By Julie Segal, Institutional Investor
The principals of Australian investment management company Channel Capital are buying back a minority equity stake from Highbury Partnership — and they’re doing it with financing from Kudu Investment Management, which takes passive permanent capital stakes in both asset and wealth managers.
Kudu is also providing additional funds to Channel Capital, which offer incubation, operations, distribution, and marketing and has partnerships with eight investment management affiliates, servicing about A$16 billion ($11.6 billion) in assets. Kudu itself is backed by permanent capital, from White Mountains Insurance Group, a public company.
Although the financial details weren’t disclosed, employees of Channel will own more of the equity in the firm with Kudu than they have under Highbury, a banking and advisory firm. Once the deal is closed, which is expected to happen this month, Kudu will hold minority stakes in 14 affiliate firms with combined assets of about $75 billion.
In some ways, the transaction marks another maturation of the so-called GP stakes business. Channel Capital is getting out of one deal and moving to a minority investor it views as a better fit for the firm. Unlike Neuberger Berman’s Dyal Capital or Goldman Sachs’s Petershill, which dominate GP stakes in the largest private equity managers, firms like Kudu, Investcorp, and Capital Constellation target smaller traditional and alternative investment shops.
Rob Jakacki, Kudu’s CEO and chief investment officer, told Institutional Investor that non-U.S. boutiques are particularly open to deals with the firm.