A plan to expand the partnership behind one of Europe’s most successful private equity real estate firms has seen two of its three co-founders scale down their stakes in the business, PERE can reveal.
Van Stults and Bruce Bossom, who co-launched London-based Orion Capital Managers in 1999, have reduced their holdings to create room for new partners to assume proprietary positions over time. The youngest of the founding trio, Aref Lahham, has retained his original position and, in an indication of his growing influence and leadership, has assumed the role of chief executive.
According to Lahham (pictured), the partnership could reach seven partners in the next five years. The first new partner, Rami Badr, was introduced when the firm announced the final closing of its fifth opportunity fund last week. Lahham told PERE: “Rami is the first one. I’m sort of the bridge. I’m 10 years younger than Van and 10 years older than Rami.”
Asked whether the new partnership arrangement meant three equal stakes being changed to see Lahham possess a majority and Stults and Bossom diluting their share to accommodate Badr and future partners, Lahham said: “Something like that. We don’t want to give the details, but you’re not far off.”
He added that the new ownership model should also be considered a message to any potential suitors. “We’re not selling our firm to anyone,” he said. “We’re keeping it and we’re controlling it. Bruce, Van and I have worked together for 25 years. We’re a closely-knit family group.”
Lahham, Stults and Bossom formed the firm after leaving global real estate investment management giant LaSalle Investment Management, where they led its European operation.
“Bruce and Van still want to work hard and are fully involved. But we have to cater for our young partners. So, we’ve agreed Bruce and Van will be reducing part of their economics to bring in new partners,” Lahham added. “When I get to a certain age, I’ll be doing the same thing.”
Lahham described the new arrangement as the first result of a ‘perpetual machine’ Orion created that will address succession issues in the future. “It means we can pass on partnerships down the line as we go through. This is an interesting concept within our partnership, which is a path for the younger partners to get into our partnership as time goes by,” he said.
Last week, Orion announced it had raised a firm-record €1.5 billion for Orion European Real Estate Fund V, hitting its hard-cap. PERE understands the vehicle was heavily oversubscribed. The capital base is entirely comprised of US and European institutional and high-net-worth family investors.