Billionaire Dan Gilbert’s independent sponsor eyes process to cash out original investors

  • Rockbridge formed in 2007 as an independent sponsor
  • Led by the Detroit billionaire Dan Gilbert
  • Firm looks for shot of fresh capital as part of deal

Rockbridge Growth Equity, formed in 2007 by partners including the billionaire Dan Gilbert, is exploring a process to bundle older portfolio companies into one pool capitalized by new investors, enabling original investors to cash out, three people with knowledge of the deal said.

Rockbridge is part of a growing trend of independent sponsors turning to the secondary market to cash out original investors and inject fresh capital into portfolios. Argonne Capital Group earlier this year completed a similar process.

Lazard is running the process, sources said. Rockbridge also is looking for a shot of fresh capital from new investors that would enable it to make follow-on investments, sources said. Such an injection of new capital is known as a staple.

It’s not clear how far along the process is. No one from Rockbridge returned a request for comment.

Rockbridge was formed by Gilbert, founder and chairman of Quicken Loans, Brian Hermelin and Kevin Prokop.

Gilbert, also the owner of the Cleveland Cavaliers NBA team, has a net worth estimated at $6.4 billion as of 2018, according to Forbes. He has invested $2.5 billion in helping to rehab Detroit’s blighted downtown, Forbes said. 

Rockbridge partners with management teams of middle-market companies in North America. The firm has a base of permanent capital and looks to leverage resources from Quicken Loans, Rockbridge’s website said.

Its portfolio includes educational non-profit Northcentral University; Protect America, an alarm company; Connect America, a personal-emergency-response business; RapidAdvance, which provides loans and working-capital advances to small businesses; national video network Gas Station TV; Robb Report; and Kings III Emergency Communications, a Texas provider of emergency communications within elevators, poolside, stairwells and parking areas.

It’s not clear which investments would be part of the deal.

Rockbridge is one of several independent-sponsor deals in the market, a relatively new addition to the secondaries world.

Fundless shop Argonne this year completed a liquidity process for six portfolio companies, bundling them into a new vehicle called Argonne Capital Partners I. Deutsche Bank spinout Glendower Capital led an investor group including GCM Grosvenor, Hamilton Lane and Strategic Partners in an about $530 million investment into the deal.

Proceeds were used to buy out investors in some of the companies, refinance debt on five of them and provide growth capital for some of them. Investors in the deal had the option to sell their interests in the companies or reinvest their proceeds into the new vehicle. 

The Argonne deal was unusual, but other fundless sponsors have taken notice and deal activity is beginning to pick up, sources have told Buyouts

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