Institutional investors such as corporations, banks, insurance companies and hedge funds may seek liquidity for direct investments for a wide variety of reasons:
- Reducing regulatory requirements: Banks, hedge funds and other financial institutions face burdensome regulatory requirements related to capital, reporting, and fiduciary obligations for holding private investments that can outweigh the benefits of an investment program.
- Eliminating future investment requirements: Private equity assets often require additional capital to maximize value and / or maintain existing net asset values. This can come in the form of future follow-on financings for venture assets, equity cures required by leveraged private equity companies and capital necessary to fund future acquisitions and roll-ups for growth equity assets.
- Minimizing accounting and tax implications: Significant exposure to private investments can create unwanted balance sheet and income statement volatility and accounting complexity arising from accounting standards pertaining to fair value requirements of illiquid and tough to value investments.
- Simplifying investment management: A direct investment program requires active ongoing management and significant involvement of experienced investment personnel alongside finance organizations to properly manage investments in private companies. Unlike investments in private equity funds, direct investment programs do not scale well and an institution that is winding down or downsizing a program frequently finds continued management to be inefficient and a significant distraction from core efforts.
- Disposing non-strategic or conflicting investments: Corporations that make direct investments for strategic reasons frequently find themselves over time saddled with investments that have become non-strategic or even competitive with existing business efforts. At best these become financial investments unsuited to a corporation’s investment program, and at worst present significant business conflicts that may cause reputational damage.
Institutions considering a disposal of all or part of an investment program typically have significant concerns regarding the risks completing a transaction. Our deep experience in and commitment to working with institutions will mitigate these concerns:
- Discretion: with fifteen years of experience Saints can meet the needs of an institution to explore the pricing and structure of a transaction on a highly confidential basis. Since Saints is exclusively focused on secondary transactions we are not conflicted by investments in private equity or venture capital funds.
- Confidence: engaging with Saints insures that a transaction agreed to will be completed. Saints has closed over 90 secondary transactions totaling more than $1 billion of investment capital and has never failed to close a transaction where final documents were negotiated.
- Flexibility: unlike many secondary firms Saints will transact with institutions that own both controlling and non-controlling investments and across multiple industry sectors in multiple geographies. We do this in order to meet the needs of international institutions which often have had broad investment mandates that do not fit narrow investment criteria.
- Creativity: Saints has pioneered many transaction structures in the industry and has closed transactions in multiple geographies involving public and private investments in North America, Europe and Asia.
Saints provides a bespoke partner to assist institutions in monetizing and managing their direct investments.
Our full range of services include the following:
- Full acquisition and assumption of ongoing management: Saints will provide a one-stop solution to acquire an existing portfolio of direct investments. These may include majority owned investments, minority investments with significant governance rights such as board rights and passive investments. Publicly traded but illiquid investments may also be included. Saints will manage the investments on a go forward basis and provide for portfolio follow-on investments, providing the institutional partner a simple and clean path to monetizing its investment portfolio and providing the portfolio companies an active and supportive shareholder.
- Structured acquisition and management: Saints will structure a transaction that leaves the institutional partner a significant ongoing stake in the portfolio to enable it to capture future upside associated with the performance of the portfolio companies. This may take the form of a retained ownership interest in the entire portfolio that the institution can manage on a post-transaction basis as a single LP-GP style relationship or a more complex structured transaction providing for upside economics based on specific portfolio return criteria.
- Retaining investment professionals: While not a requirement to a transaction, to the extent that existing investment professionals wish to remain involved with managing and ultimately monetizing the portfolio investments Saints can structure a transaction that enables existing investment professionals to continue their involvement with the portfolio companies post-closing.
Cross-border and cross-sector expertise:
Many financial institutions have direct investments spanning a broad range of geographies and industry sectors. Saints has experience pricing and closing investments in all major areas of technology and healthcare investing, business and financial services, consumer and industrial and cleantech industries. We have acquired, managed and exited companies in North America, Europe and Asian markets and have structured transactions with institutions in each of these major geographies.