Tristan Capital Partners’ sale of 31 percent stake in the business to Candriam Group, the European asset management subsidiary of US insurer New York Life, is the culmination of a predictable journey for the London-based private equity real estate firm.
It follows two prior sales. The first was in 2018, when Candriam acquired 40 percent. The second was in 2020, when a further 9 percent was exchanged. A third purchase by an organization accustomed to owning large majority positions in its managers, was always a matter of when.
But each stake sale marked a different moment in the evolution of Europe-focused Tristan. In 2018, it was about replacing previous strategic partner, the German insurer Gothear Group, which owned 15 percent. In 2020, it was about keeping the ship steady as covid-19 wreaked havoc on financial markets.
The story behind this sale is largely about its high-profile leader Ric Lewis, who was the main seller. Now, more than 14 years after founding the business, his personal holding is similar in size to Tristan’s other largest individual shareholders, Ian Laming, Tristan’s chief executive officer and Cameron Spry, who shares one of Lewis’ two titles, co-chief investment officer. Lewis is also executive chairman.
The three executives are the biggest shareholders of Tristan’s residual 20 percent position, the remainder shared between approximately 30 senior staff.
Lewis said. “I’ve effectively capitalized dividend payments of the next several years into the next few years.”
He declined to divulge details of the sale. But he was adamant that while his prior ownership in the management business was now largely in the hands of the firm’s American partner, as with the previous stake sales, control of the business remains squarely with him, Laming, Spry and Tristan’s other senior executives. “We still control all the investment, asset management and divestment decisions,” he says. “None of that is out of our domain. It never was, it still isn’t and it’s never going to be.”
Indeed, when asked about the possibility of a final and complete exit to Candriam, Lewis replies: “We’re never selling 100 percent.” He adds: “It is neither in ours nor their interest to ever change 80:20.”
Lewis is cognizant of inevitable questions arising relating to his activities now that he has materially exited. To those, he says: “Some clients have asked has this changed my motivation? I said ‘you should pull up a chair next to me. Be at my desk. Nothing is going to change. I’m still doing the job I do. You’ll see me all the time. There’s still way too much to play for.”
Lewis expects to remain at Tristan for some time, but he said even if he eventually retired, nothing would happen to its 80:20 ownership structure. Further, Candriam’s latest investment sees its board seats rise from two to four, compared to Tristan’s three. “But I’m still chair,” he says.
Tristan currently manages approximately €15 billion of assets across value-add and core-plus fund series. In December, the firm closed on €2 billion of equity for its European Property Investors Special Opportunities 6 fund, its largest fundraise to date. Since acquiring its initial stake in the firm, Candriam has been a serial seed investor, culminating in a €200 million commitment to EPISO 6.
Lewis says. “They have liked our products and have always stepped up with commitments.”
News of Tristan’s latest stake sale has not come as a surprise to the market, nor is Lewis’ reduced holding expected to impact the attractiveness of the firm’s future fund offerings. Two sources, who both requested anonymity, told us Tristan’s evolution from a niche manager to a broader asset management business, means institutions should place less reliance on any individual.
“One could argue that Tristan went from being an owner-managed ‘boutique’ to an investment manager and aggregator when they sold the first big tranche, so why should an LP [be concerned]?” asks a senior executive at another Europe-focused manager.
An investor, meanwhile, says he would care less about individuals but the bigger corporate picture now that the firm is majority-owned by a larger asset manager: “Growth in products, which often result when a ‘distribution-led’ firm acquires an ‘investment-led’ firm can be a bit of a worry given the potential for distractions and cultural change,” he says.
To the cultural point, Lewis has continually insisted Tristan enjoys unfettered leadership of its activities and executives, himself included, have retained all the economic incentives that have been in place since the firm’s formation. “That’s contractual and can never change,” he says.