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Jan 18 (Reuters) – Jefferies Economic Group Inc (JEF.N) is abandoning an effort and hard work to elevate a $1 billion fund to buy stakes in private fairness fund supervisors, supplying up on a niche and profitable corner of asset management, people acquainted with the issue explained.
It is a blow to Jefferies’ Leucadia Asset Management division, which offers different expenditure products this kind of as non-public equity. The asset administration organization noted a 52% fall in web revenues in the three months to the end of November to $43 million, citing reduced expenditure returns.
Leucadia Asset Management partnered in 2019 with Stonyrock Companions LP, a non-public equity organization started by Blackstone Inc (BX.N) and Carlyle Group Inc (CG.O) veterans, to raise the fund to make investments in non-public fairness fund supervisor stakes.
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Dubbed Stonyrock Alt Fund I, the fund was seeking to raise $1 billion but had amassed only $38 million as of April 2021, in accordance to a regulatory filing at the time.
The sources requested anonymity for the reason that the make a difference is confidential. A Jefferies spokesperson declined to remark. Stonyrock executives did not promptly answer to requests for comment.
Traders are starting to be increasingly skeptical that there are sufficient eye-catching prospects to get stakes in non-public equity companies to assistance the quantity of dedicated resources that have introduced with a focus on this system.
The marketplace for non-public fairness fund manager stakes is dominated by a couple of massive companies which include Blue Owl Capital Inc (OWL.N) via its Dyal franchise, Blackstone Inc (BX.N) and Petershill Partners, a device of Goldman Sachs Group Inc (GS.N).
A handful of other corporations, like Investcorp, Bonaccord Capital and Hunter Place Capital, compete by snapping up the passions of primarily middle-market professionals.
Stonyrock and Jefferies built at minimum one particular expenditure with each other – the acquisition in 2019 of a stake in Oak Hill Money, a Stamford, Connecticut-dependent private fairness agency with about $9 billion in belongings less than management. Jefferies funded that expense through its harmony sheet, 1 of the sources claimed.
Funds that investors fully commited to Stonyrock Alt Fund I will be returned to them, the resources stated.
Stonyrock Partners was started in 2018 by Craig Schortzmann, a former executive in Blackstone’s private fairness fund supervisor stakes device, and Sean Gallary, who ran a comparable division for Carlyle Group (CG.O) for about a year, according to his LinkedIn page.
Leucadia Asset Administration was launched in 2013 and has $37 billion in property underneath management, together with in hedge resources and corporate credit.
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Reporting by Chibuike Oguh in New York Enhancing by Will Dunham
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