Industry Vets Create Electronic Marketplace For PE Funds

Qualified institutional investors can now anonymously post wish lists of alternative commitments they’d like to make or let their peers know what investments they’d like to unload on an electronic bulletin board created by two industry veterans.

Trusted Insight Inc. started as an internal project of the Rumson Consulting Group, a New Jersey-based asset management and advisory firm specializing in venture capital and private equity investments, but was then spun out as a separate company, Alex Bangash, Rumson’s managing director and a co-founder of Trusted Insight, told Buyouts.

Jonathan LaCrosse will serve as CEO of Trusted Insight, which currently has a staff of five. LaCrosse was a founding partner of Centinela Capital Partners and, before that, served as an alternative investments officer at the Robert Wood Johnson Foundation.

“We created Trusted Insight for a couple of reasons – to make the alternative investment business more efficient and transparent,” LaCrosse said, adding that the Web site facilitates both new and secondary investments in buyout, venture capital, hedge fund and real estate funds. Although the site helps match buyers and sellers of new funds and secondaries, the firm is not a broker/dealer, and people conduct their transactions offline.

“It’s a ‘freemium’ model, very similar to the business model of LinkedIn,” said LaCrosse, meaning that much of the information is free but requires a subscription in order to contact a potential buyer or seller. The firm has all types of investors signed up, including endowments, foundations and sovereign wealth funds, said LaCrosse.

Although the site was launched roughly four weeks ago, it already contains about 120 listings of secondaries and many listings of LPs looking to invest in new funds, according to Rumson’s Bangash.

“You’ve been hearing about failed auctions and how buyers and sellers are not coming together. Here, those buyers who are interested in enhancing their portfolios or adding positions that are of strategic value to them can connect with sellers,” Bangash explained. He also noted that these are not distressed sellers because they want to sell via auctions. Rather, these are passive sellers who may not need to sell, but perhaps are rebalancing their portfolios. “Maybe they don’t want to bet on India anymore, but instead want to bet on Brazil,” said Bangash. He also noted, “It can be used to test the market to see what they can get or who wants to buy something.”

One example of a posting on the site is an institutional investor looking to commit less than $5 million to a new U.S. buyout fund whose size is between $250 million and $500 million. Another poster is willing to pay a premium for a secondary investment in an especially popular Indian buyout fund.

In addition to the listings, site users can write reviews of funds. One user wrote, “This fund’s strategy is to focus on medical devices. Their terms are fair to LPs. They stick to their strategy, and they are responsive to LPs and straightforward in terms of how companies are doing. I would invest in them again.” About a particular venture capital firm, one reviewer wrote, “Their valuations are very opaque. I did not find them overly responsive to LP concerns.” Currently any site user can write a review, but soon this feature will only be available to paid subscribers, said Bangash.