PE firms unprepared for new SEC rules; HarbourVest said to lead investors on Roark’s multi-asset secondary

Good morning, Hubsters. MK Flynn here on the Wire.

If you’re finding the SEC’s proposed requirements for additional transparency from private fund managers a bit daunting, you’re not alone.

Be prepared. A new survey from EisnerAmper, which incorporated feedback from 235 financial services executives on the impact of private fund regulations, revealed a lack of preparation for potential new rules.

I reached out to Anthony Minnefor, partner-in-charge of the accounting firm’s national private equity services group, to learn more.

“The results from our survey show only 16 percent of financial services executives feel ‘very prepared’ to comply with the reporting and compliance requirements for private funds; yet nearly half (44 percent) believe that several of the proposed rules will be finalized in the next 12 months,” Minnefor said. “This shows a contrasting gap that firms are expecting change, but don’t feel like they have the resources – whether it be talent or technology – to comply. “

Minnefor advised: “Private equity firms not only have to track and evaluate multiple SEC proposals but also build the infrastructure and internal team to comply with the rules once they’re enacted. It is critical for firms to engage in a dialogue with key advisers and service providers now so that they’re prepared to kick off an implementation plan in response to finalized regulations.”

Shareholder of record. For ongoing analysis on the SEC’s moves, read our affiliate publication, Regulatory Compliance Watch. For example, Bill Myers’ story from earlier this week reveals that SEC chairman Gary Gensler is pushing Commission staff to come up with new rule proposals that would change the definitions of accredited investors and shareholder of record.

Secondaries. HarbourVest Partners is among a group of lead investors on Roark Capital’s multi-asset secondary that will move several portfolio investments into a new vehicle for more time to manage them, sources told Buyouts’ Chris Witkowsky.

“Roark is one of the larger processes this year and appears to be making it through the market despite pricing uncertainty,” Chris writes. “Some large transactions are hitting delays as pricing is shifting in the changing markets, and building large-enough syndicates for mega-deals has become challenging, sources have said. One way to move a deal through the economic turmoil is to find lead investors, who can then help drive momentum to get a big secondary to the finish line. HarbourVest is said to be a lead, along with AlpInvest Partners and two other investors. Spokespeople for HarbourVest and Roark declined to comment, while no one from AlpInvest responded to a comment request this week.”

Roark brought the deal to market earlier this year, working with Evercore as secondary adviser. The deal was expected to total up to $3 billion including new capital and existing LP roll-over, sources said at the time. The process could be heading for a close in September, two of the sources told Buyouts.

“The deal involved moving assets out of Roark’s first and second funds, including Inspire Brands, which holds a portfolio of popular restaurants like Arby’s, Buffalo Wild Wings and Sonic,” Chris reports. “Roark formed Inspire Brands in 2018, which has been acquiring popular restaurant brands, including Dunkin’, which it bought in 2020 for $11.3 billion.”

For more, read Chris’ story.

Programming notes: Tomorrow, Craig McGlashan, editor of PE Hub’s expanding coverage in Europe, will make his debut writing the Wire! Tune in for Craig’s perspective on PE deals across the pond. On Friday, reporter Aaron Weitzman will file his weekly column. On Monday, the Wire will pause to observe Independence Day in the US, and I’ll be back at the helm on Tuesday.

Until then, happy dealmaking,

MK