Xponance hired Michael AB Orr to lead a first-time offering focused on making minority investments in diverse and women-owned private equity firms.
Orr joined Xponance Alts Solutions, Xponance’s private-market affiliate, as managing director and CIO, the Philadelphia money manager said in a statement.
As part of the job, he will run the strategy of Xponance Diverse Opportunities Fund, launched in 2021 to support diversity, equity and inclusion in the alternative asset industry through GP staking. The vehicle is sponsored jointly by Xponance and Investcorp’s Strategic Capital Group, a GP stakes investor.
Orr brings to the position more than 25 years of experience in asset allocation, investment banking and private equity, Xponance said. He was most recently senior vice president and senior client investment officer in Northern Trust Asset Management’s not-for-profit outsourced CIO practice. Before, he was executive director, alternative investments, at Providence St Joseph Health.
XDO Fund is presently in the market with a target of $300 million, Buyouts reported. Its hard-cap is $400 million.
Like other GP stakes investors, the fund will acquire long-dated minority interests in firms seeking capital to fortify balance sheets and finance priorities like commitments to offerings and growth initiatives.
Uniquely, however, XDO Fund will apply a diversity lens when sourcing opportunities. It will target a range of mid-sized managers in which women or minorities are significant owners (at least one-third of equity) or occupy a senior role (such as managing partner).
The fund is expected to deploy a portion of capital to Investcorp (25 percent of the total), to co-investments alongside Investcorp (42 percent) and to direct minority investments (33 percent). As part of direct investing, it will also provide seed capital to the pools of diverse and women-owned managers.
With his hire, Orr became a member of XDO Fund’s investment committee. Other members include Tina Byles Williams, CEO and CIO of Xponance, and Anthony Maniscalco, managing partner of Investcorp’s Strategic Capital Group.
GP staking is catching on with LPs, according to Coller Capital’s Global Private Equity Barometer Summer 2022. The survey found 47 percent of LPs currently invest, or are planning to invest, in vehicles that acquire minority interests in private equity and other alternative asset managers. This is up from 36 percent four years ago.
The trend perhaps explains vigorous capital raising of late by GP stakes funds. Among them is the latest offering of Blue Owl Capital’s Dyal Capital, Dyal Capital Partners V, expected to close later this year at a record $10.5 billion-plus.
In addition, Investcorp earlier in 2022 wrapped up its debut GP stakes fund earmarked for underserved mid-market opportunities. Following the close, Investcorp Strategic Capital Partners oversaw more than $800 million, Buyouts reported. It has to date made nine minority investments, five involving firms owned by women or minorities.