Paul Capital is winding down its portfolio and shuttering all
but one of its offices following the collapse of a planned sale to
Hamilton Lane, said several people familiar with the sales
process.
The firm, which buys stakes in private-equity funds, told
investors it will no longer make any additional investments related
to its latest fund, Paul Capital Partners X LP, according to these
people. As much as $300 million of open commitments will be
returned to investors, one of the people said.
Paul Capital will instead wind down its remaining portfolio,
including capital already invested through Paul Capital Partners X,
and close its offices with the exception of its headquarters in San
Francisco, these people said. Since its founding in 1991, the firm
has opened offices in New York, London, Paris, Hong Kong and São
Paulo.
The collapse of a potential sale underscores the difficulty that
surrounds consolidation in the private-equity industry, where
complicated economics and legacy holdings can make for complex
negotiations.
Some deals have managed to make it past the finish line. Last
year, StepStone Group agreed to buy Greenpark Capital, which had
struggled to find its footing while out raising a secondaries fund.
Meanwhile, Credit Suisse Group was able to unload two of its
private-equity businesses in 2013, selling its Customized Fund
Investment Group to Chicago-based Grosvenor Capital Management and
shedding its secondary business, CS Strategic Partners, in a sale
to Blackstone Group LP.
After struggling to raise its latest fund, which launched in
2012 with a $2 billion target, Paul Capital hired Colchester
Partners LLC to explore possible options for the firm. LBO Wire
reported in December that Hamilton Lane, which last year acquired
Shott Capital Management, was nearing an agreement to take over the
business. It is unclear what caused the deal to falter.
Following the collapse of the Hamilton Lane deal, Goldman Sachs
Asset Management, the secondary arm of Goldman Sachs Group Inc.,
briefly had been in discussions with Paul Capital, but no deal was
reached, said two people with knowledge of the matter.
Amid uncertainty over its future, a number of executives have
departed Paul Capital, including Todd Miller, a managing director,
and Joshua Glaser, who headed investor relations. A team including
Ken Macleod, John Leone, David Lippman and Julie Rahman also left
the firm to join hedge-fund manager Visium Asset Management LP,
though they are continuing to advise Paul Capital on its legacy
health-care investment funds, according to a filing with the
Securities and Exchange Commission.
Laura Kreutzer contributed to this article.
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