Eldridge makes major commitment to Investcorp’s $750m GP stakes strategy

Investcorp is halfway to meeting the target set for its debut GP stakes fund after securing $150 million from holding company Eldridge, sources told Buyouts.

Eldridge, led by Todd Boehly, an owner of the Los Angeles Dodgers and the Los Angeles Lakers, made the commitment in May, sources said. It brings the total raised by the pool to $400 million-plus – just over 50 percent of the $750 million target.

Investcorp’s Strategic Capital Group, which oversees the strategy, earlier collected about $250 million from a range of institutions, sources said. Limited partners include Dock Square Capital, a merchant bank founded by ex-Florida governor Jeb Bush.

The earlier amount also includes $40 million from parent organization Investcorp, a global alternative investment firm based in Bahrain, sources said.

Fundraising is expected to wrap up by the end of the year. Investcorp declined to comment.

Investcorp’s GP stakes platform was launched in 2019. It is led by Anthony Maniscalco, formerly co-head of Anteil Capital Partners, Credit Suisse’s GP stakes business, and a founding member of Blackstone’s Strategic Capital Advisors.

Mid-market focus

Investcorp created the strategy to acquire minority interests in a range of general partners, including those specializing in private equity, private credit and real estate. A key focus is mid-market opportunities, typically growth-oriented managers with assets of $1 billion to $10 billion.

GP stakes investing has emerged strongly in the past few years. Top players, such as Blackstone, Blue Owl Capital (previously Dyal Capital Partners) and Goldman Sachs’ Petershill unit, have dominated activity, the lion’s share of it geared to large PE brands.

Deals have more recently zeroed-in on mid-market firms with assets of $2 billion to $8 billion, according to a 2020 report by Pitchbook. The space is attractive to investors like Investcorp because it remains mostly uncharted territory, with a lot more sellers than buyers.

Mid-market firms, like large shops, sell pieces of themselves to bolster balance sheets and fund priorities, among them capital commitments and growth initiatives. The latter were emphasized in Investcorp’s investment last year in Centre Lane Partners, a PE and private credit manager oriented to complex situations, Buyouts reported.

Centre Lane was Investcorp’s second deal (the first, done in 2019, was not disclosed). With Eldridge’s commitment, the GP stakes platform now appears ready to further work its pipeline. It is expected to back 10 to 12 general partners, writing checks of $50 million to $150 million. For bigger deals, co-investment capital will be supplied by LPs, sources said.

Not just a check

LPs like Eldridge and Dock Square offer more than just money. Several are helping to build out Investcorp’s Strategic Capital Group. Advisory board members, such as Jeb Bush, are also expected to provide advice on deals and lend resources to the portfolio.

Investcorp in April forged another partnership. Multi-strategy investor Xponance, led by Tina Byles Williams, a one-time CIO of City of Philadelphia Board of Pensions and Retirement, is collaborating with Investcorp to bring GP stakes and seed capital to diverse and women-owned mid-market firms.

Along with acquiring minority interests, GP stakes funds provide post-investment, value-adding support to managers and their development goals. Investcorp’s strategy will do this in part by tapping into the global distribution arm of its $35 billion parent organization.

Maniscalco founded Investcorp’s Strategic Capital Group alongside partner David Lee, Anteil’s former head of transactions. Other senior members of the New York team include partner Fredrik Guster, who joined Investcorp in 2016 from Sarissa Capital Management.

Investcorp’s competitors in mid-market GP stakes investing include Azimut Alternative Capital Partners, Bonaccord Capital Partners and Stonyrock Partners.