News from Ely Place

Last year was a very strange one for most of us, and highly challenging for some. We at Ely Place have had our fair share of setbacks, most notably with our Partner and friend Gavin Mailer-Howat’s illness and major surgery. We wish him and his family well on his long recovery and treatment plan.

As we finish our second full year of business, we are however proud of what we have achieved in these unprecedented circumstances.

In January 2020, our client, Oxx announced the closing of its first fund raising $133m of commitments. Click here to see how it was reported by TechCrunch.

At the start of 2020 we also developed a new business line, GP Advisory, focused on pre-fundraising advice for GPs. This includes the preparation of due diligence documentation for new managers, and assisting GPs articulate their messaging to LPs, particularly after a transition, such as a shift in strategic direction or team change. Our GP Advisory work also covers strategic introductions to LPs ahead of a launch of a fundraising to enable the GP to build relationships with the right sources of capital.

We completed four GP Advisory mandates in 2020 and expect to continue to be active in this area as the competition for capital intensifies.

The crisis threw up several opportunities for our clients. We advised one client in procuring over €10m of co-investment capital for one its investments from a prominent LP, closing in July.

Also in the summer, following an introduction by Ely Place Partners, our client PennantPark closed a joint venture with Pantheon Ventures – a deal that brought in $65m of capital from Pantheon and which also allowed PennantPark’s BDC, PNNT, to decrease its balance sheet leverage by $245m.

In November our US-European client, TriSpan announced the first close on its Opportunities Fund II.

December, as always, was a busy month with two closings taking place with Ely Place clients. PennantPark held a final close on PennantPark Opportunistic Fund III with Ely Place Partners helping it grow its European LP base.

Finally, we closed a secondary transaction acting on behalf of Passion Capital, the UK based early-stage VC GP for whom we ran a competitive process to select a bidder to make a tender offer to its LPs. Our press release can be found here.

We also expanded the team in 2020, with Stephan Leppla joining as a fourth Partner, as well as Nick Parry as Finance Director.

Looking ahead: grounded optimism

What do we expect for this coming year? It continues to be a challenging fundraising environment and the lack of face-to-face meetings makes it harder for some LPs to take decisions on new relationships. However, we have seen many LPs adapt well to the challenges of lockdown, completing full due diligence processes virtually. Our GP clients from the US are benefiting from virtual processes without the need for transatlantic trips in the competition for capital, and we therefore welcome these new working practices.

The pandemic, coupled with greater emphasis on ESG, has made us all reflect on how much travel is really necessary. So while we recognise the importance of human contact, we do not think the industry will jump on the next available flight once restrictions are lifted. Instead we believe a more balanced approach will be taken where much of the fundraising and diligence work will be carried out remotely.

Which are the sectors we are excited about for 2021? We will continue to focus on our core of private equity, venture and direct lending clients. But we are also in discussions with managers running hybrid, flexible or niche strategies such as venture debt, CLO equity, and preferred equity.

On the secondary side, GP-led secondaries became a dominant theme in 2020. We have long worked with GPs on such transactions as extension vehicles, tender offers, stapled secondaries, fund re-openings and co-invest deals. These require a careful approach to balance the objectives of the existing LPs, GP and new investors, and to delicately manage perceived conflicts. While the availability of capital continues to be skewed towards the secondary side, we expect to continue to work with clients to help them access secondary and coinvest capital as a means of growing their AUM alongside their fundraising initiatives.

We also expect to be increasingly active in venture and private debt secondaries – we have closed transactions in both areas in this last year and we already have new deals in the pipeline that we hope to bring to market soon.

Finally, there is an unstoppable trend in sustainability and impact investing, and we are pleased to be partnering with two leaders in these fields, including Vantage Infrastructure.

With the rollout of the vaccine, there is much to be upbeat about in 2021. In the meantime we remain optimistic about the outlook of the alternatives asset classes. We look forward to discussing our thoughts and views with you in the year ahead – perhaps even in person.