Jefferies names Sean Gallary as GP stakes banker

Jefferies tapped veteran GP stakes investor Sean Gallary to help advise private investment managers who want to sell stakes in their management companies, sources told Buyouts.

GP stakes investing has grown into a vibrant part of private markets investing, as successful PE firms with potentially lucrative franchise valuations seek to unlock some of that equity for various reasons.

A handful of firms dominate the GP stakes market, including Blue Owl’s Dyal Capital franchise, Goldman Sachs’ Petershill Group and Blackstone Group. A few smaller players also participate, including Bonaccord Capital, Hunter Point Capital and even LPs like Alaska Permanent Fund.

GP stakes deals give the buyers a cut of economics that include fee streams and a share of carried interest. Buyers are generally non-control, passive owners who also may choose to participate as LPs in future funds. GPs usually choose to sell stakes in themselves as a way to generate capital for strategy expansion, to make GP commitments to future funds and sometimes simply for older partners to cash out.

With billions of dollars raised for the strategy, some question how many deals are left after so many firms have already participated. Some LPs remain skeptical that GP expansions fueled through stake sales are simply a way to grow assets, rather than for strategic reasons.

Such deals are facilitated by investment banks, including Evercore, where Saul Goodman has made a name over the years as one of the premier GP stakes bankers. (Read this Goodman Q&A with PEI here.) Other advisers include Houlihan Lokey, Berkshire Global Advisors and DC Advisory.

Gallary started in the new role as head of GP stakes advisory recently, sources said. He has been within the Jefferies orbit for several years.

Prior to joining Jefferies private capital advisory group, Gallary co-founded GP stakes investor Stonyrock Partners alongside managing partner Craig Schortzmann in 2019. Stonyrock was formed through a joint venture with Jefferies’ Leucadia Asset Management and intended to raise a permanent capital vehicle to buy stakes in private investment firms.

However, the fundraising never really got off the ground, according to a Reuters report and a Form D fundraising document showing that, as of April 2021, the fund had only raised about $38 million on a $1 billion target. Jefferies decided to shut down the fundraising, Reuters reported last year. Stonyrock/Leucadia completed one deal, buying a stake in Oak Hill Capital in 2019.

Jefferies has been building its secondaries advisory business within its private capital advisory group for the past few years, including capabilities around GP-led continuation fund deals and LP portfolio sales. The GP stakes strategy is complementary to that business, a source said.

Prior to Stonyrock, Gallary worked with Carlyle Group’s AlpInvest division on GP stakes investing.