In what represents further evidence of consolidation within the private equity funds of funds space, the US-headquartered StepStone Group has announced that it has purchased fellow private equity fund of funds manager Parish Capital Advisors.
StepStone believes that the acquisition will further enhance its capabilities in investing in small private equity funds with focused strategies, as well as contribute to growing the firm’s European investment capabilities - an important strategic goal for StepStone. Parish Capital Advisor were targeted as their investment strategy focuses on investing in experienced private equity investors that operate with smaller pools of capital and a niche sector, geographic and/or strategy focus. David Jeffrey, a Partner at Parish Capital, will join StepStone as a Partner to head up its European operations and business strategy.
The private equity funds of funds industry is expected to under-go further restructuring and consolidation in the next few years. This trend has been driven by poor fundraising performance, as well as the need for captive owners (banks and insurance companies specifically) to dispose of non-core assets due to regulatory pressures. This year, AXA announced that AXA Private Equity, which includes a private equity fund of funds business, was up for sale. Elsewhere, Edmond de Rothschild sold its private equity fund of funds division – now named Seligman Private Equity Select - to its founder David Seligman in October, while 2010 saw the merger of the private equity fund of funds businesses of Hermes and Gartmore to form Hermes GPE.