AlpInvest becomes first outside investor in ex-Clinton adviser’s firm

  • AlpInvest becomes first outside investor in Stagwell
  • Stagwell has completed 17 investments since 2015
  • Mercury Capital was intermediary on deal

AlpInvest Partners led a $260 million capital infusion in Stagwell Group, the investment firm launched by ex-Bill Clinton adviser Mark Penn, as part of a secondary process, the firms confirmed Tuesday.

Buyouts exclusively reported this month that AlpInvest was lead investor on the transaction. AlpInvest appears to have completed the deal on its own and was not part of an investor group.

Mercury Capital Advisors was intermediary on the transaction.

The firms released scant details about the deal. It’s not clear whether AlpInvest simply committed $260 million to the firm, bought interests from Stagwell’s original limited partner, Steve Ballmer, or took direct stakes in the prior portfolio.

An Aug. 14 news release from both firms said AlpInvest, which is owned by Carlyle Group, is the first outside investor in Stagwell since Penn launched it in 2015. Stagwell management will remain in place. 

“The new investment will support Stagwell’s strategy of building a network of innovative marketing and research companies,” a statement from the firm said.

Penn launched Stagwell with backing from Ballmer, the former Microsoft CEO, to invest in marketing companies. The firm raised an initial $250 million with the ability to use leverage to make up to $750 million in acquisitions.

As of Dec. 31, 2017, Stagwell managed about $591.5 million in discretionary assets, according to the firm’s Form ADV dated June 19, 2018.

Stagwell has completed 17 investments since inception and is on track for more than $400 million in consolidated net revenue this year, the firms said.

Among Stagwell’s investments are consulting firm SKDKnickerbocker; marketing firm PMX Agency; public relations shop Wyecomm; creative agency Code and Theory; healthcare and consumer-marketing firm Scout; marketing agency Forward3D Group; marketing-research firm Harris Poll; movie-marketing-research firm National Research Group; and online reputation-management company ReputationDefender.

Stagwell is not a traditional private equity firm — it falls between a PE shop with a traditional fund and a fundless sponsor. The firm began with a pool of capital from Ballmer and has now added another LP to its roster, sources said.

Secondaries are getting more creative and targeting firms that may not fall explicitly in well-defined categories like traditional PE funds.

“The secondary market has broadened such that it is no longer just buying LP interests from others or the recapitalization of older funds,” said Alan Pardee, managing partner and co-founder of Mercury Capital.

“You’re seeing today secondaries-style investors coming into newer portfolios, coming into single assets, providing preferred equity to GPs.”

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