Co-Investments / Direct Investments
Our clients have used co-investments and other direct investment strategies in their alternative asset portfolios to enhance returns and employ tactical capital outlays. Pavilion Alternatives Group has assisted clients in the execution of this strategy, including transaction sourcing, customized screening and assessment, detailed due diligence and specialized areas such as valuation. We involve the client’s internal staff, and focus on implementing a disciplined process to avoid adverse selection.
Our customized sourcing and screening process, which leverages our extensive database of funds and network of industry relationships, provides clients with a pipeline of deals that have been vetted against their tailored screening criteria. As a result, our cost-effective alternative to third-party managed accounts allows clients the flexibility to manage investment pace and target specific geographies, strategies and sectors. We therefore provide co-investment services to clients either on an advisory basis or through customized separate account vehicles.
Post-investment, we provide active monitoring and reporting for co-investments. This includes identifying key metrics to monitor, obtaining annual budgets and tracking quarterly performance, comparing performance against original projections, conducting regular calls with the investment manager and portfolio company management to assess progress, and identifying governance rights and deadlines to determine potential decision points.
In addition to our deep expertise on primary commitments, where we have developed strong relationships with many of the leading fund managers in each of the major markets and recommend commitments totaling $5-6 billion annually to our clients, our team has assisted multiple clients in evaluating secondary sales and purchases. The goal is to help rebalance opportunities and reduce exposure to “non-core” managers, letting staff re-focus on core relationships, strategies and vintage years while maximizing value. These transactions have ranged from purchases or sales of single fund interests to large portfolio sales which in aggregate have totaled over $6.5 billion of net asset value.
Through the course of our work, we have assessed the fair value of funds in our clients’ portfolios through top-down, bottom-up and scenario analyses, and assisted in identifying the funds for which the client would derive maximum value through secondary sale transactions.