A dispute between Paris-based investment firm Weinberg Capital Partners and its real estate team led the latter to officially split from its parent company and launch its own firm and fund, PERE has learned.
Laurent Halimi, founder of the new firm, Osae Partners, told PERE that the separation – which began in July – was a result of the partnership being unable to agree on how the business should grow and be reorganized.
Before the spin-out, Weinberg Capital Partners consisted of three separate business verticals: leveraged buyouts, real estate and long-term investments in listed mid-cap companies. Serge Weinberg founded the firm with the original LBO division and then hired Halimi, who joined in 2007 to launch a real estate business. Since inception, Serge Weinberg had been the partner with the largest stake in the company. Halimi and Phillippe Klocanas, co-founding partner of the LBO department, held minority stakes.
One year ago, Weinberg’s partners began discussions on the direction of the firm, including organization, corporate governance and ownership interests, according to Halimi. He felt the firm should enlarge the partner base and offer some portion of equity in the company to all the senior Weinberg employees. He also wanted the company to adopt a standard shareholders agreement where all partners would have a say in strategic decisions, not just the founder.
Unable to agree on the company’s direction, the partners agreed to let the real estate team spin-out and investors approved the decision unanimously, according to Halimi. The real estate team now operates independently from Weinberg Capital Partners under its new name.
Osae will move forward with Halimi’s organizational vision of a firm where every team member has the opportunity to be a partner and receive equity in the company.
“Our main strength to attract talent is to be a partnership,” Halimi said. “People join such companies to be part of the journey as a partner, even with a small stake.”
Halimi also intends to increase headcount from the current seven members to a team of 10-11 in-house employees in approximately a year, and up to 15 people in the long term.
The spin-out firm will continue to execute on the opportunistic and value-add investment strategy it created while doing business as part of Weinberg Capital Partners, according to Halimi. Over the next three to five years, the firm will continue to pursue real estate investments in France but currently has no plans to expand its geographical focus, he said. Instead, he expects to grow the business by expanding its expertise in different property types.
The Osae team has a history of making investments across all property types, and Halimi told PERE that they were early movers on medical office and senior housing investments. He expects the team to continue to bring value by becoming experts in more niche property types in addition to the main property sectors.
Already, Osae has launched its first fund as an independent real estate firm: OREP I, which seeks up to $250 million. The firm expects strong interest from previous Weinberg Capital Partners real estate investors and will use a placement agent to bring in new investors.
Weinberg has no intentions of giving up its real estate business after the Osae team’s departure. The firm announced the hiring of Jean-Philippe Olgiati, who will begin November 5, as partner and director general of real estate activities. Weinberg declined to comment further.
Halimi expects Weinberg to pick up where the Osae team left off, fundraising for Weinberg Real Estate Partners III – the third fund in the firm’s real estate business.
“We have a very good relationship and mutual respect,” Halami said of Weinberg. “We just disagreed on the future of the organization. That does not mean we cannot live in the same world and be friendly and loyal competitors.”
Osae and Weinberg have agreed to continue to work together on WREP II and existing mandates. There will be no change in governance in the existing vehicles, as Osae will continue to manage the investments in WREP II and any existing club deals until liquidation. WREP I has already been fully realized.
The Osae team also agreed to act as the interim asset manager of Weinberg’s senior housing program until a replacement real estate team is approved by investors and in place. After a new real estate team is brought on, the incoming team will buy out the remaining carried interest that would have been earned by the Osae team, according to Halimi.