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Petershill sells hedge fund stake for up to $258m amid valuation concerns

Goldman Sachs’ private equity investment firm, Petershill Partners, has sold an 18% stake in hedge fund LMR Partners for up to $258m in a move aimed at addressing investor concerns about the accuracy of the firm’s asset valuations, according to a report by The Times.

Listed investment vehicle Petershill, which is majority-owned by Goldman Sachs, stated that the sale price was “marginally above” the $195m valuation of the stake at the end of last year. LMR Partners’ leadership made an initial cash payment of $107m, with a second payment of $111m to follow. An additional performance-based payment of up to $40m has also been agreed.

Launched by Goldman Sachs in 2007, Petershill was listed on the London Stock Exchange in 2021 during a robust IPO market, with shares priced at 350p. At the time, JP Morgan and Lazard invested £157.5m and £129.5m, respectively, while Goldman Sachs sold shares worth £475.6m. On Wednesday, Petershill’s shares closed 3.5p higher at 219.5p.

The report cites data from FactSet as revealing that funds managed by Goldman Sachs remain the largest owners of Petershill with a 79.5% stake. Lazard meanwhile, has reduced its holding from 3.2% to 0.85%, while JP Morgan has nearly divested its entire stake, which originally stood at 3.9%.

Petershill’s shares have been trading at a 40% discount to the book value of its assets, highlighting market concerns over the sale prices it could secure for its 26 minority stakes in private equity firms, hedge funds, and property investment managers.

Deutsche Bank analyst David McCann noted that the LMR sale reflects Petershill’s ability to accurately evaluate its portfolio, which is primarily made up of private market companies. “This could help alleviate concerns about the group’s ability to realise value from its holdings,” McCann said.

JP Morgan analysts echoed this sentiment, stating that the sale demonstrated the “significant value” in Petershill’s collection of minority stakes. They suggested that Petershill could benefit from consolidation in the private markets by potentially realizing higher values from some of its current stakes if partner firms were acquired by other managers.

Petershill’s co-heads, Ali Raissi-Dehkordy and Robert Hamilton Kelly, remarked that selling the LMR stake aligns with their strategy of shifting focus away from hedge funds toward private markets, which they view as offering “attractive growth opportunities.”

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