Hedge fund sponsor Capital Z Investment Partners has announced completion of a management buyout together with Paine & Partners, a San Francisco- and New York-based private equity firm
Hedge fund sponsor Capital Z Investment Partners has announced completion of a management buyout together with Paine & Partners, a San Francisco- and New York-based private equity firm, under which they have acquired the minority stake previously held by Zurich Financial Services Group.
Capital Z’s hedge fund management team and Paine & Partners will purchase Zurich’s minority stake of the hedge fund management company and general partnership interests held by the Swiss group in two of Capital Z’s alternative investment sponsorship funds.
Following the transaction, a new company, Capital Z Asset Management, will be established to continue and expand the hedge fund sponsorship business. Terms of the transaction were not disclosed.
Capital Z claims to be the largest dedicated sponsor of hedge fund managers, having sponsored and assumed minority interests in 16 hedge fund managers with a combined USD10.8bn in assets under management since its launch in 1998.
Laurence Cheng, founder and chief executive of Capital Z Investment Partners, will become chairman of Capital Z Asset Management. The company plans to expand its marketing team and raise a new fund focusing on the sponsorship of hedge fund managers.
Christianna Wood will join Capital Z from the world’s largest public pension fund, the California Public Employees’ Retirement System, next month in the new position of chief executive. Wood has spent five years based in Sacramento as senior investment officer for global equity, overseeing the equity portfolio of the USD246bn pension scheme.
‘Paine & Partners is a leading private equity firm whose experience and dedicated focus has contributed to the successful growth and development of companies with which it collaborates,’ Cheng says.
‘We believe our new company represents the first vehicle of its kind – an entity dedicated not only to holding interests in management companies and general partners of hedge funds, but providing a full range of hedge fund products. We acknowledge the increasing bifurcation in the alternative asset marketplace and strive to level the playing field for talented emerging hedge fund managers.’
W. Dexter Paine III, co-founder of Paine & Partners, says: ‘Capital Z has been an innovator in the area of alternative asset management. We were attracted to the unique sponsorship model that Laurence Cheng and his team have honed, which ensures that the entrepreneurial spirit of the hedge fund managers remains intact – allowing them to build their own businesses with guidance and patient support from Capital Z.’
Under the agreement, the Capital Z management team will own a significant portion of Capital Z Alternative Asset Management and will have representation on its board of directors.
Paine & Partners, formerly known as Fox Paine Management III, provides equity capital for management buyouts, public to private transactions and company expansion and growth programmes. The firm says it operates exclusively through friendly transactions developed in co-operation with a company’s management, board of directors and shareholders.
Capital Z Investment Partners is a USD2.25bn alternative investment sponsor with offices in New York, London, and Hong Kong. The company invests in private equity funds, hedge funds and structured products while taking a meaningful minority interest in the funds’ management companies.