Hunter Point Capital raises debt to distribute cash to investors

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Hunter Point Capital has taken the rare step of turning to the debt markets to return cash to its investors as it and rival investment firms look for ways to appease clients who have been left out of profit sharing.

The group has raised $425 million backed by its stakes in a handful of private equity firms, a complex deal that will give it the ability to send a dividend to investors in its $3.3 billion flagship fund, according to a letters to investors seen by the Financial Times. .

The deal underscores how much private equity firms will satisfy investors who have trillions of dollars locked up in buyout funds as they await a return to the cash payouts they’ve grown accustomed to but have dried up as deal closing slowed in 2022 and 2023. .

In recent months, as debt markets have rallied, private equity groups have turned to bond and loan markets to issue their dividends, offloading that debt to portfolio companies to return capital to their investors.

Hunter Point’s CFO David Prael wrote in the letter: “While we expected to pursue a financing and ‘dividend recap’ when the portfolio was further developed, the market provided a window of opportunity in which to we profit”.

Capital raising for Hunter Point, led by bankers from Goldman Sachs and Wells Fargo, has shifted to a relatively new structure supported by cash flows from its investments in other managers. This includes its holdings in buyout firm L Catterton, secondary investor Coller Capital and real estate investment and lending shop Pretium Partners.

Hunter Point, Goldman Sachs and Wells declined to comment.

Investment managers in this small corner of the market have used these securitizations to return money to their fund backers, given that stakes in buyout groups are often cashed out only when firms go public or are sold.

Hunter Point was founded in 2020 by former top Blackstone executive Bennett Goodman and JC Flowers and Goldman Sachs alum Avi Kalichstein. Their businesses focus on buying stakes in other private equity firms, a strategy that has attracted capital growth given the relatively stable management fees those businesses generate.