CMS to sell shares in VantagePoint

CMS Cos. of Philadelphia is moving along with its proposed secondary sale of shares in three VantagePoint Venture Partners funds, after agreeing to disclose the sale price to VantagePoint.

The sale had been scheduled to close earlier this month, but VantagePoint balked at signing the required documentation.

General partners typically agree not to “unreasonably withhold” permission for a limited partner to sell its shares on the secondary market, but there are often differing details beneath that linguistic umbrella. Sometimes either the GP or LP has sole discretion, while other agreements include timing restrictions or requirements that the LP disclose such data as sale price or buyer identification.

CMS apparently did not believe it was required to disclose the sale price to VantagePoint Venture Partners, when it agreed to sell positions in the first three VantagePoint funds to an undisclosed buyer. VantagePoint disagreed, and refused to sign off until it received the information, according to an article in Private Equity Insider.

“Only once in a blue moon do general partners ask for the price,” says a private equity secondaries investor who asked not to be identified. “Typically GPs do not want to know price because, if it’s a discount, they have to disclose to other LPs that the carrying price is not necessarily reflected in the marketplace.”

But VantagePoint insisted, even though it is in the midst of a fund-raising effort aimed at securing a $1.25 billion fund.

“Requesting the price of the secondary sale is standard info that we collect in order to comply with obligations to our LPs,” says Christine Hinton, vice president of marketing for VantagePoint. “Such a request is nothing exceptional and is consistent with transactions of this nature. CMS has provided us the info and now, having received the information, the transaction will proceed.”

Cogent Partners is brokering the deal for CMS, but declined to comment.