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Consolidation: StepStone Group’s announced acquisition of Greenspring Associates includes a share of carried interest from primarily new funds. StepStone’s co-CEO Scott Hart on an analyst call yesterday talked about how the structure of the deal is meant to incentivize the Greenspring team going forward.
“There is a significant equity component to the purchase price here. You also have the potential for the earnout which we think will continue to help motivate and drive the team. And then some of the legacy carry left behind, we think the team continues to be incentivized to drive the best results for their existing clients and LPs,” Hart said.
Check out the terms of the carried interest share, disclosed in an investor presentation yesterday:
* $185 million in cash and $540 million in equity in Class A common shares at about $34.27 per share, and Class C units convertible to Class A common stock.
* Potential earnout of up to $75 million payable in 2015 based on certain revenue targets
* StepStone will be entitled to 100 percent of fund management fee-related earnings of all Greenspring fee earning AUM and as well as a portion of carried interest from Greenspring funds that begin investing after the close of the deal.
* StepStone will be entitled to a portion of carried interest for new funds: 25 percent of carry for new funds that have a first close and commence their investment period following the close of the deal, and before the end of 2024.
* 50 percent of carry for new funds that have a first close in 2025 and beyond.
* Deal does not include any accrued or future carry for legacy Greenspring funds.
Meta: Here’s a continuation of a continuation fund deal! Wind Point Partners is reinvesting in Ascensus Specialties, which provides specialty materials for life sciences. Wind Point is reinvesting through a continuation fund structure alongside New Mountain Capital, which is acquiring the company.
Wind Point completed a continuation fund deal for two assets out of its 2006 vintage sixth fund in a process advised by Park Hill Group in 2018. Neuberger Berman led the deal, which totaled around $200 million, Buyouts previously reported. The 2018 deal moved Ascensus and RailWorks Corp out of Fund VI and into a continuation pool, wrote Secondaries Investor. Read more here.
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