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LPs in 2007 fund from real-estate specialist BayNorth approve recap

  • Why is this important: GP-led deal volume was up sharply in 2017 and remains a major topic for LPs

BayNorth Capital, a private real estate manager that traces its roots to Charlesbank, earlier this year recapped one of its older funds for more time to exit assets, sources told Buyouts.

BayNorth ran a tender-offer process on its seventh fund, which closed on $472.5 million in 2007. About $100 million of net asset value was left in BayNorth Realty Fund VII, sources said.

LPs could choose to sell or not, and they also were asked to approve an amendment to extend the life of Fund VII. LPs who didn’t respond simply stayed on the same terms, sources said.

LPs approved the transaction in the first quarter, sources said. Pricing on the tender process is not clear, though one source described it as strong. Greenhill Cogent was intermediary on the deal.

As part of the deal, the GP got new economics from the buyer; existing LPs were not charged for the new economics, sources said. It’s not clear who led the investment.

BayNorth was formerly the real estate group of Charlesbank Capital Partners. It was formed in 2004 by two real estate principals of Charlesbank, Charles Wu and Chip Douglas. Douglas left the firm in 2012 but Wu remains.

GP-led deal volume was $14 billion in 2017, Greenhill Cogent estimates, up from $9 billion in 2016. Such deals, which include fund restructurings and tender offers, represented 24 percent of total secondary-market volume last year, Greenhill Cogent said.

Wu did not return a request for comment.

Action Item: Check out BayNorth’s Form ADV here: https://bit.ly/2KLggVd