New York-based investment firm Neuberger Berman's permanent capital vehicle, Dyal Capital Partners III, has acquired a minority stake in private equity firm HIG Capital, PERE's sister publication, Private Equity International, reported last week. The deal values HIG at around $4.5 billion, according to media reports.
A permanent capital vehicle, unlike a typical private equity fund, can continue to make investments permanently, meaning it is not required to sell assets and distribute the returns within a set period of say ten to twelve years. Dyal, which has over $6 billion devoted to permanent capital investing, takes minority equity stakes in institutional alternative asset management firms.
Dyal acquired a passive non-voting stake of less than 15 percent of HIG. The funds will mostly be used to boost HIG's investments in its own funds, and to finance a number of growth initiatives in the small and mid-cap market, HIG said.
HIG, which was founded in 1993, manages over $20 billion in equity capital. Its funds, which span private equity, growth equity, real estate, credit, lending and biohealth, invest in companies across the US and Europe.
HIG Realty was founded in 2012 with $3 billion from parent firm HIG Capital, a Miami private equity firm. HIG Realty now has over $20 billion in assets under management, according to its website. The firm held a first close at the end of 2015 with $253 million for HIG Realty Partners III after launching the value-add and opportunistic fund in the summer of 2014 with a $500 million target, PERE previously reported.
HIG's most recent publicly available real estate transaction was the June sale of a Tampa, Florida hotel for $101 million, according to real estate data provider Real Capital Analytics. HIG and its partner, hotel developer Driftwood Hospitality, sold the Hilton Tampa Downtown (pictured) to Boston-based CrossHarbor Capital.
Dyal, established in 2011, manages three independent permanent capital funds and 18 minority partnerships.
Dyal isn't the only one acquiring minority stakes in other private equity funds: Goldman Sachs Asset Management, Credit Suisse, and Hycroft have also set up similar businesses. Revenue comes from sharing management fees, returns from GP commitments, and profits from portfolio firms.
Spokespeople for HIG and Dyal declined to comment beyond what was said in the press release regarding the size of the stake and how the proceeds from Dyal's investment would be used.