Rose to retire from StepStone as IPO looms

Jay Rose, one of the original partners of StepStone Group, is retiring from the firm later this year, three sources said.

Rose, 44, told StepStone’s management about his plans earlier in 2019, one of the sources said. His departure from StepStone is slated for June, the person said. He plans to spend more time focusing on his family and personal pursuits, the source said.

Rose spent 12 years helping grow StepStone’s business, the person said. “[StepStone is] disappointed but they wish him the best,” the source said.

“He is a good guy and will be missed,” a second person said.

State of Wisconsin Investment Board has been a client since StepStone’s launch in 2007. SWIB, in a statement, thanked Rose for his work and dedication over the past dozen years. “During this time, Jay led StepStone’s efforts in working with the SWIB private equity team in shifting the investment strategy from the large end of the market to focusing on small and middle-market commitments,” SWIB said.

StepStone provides management and advisory services across private equity, private debt, infrastructure assets and real estate. Strategies include primary fund investments, secondaries and co-investments offered through separately managed accounts, co-mingled funds and advisory relationships, Moody’s Investors Service said.

Monte Brem, CEO and partner, co-founded the firm in 2007 along with Thomas Keck, partner, and Jose Fernandez, partner and co-COO. They originally called it Leucadia Capital Partners but changed the name in June 2007 to StepStone, which refers to a beach in Leucadia. Rose was hired months later, but is considered a founding partner, sources said. He was previously head of research for PCG Asset Management. (Brem was president of PCG before he helped start StepStone.)

StepStone has more than $255 billion in total capital allocations, including $51 billion in AUM, as of Dec. 31. It employs more than 400 people spread across 18 offices. StepStone in December closed its buy of Courtland Partners, an institutional real estate investment adviser. The firm takes part in co-investments. In September, FTV Capital and StepStone invested in Strata Fund Solutions.

Going public

Last year, during the first quarter, StepStone issued roughly $150 million in debt, according to S&P Global Ratings and Moody’s. StepStone was expected to use proceeds of the offering to repay $12 million in debt, fund future general partner commitments and refinance existing GP commitments, for equity redistributions to team members and to fund the acquisition of Courtland Partners, the ratings agencies said.

StepStone’s founders are believed to have received a “huge distribution” from the debt offering, the second person said.

Rose’s departure comes as StepStone is expected to go public, which could come later this year or in 2020, sources said. Hamilton Lane, its larger rival, is already public and raised $200 million in a February 2017 IPO.

If it opts to go public in 2019, a StepStone offering would come in a market dominated by high-profile deals. Lyft, the ride-hailing app, went public in March, raising $2.2 billion. Uber is also expected to launch its IPO soon and could be worth as much as $120 billion, according to press reports.

Lyft’s brief journey as a public company has been bumpy. Shares of the ride-hailing app dropped below its $72 IPO price on its second day, but the stock has since rebounded. In contrast, Hamilton Lane has seen its stock price nearly triple since going public at $16 a share. Hamilton Lane’s stock added 48 cents to $45.29 in mid-day trading Friday. The company has a $2.45 billion market cap.

“As a policy matter, we do not comment on market rumors about the firm’s strategic alternatives,” StepStone said in a statement.

Action Item: For more information, see Moody’s March 2018 credit opinion on StepStone.