The Jordan Company is running a process for more time and capital to manage two assets in older funds amid a challenging environment that has made it tougher for GPs to close large secondaries deals, three sources told Buyouts.
The deal is among several large-scale GP-led continuation fund processes trying to make their way through the market as buyers have become pickier and prices have fallen. Impacts from the broader economy – inflation, geopolitical turmoil and slower growth – have made it tougher to value assets in secondaries processes, with a wide gap between buyer and seller expectations.
“As marks have come down, seller expectation has not come down, so you’ll have a lot of stuff that doesn’t clear the market or doesn’t even get taken to the market,” a secondaries buyer said in a recent interview.
TJC, led by CEO Rich Caputo, wants to move two assets out of older funds and into a continuation pool for more time and capital to run the investments. The portfolio companies are AIT Worldwide Logistics and Echo Global Logistics.
The firm is looking for up to $2 billion on the deal, to move the companies out of the older fund as well as for fresh capital for additional investments. Generally, existing LPs in the older fund or funds have the option to cash out of their interests in the companies, or roll their stakes into the continuation fund.
Credit Suisse is working as secondaries adviser on the process, two sources said. Spokespeople for TJC and Credit Suisse did not respond to comment requests Wednesday.
The two investments are relatively young for TJC. It acquired both companies last year, according to TJC’s website and statements at the time of the investments. TJC is investing out of its fifth fund, which closed on $5 billion in December, at which point it was already 50 percent deployed, the firm said in a statement.
The firm closed a $1.3 billion GP-led secondaries fund deal last year that moved assets from The Resolute Fund II into a continuation pool. Hamilton Lane led the process last year, while M2O Private Fund Advisors worked as adviser.
GP-led deals may be harder to close this year as the gap between buyer and seller pricing expectations has widened in the uncertain markets. Buyers are expecting discounts while sellers generally have not yet adjusted pricing expectations to match the market, sources have told Buyouts.
While deal flow has kept up, GPs’ ability to close deals has become challenged, sources said. Buyers, with limited capital, are not spending time with anything but high-quality assets and managers, the sources said.
“Nothing really has to happen with GP-leds, they just kind of float around, they’re not dead yet but almost like, kind of just floating around in wishful thinking land,” the secondaries buyer said. “A lot of people just are in wait-and-see mode. Buyers did a lot last year across the industry, and they feel less pressure to put money out.”