Seine Capital, with focus on small-market secondaries, launches debut fund

Buyers have a chance to seize on more proprietary deal flow in the small end of the market, with many processes not run by a banker.

Seine Capital, staffed with a roster of secondaries professionals, is raising its debut secondaries fund targeting $150 million, sources told Buyouts.

The fund, capped at $200 million, is part of a wave of new firms and funds targeting the smaller end of the secondaries market, which comes with less competition and the potential for wider discounts.

Buyers have a chance to seize on more proprietary deal flow in the small end of the market, with many processes not run by a banker, and sellers more accepting of discounts.

Seine is targeting a first close on about $50 million, the source said. The majority of the fund’s capital, around 70 percent, will be focused on LP sales, with the remainder for GP-led deals and direct secondaries, according to a marketing document seen by Buyouts. It will primarily invest in North America and Western Europe.

The fund has an eight-year term with a 2.5 year investment period and management fees of 1.5 percent during the investment period that step down to 0.50 percent on invested capital on any extensions, the document said. The carried interest rate is set at 15 percent after an 8 percent preferred return, the document said.

Seine is offering incentives for early backers: first-close investors are offered a 12 percent preferred return and preferential rights on co-investments, the document said.

The firm completed two deals so far using special purpose vehicle structures with capital sourced specifically for each transaction, the source said.

The firm was launched and is led by Fabrice Moyne, managing partner, and partners Chad Zidow and Sol Zein. Moyne formerly worked at Mantra Investment Partners, where he helped set up and lead the secondaries program, according to his biography.

Zidow previously worked at Crestline Investors, Landmark Partners and Beneficient, while Zein worked at Pantheon and Montana Capital.

Seine targets investments of between $3 million and $15 million on funds ranging in size from $150 million to $750 million, according to the marketing document.

Significantly, the firm frames its investments on assets that it believes will become DPI break-even within three years, according to the document and the source. It is targeting returns of 2x multiple and 25 percent IRR, the document said.

To achieve its DPI goal, the firm targets more mature funds, from seven to 12 years old, and looks to buy at discounts to net asset value. It also is targeting sales that are much less competitive than at the higher ends of the secondaries market, where multiple buyers may be jockeying for a fund portfolio, the source said.

Along with this, the firm, because of its focus on less competitive processes, has the ability to take its time analyzing the assets, the source said.

Seine is among several secondaries managers seeking capital in the tough fundraising markets. Last year, secondaries firms raised about $86 billion, a 20 percent increase from the prior year, Campbell Lutyens said in its full-year secondaries volume survey.