture to mid-market buyout since 2004.”
There is an estimated $100 billion in private equity assets managed by funds past their investment periods, according to industry estimates. Many of these so-called “zombie funds” have serious issues of alignment between the general partner and limited partners. As a result, an increasing number of institutional investors are looking for creative and effective ways to restructure these funds and rationalize their private equity portfolios.
“This partnership provides tremendous validation of a model that we pioneered years ago at Kirchner Group,” said Bud Kirchner. “Limited partners are realizing that there are alternative solutions to underperforming funds, and now is the right time for us to scale up to meet rapidly increasing market demand. I am excited to join with Crestline to continue building on the business lines that we have developed, giving us the institutional infrastructure and access to capital to best serve investors.”
The new business unit will focus on the following:
Successor General Partner: Acting as a fiduciary to replace or complement the general partner in order to help better align interests, find liquidity and maximize value for limited partners.
Advisory Services for Limited Partners: Managing or monitoring an existing troubled portfolio of private equity funds on behalf of limited partners.
Successor Fund Creation: Consolidating direct private equity investments into a fund structure to help manage, monitor and exit positions on behalf of a direct private equity investor or group of investors.
Investment Opportunities: Sourcing and structuring investment opportunities derived from the aforementioned activities, including:
Secured lending and/or investments in private equity portfolios to provide follow-on capital at the portfolio level
Secondary purchases of some or all of a fund’s limited partnership interests
Providing follow-on capital at the underlying company level
The business will be headquartered in Fort Worth, with additional offices in New York City and Toronto.
About Kirchner Group
The Kirchner Group provides asset management services for institutional investors as well as operational and transactional support for companies. Kirchner Group’s proprietary platform is built on the premise that pairing deep domain expertise with process experts provides superior results. Kirchner Group manages assets on behalf of some of the world’s largest insurance companies, commercial banks and institutional investors. In addition, our transaction and operational clients range from some of the most promising entrepreneurs, to Fortune 500 companies and their investors.
Bud Kirchner is the designer and architect of several proprietary business method models including “PortfolioWorks” and “Crystallizing Value in Intellectual Property,” with over 40 years of successful entrepreneurial, operational, transactional and international experience in numerous private equity and debt investment scenarios. He has been a principal or agent in over 300 financings, mergers, acquisitions, divestitures, workouts and turnarounds.
About Crestline Investors, Inc.
Crestline Investors, Inc. is an institutional alternative investment management firm based in Fort Worth, Texas. Founded in 1997, Crestline manages $7.2 billion in client assets across separately managed accounts and commingled funds. Strategies offered include: (1) low volatility and customized hedge fund of funds, (2) opportunistic and customized investment programs including a family of opportunistic strategies, hedge fund secondary investments and private credit funds and (3) tailored beta and hedging strategies. Crestline has 84 employees with 42 investment professionals.
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