Private Equity Secondaries
Halocline provides portfolio management, liquidity and replacement capital solutions to leading international private equity investors. As a preferred partner in being a replacement capital source for what we call “special situations” we maintain a flexible and nimble approach in being able price and structure the most complex of secondary opportunities. Partnering with sellers, Halocline treats each opportunity uniquely and typically aims for a tailor made solution for the seller.
For Limited Partners: Halocline takes a highly collaborative, partnership-like approach to transactions. We work closely with counterparties to create customized solutions, evaluating opportunities from both a tactical and strategic perspective. This collaboration is crucial when meeting complex objectives. We apply this approach successfully in helping investors achieve a wide variety of financial and strategic goals that can include:
- Rebalancing private equity asset allocations via normal portfolio management
- Exiting a seller’s non-core investment activities and reducing the administrative burden of managing non-core relationships
- Generating near, mid, and long-term liquidity needs tailor made to each seller
- Monetizing and redeploying capital
- Working with a seller to relieve unfunded commitment liabilities
- Working with the seller to refocus their portfolio on key fund relationships
- Reducing seller’s over-weighted exposure to a single manager
For General Partners: As an experienced secondary private equity investor, Halocline believes that working alongside its proprietary funding partners, that it can be an ideal and preferred long term replacement capital source for GPs and is a reliable and trusted partner for LPs who are seeking effective portfolio management and liquidity solutions. As a family office, we remain flexible and nimble in our approach to working with both limited partners and also with General Partners in finding unique solutions in “special situations” which can provide to be of considerable value to GPs and can be a significant factor when executing on a complex or simple secondary transaction.
The average investment size we focus on can be broad, but we can look at deals from as small as US $1m to US $1 billion with the average transaction size in the $5m-$100m range. We also typically do not participate in widely marketing or open market transactions with multiple bidders.
Since 2005, nearly all of our deals have executed as part of bilateral and not widely marketed transactions. Given this experience, we do not feel the need to participate in open market bidding processes. We are transparent, efficient, flexible, and most importantly confidential in working closely with sellers to provide the ideal solution. We request that before approaching us on any secondary transaction to please consider these points carefully.
Types of secondaries we are interested in considering include any of the following:
- Sales of limited partner Interests: Our team works with our LPs to acquire interests in nearly all types of private equity partnerships including buyout, venture capital, and mezzanine funds. Transactions may encompass either the acquisition of a single LP interest in one fund or a portfolio of interests in multiple funds.
- Spin-outs: The Secondary Investments team will support the spin-out of captive private equity management teams from larger organizations seeking to reduce or eliminate their private equity exposure. Such transactions typically combine the purchase of an existing portfolio together with a new commitment to the spin-out team. The new commitment can be used for follow-on investments in the existing portfolio or for new investments.
- Stapled secondary/primary investments: Occasionally we also consider stapled secondary/primary transactions that combine the purchase of an existing pool of private equity assets together with the commitment of primary capital to the general partner's next fund. The key to such solutions always depends on the ratio of secondary to primary investment. We have a proven ability to execute on these kinds of deals so please don’t hesitate to approach us if this is a required solution as a GP.
- Portfolio Restructuring: Halocline develops and works with our LPs to finance innovative structures that allow investors to rebalance their exposure to private equity assets—including fund interests, direct investments, and co-investments—through alternative mechanisms to an outright monetization. We can customize such solutions to meet seller’s specific objectives. However, such transactions may be broadly categorized as a joint venture or securitization.
- Joint ventures: The Secondary Investments team will form joint ventures with holders of private equity assets. Existing assets are placed in a new vehicle through which Halocline alongside its LPs and the joint venture partner share the cash flows from the portfolio. Advantages to this structure include the flexibility to share risks, to improve returns through the case of leverage, and to make new fund commitments through the joint venture. The quality, reputation, and experience of the joint venture partner is key to successfully executing on these transactions.
- Securitizations: The Secondary Investments team will acquire the equity strip of a private equity portfolio securitization. Existing assets are placed in a new vehicle that leverages the portfolio by issuing rated bonds. Advantages to this structure include the potential ability to increase proceeds at closing. These transactions can be complex and require an experienced, creative, and reliable equity partner.
- Secondary direct Investments: Sometimes referred to as synthetic secondaries, these are acquisitions of existing direct-investment portfolios. Interested sellers may include GP's seeking liquidity in older fund portfolios or institutions seeking to reduce exposure to certain types of assets.
If you are ready to discuss an ideal solution for your private equity fund investments or secondary direct portfolios, please contact our team at:
Alternatively, please use the “submit a deal” form our website to approach us on bilateral and confidential opportunities.