Saga of Eaglehill, formed by ex-Citi bankers and backed by Koch, comes to close

  • Centre Lane buys Eaglehill portfolio
  • Eaglehill team not part of the deal
  • Centre Lane no stranger to GP replacements

The long, strange saga of Eaglehill Advisors, a much-hyped credit shop whose two partners split up, has come to an end.

Centre Lane Partners acquired Eaglehill’s portfolio and will manage the assets going forward. The Eaglehill team will not be part of the portfolio going forward, according to Quinn Morgan, co-founder and managing director at Centre Lane.

“We had a familiarity with the credits in the portfolio. It’s the same kind of thing we look for and what we do, so it was a pretty good fit,” Morgan said.

The total value of the deal is unclear, but the total assets involved in the deal — just shy of 20 diversified credit investments — totaled roughly $250 million, Morgan said.

More than half the Fund I LP base chose to stick with Centre Lane going forward, rolling their Fund I interests into a new vehicle to house Eaglehill’s assets. The rest of the LPs cashed out of their stakes, selling at a discount to net asset value as of December, Morgan said.

It’s not clear what kind of discount LPs sold at. A separate source said the discount was minimal but that could not be confirmed.

Park Hill Group was secondary adviser on the deal.

Eaglehill in 2014 was launched with much fanfare by former Citi bankers Jason Cunningham and Mike Zicari. The firm got anchor backing from Koch Industries and ultimately raised $250 million for Fund I, which closed in 2017.

The firm invested in North American middle-market companies backed by PE firms. One deal came in March 2018, when Eaglehill participated in financing Wind Point Partners’ acquisition of Ox Engineered Products, which makes sheathing and thermal insulation building products.

Last year, Zicari abruptly left the firm for undisclosed reasons. The loss of a founding partner spurred Eaglehill to launch the secondaries process, sources said.

Cunningham and his team are happy with the result for LPs and hope to either get hired somewhere else or launch a new fund, according to a source with knowledge of Eaglehill.

Centre Lane is no stranger to deals involving GP replacements. The firm in 2014 acquired interests in five funds managed by Perseus Group, which was winding down after the death of its founder, Frank Pearl.

Centre Lane created three new pools to house the assets and enabled investors to either sell out of their stakes in the old funds or roll into the new vehicles, Morgan said.

“We are a deep-value firm that thrives on complexity,” Morgan said. “Perseus took over two years. With Eaglehill, we started working on that last summer. There’s lots of constituents, different interests.”

Update: This story was updated with more information about the process, including about pricing for selling LPs.

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