Bay Partners is asking investors to amend the terms of its current fund, so that general partners Chris Noble and Bob Williams can transition into part-time roles. It may be just the out that certain LPs were looking for.
The Cupertino, Calif.-based firm closed Bay Partners XI nearly a year ago with $290 million in capital commitments. It was not, however, an easy process. The firm had not yet made a single distribution from its $365 million predecessor fund, and also had seen firm founder John Freidenrich retire during fund-raising and General Partner Loring Knoblauch resign.
Partner Neal Dempsey told PE Week at the time that Bay Partners was in “advanced negotiations” with “a couple of senior general partners,” but no such senior hires were made. Nonetheless, limited partners, such as Horsley Bridge and Paul Capital, signed on to fund XI, and Bay kept chugging along with five general partners: Noble, Williams, Dempsey, Atul Kapadia and Dino Vendetti.
A few months later, Vendetti left to join startup firm Formative Ventures. Bay Partners responded by promoting Eric Chin and Neil Sadaranganey to partner. They each joined in 2005; Chin as venture partner and Sadaranganey as an entrepreneur-in-residence. Rumors continued to swirl that Noble and Williams were looking to scale back.
The limited partner agreements for fund XI, however, include keyman provisions that would be triggered if two more general partners were to step down. To pre-empt such a scenario, Bay Partners is presenting LPs with an LPA amendment.
Dempsey declined to confirm or deny that such an amendment exists, but he did acknowledge that the firm was “planning for the future,” and that any possible changes are “not new items.”
Neither Noble nor Williams returned requests for comment. Bay Partners X still had not made a distribution, according to data from the California Public Employees’ Retirement System through Q1 2006. It had called down 75% of its capital with a -16.5% internal rate of return.