RidgeLake inches closer to debut GP stakes fund’s $1bn target

RidgeLake Partners got closer to the target set for its first-time offering, as LP appetite for GP staking increases.

RidgeLake Partners I raised $812 million, according to Form D documents filed last week. That puts the vehicle within reach of its $1 billion goal, disclosed by several sources, among them MWRA Employees’ Retirement System.

Fund I’s placement agents are NYLIFE Distributors, CSP Securities, New York Life Investment Management Asia and Shinhan Securities.

RidgeLake was launched in 2020 by Apogem Capital, formerly PA Capital, a subsidiary of New York Life Insurance Company, and Ottawa Avenue Private Capital, an investment adviser to the DeVos family. It draws on the investment and organizational resources of the two sponsors, including Ottawa Avenue’s background in GP staking.

Apogem and Ottawa Avenue affiliates seeded the business with $500 million, Private Equity International reported, a commitment that is said to be on top of Fund I’s target.

RidgeLake did not respond to a request for comment.

GP stakes funds acquire long-dated minority interests in private equity and other alternative asset managers in exchange for a share of income. Firms sell pieces of themselves to beef-up their balance sheets and finance priorities, such as GP commitments to funds and growth initiatives.

The investable market is expected to be about $600 billion this year, Blue Owl Capital’s Dyal Capital estimates, and to reach about $749 billion by 2025. This calculation of size by enterprise value accounts for not just new investments but re-ups, which are becoming more common in dealmaking.

Rising LP demand

LPs are warming up to GP stakes funds, a 2022 Coller Capital survey found. Forty-seven percent of institutions said they currently invest, or are planning to invest, in the strategy, up from 36 percent four years earlier.

More LP demand for a fixed number of products on offer may give RidgeLake a leg up in a tough fundraising environment. It might also help explain the success of another new face, Hunter Point Capital, which in April reported securing $2.66 billion for a debut vehicle, possibly exceeding its target, Buyouts reported.

RidgeLake focuses on acquiring minority interests in mid-market shops, a community that has until recently been neglected by GP staking. Targets feature buyout, growth equity, turnaround, secondaries, real assets and opportunistic credit strategies and manage assets of $1 billion to $10 billion.

Along with capital, RidgeLake provides investees with value-added services, including “strategic counsel” and access to “deep industry relationships,” according to Apogem’s website.

The firm has done at least four deals, among them a 2020 investment in secondaries manager Newbury Partners. Earlier this year, Bridge Investment Group bought essentially all of Newbury’s business for $320 million in cash, presumably giving RidgeLake an exit.

In addition, RidgeLake two years ago invested alongside Blackstone GP Stakes in Sentinel Capital Partners and independently backed Gauge Capital. And last year it teamed up with Bonaccord Capital Partners to invest in Shamrock Capital.

RidgeLake is co-headed by Todd Milligan, a managing director at Apogem, and Michael Lunt, a manager director at Ottawa Avenue.