Paris secondary-fund stake-buyer Seine Capital is making steady headway as it invests its initial capital from the $70 million first close it held on its debut fund in October.
By March, Seine expects to have closed on the new fund’s first three deals, all of them within its target range of $3 million to $15 million. And, although Seine underwrites its positions to repay at least its investment within three years, these early deals are expected to move more quickly than that.
The first transaction via Seine’s fund closed in mid-January, with the firm paying $5 million to $6 million for a single fund stake from a U.S. family office that needed to quickly offload the position. What Seine paid reflected less than 50% of the net asset value remaining in the underlying fund, which was a 2015-vintage private equity fund with a growth equity strategy. Already, however, expectations are that one of the largest holdings in that fund stake will be sold in the next six months, and when it does so, investors will have received at least 70% of the investment in that position. Between Seine’s payment and the fund stake’s earlier exits, the family office that unloaded the position to Seine did reclaim its original investment.
Seine’s fund also has one other deal whose closing is imminent, and a third that’s expected to close next month.
The imminent deal is a stake in a private equity fund with a strategy that Seine considers esoteric
and for which Seine is expecting to buy for $2.5 million from a European family office that also is urgently seeking to dispose of the position.
Seine is buying the position at a discount that’s slightly more than 50% of its net asset value. Seine
expects that it will be an especially profitable deal that will pay out twice what the firm paid within 12 months of its close.
The third transaction for the fund, the one that is expected to close in March, is the purchase of several fund stakes from a European manager that is liquidating a private equity fund of funds. Most of the underlying funds have vintages dating to 2007 and 2008. The vast majority of that exposure is to U.S. companies owned by well-known buyout funds.
And Seine expects to pay $5 million to buy the stake at a discount of nearly 50% of the fund’s net
asset valuation. Seine anticipates that this position will also pay out more than twice its investment.
These three deals follow two that Seine inked in the first half of last year in which it invested via special-purpose vehicles. Those deals also are progressing well. A stake in four private equity funds for which Seine paid $15 million at a 40% discount has repaid 70% of that investment in the first eight months, with an expectation it will pay out twice the initial capital or more. The second one was a $5 million position bought at a 50% discount for which Seine has received 30% back and expects to ultimately receive more than twice the original investment. Seine is led by managing partner Fabrice Moyne, who previously launched the secondary business at Mantra Investment, where he worked for 11 years. Source: Hedge Fund Alert, the weekly update on fund management intelligence
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