Graphite recruits fund of funds veteran

The mid-market buyout firm and fund of funds has recruited Dana Haimoff from JPMorgan as a partner, as Graphite’s listed investment trust trades at a discount on the public markets despite 14.3 percent net asset value gains in 2007.

Private equity firm Graphite Capital has recruited former JPMorgan Private Equity fund of funds managing director Dana Haimoff as a partner.

Haimoff joined JPMorgan six years ago. She has also held senior positions at financial services firm Prudential and Merrill Lynch.

Rod Richards, a managing partner at Graphite, said: “We’ve hired Dana to work alongside Emma Osborne [who has been running the fund of funds programme since 2004]. With a small team you don’t really have hierarchies.” 

Graphite Capital has accelerated its fund of funds programme during the last three years, having been an investor in third-party funds for more than 20 years.  The fund of funds team manages commitments of more than £600 million to 41 private equity funds, as well as a portfolio of co-investments. 

Fund of funds’ investments are made through Graphite Capital’s publicly-quoted fund, Graphite Enterprise Trust, which had a net asset value of £391 million at 31 December 2007, an increase of 14.3 percent during the year. 

Like the majority of listed private equity firms Graphite Enterprise Trust’s share price has declined as the public markets have reacted against the asset class. Its share price has fallen by nearly 10 percent in the last three months to £4.28 per share at 1631GMT, giving it a discount to net asset value of approximately 10 percent.

Other stocks like KKR Private Equity Investors, a listed fund set up to invest in global buyout firm Kohlberg Kravis Roberts’ funds, have declined more dramatically. Following a rally by more than 10 percent in the last week the KKR trust’s share price was still down by 23.5 percent in the last three months to $14 per share at 1526 GMT, a discount to net asset value of nearly 43 percent.

Richards said the net asset value discount was simply a reflection of public market volatility. “My own view is that the market overreacts in both ways…. You need to be a bit suspicious about a trust being at a big premium, because running a trust with a premium to net asset is a thankless task as [you will probably disappoint the investors in the long run].” He said the discounts to net asset value at listed private equity firms probably did not correspond to prices in the secondary market for those firms’ funds and the calculations came from fairly thin volumes of trading.   

He said the UK mid-market buyout arm of Graphite had been less active in the last month, but he said it was unlikely this meant an overall slowdown of the market. “There’s an element of feast and famine in what we do… It’s really very dangerous to make a judgement on six weeks activity.” The firm has also been busy doing deals in the first quarter including the buyout of UK retailer Kurt Geiger.