Evercore Partners, the listed, New York-based investment bank, will absorb the fund placement unit belonging to Neuberger Berman.
Evercore’s buy of the Neuberger Berman asset will result in its integration into the investment bank under the Evercore Private Funds Group brand; terms of the merger were not disclosed.
Eight Neuberger Berman pros will be joining Evercore as part of the deal; the group is headquartered in London but has U.S. operations as well. Richard Anthony will lead the Evercore group.
The investment bank, which, last year partnered with CITIC Securities International to source Chinese deals, will attempt to grow the private funds group into the Middle East and Europe. Calls to Evercore and Neuberger Berman were not acknowledged by press time.
“The fund placement business fits perfectly into the Evercore model of providing independent advisory services to our clients based on our intellectual capital and relationships,” said Ralph Schlosstein, president and chief executive of Evercore, in a statement.
While the deal represents a key integration for Evercore, Neuberger Berman, which was bought in 2008 from Lehman Brothers by the asset manager’s senior executives, is going core — back to money management, where it has more than $170 billion in assets under management — with the deal. However, Neuberger Berman will continue to receive earnout payments from Evercore over an unspecified period of time.
Private-equity firms looking to upsize from previous funds have run aground with the recession’s arrival and have resorted to collecting smaller checks from a broader pool of subscribers. Indeed, despite some recent notoriety generated from the New York state pension system pay-for-play flap, placement agents could become an increasingly integral part of the PE game.
“It’s a lot harder for funds that are out looking for new LPs,” said one private-equity pro, who asked to not be identified. “Before, they would be able to turn to their prior subscribers and raise 80% of a fund from that alone.”
Greenhill & Co., for example, launched in May 2008 a fund placement advisory group with former Lehman fund marketing veteran Christopher Kirsten, who brought others from the bank when the initiative was launched. Since then, it has placed funds with Tenaska Power Fund II ($1.5 billion), Element Partners II ($400 million) and the Tennenbaum DIP Opportunity Fund ($300 million).
Already, Evercore has established a partner on the private-equity side. Earlier this month, the investment bank announced its partnership with Charles Ayres’ Trilantic Capital Partners. Evercore took a minority stake in Trilantic’s current global fund, issuing shares of its own and also committing up to $50 million to Ayres’ next fund in exchange for a stake in that vehicle. Ayres, who used to run Deutsche Bank’s private-equity arm, will enjoy access to deal flow and to the boutique’s restructuring services.
So as private-equity firms increasingly pair off with investment and merchant banks, M&A professionals say placement agents could again come back into fashion.
“They know where the money is buried,” said another PE dealmaker.
Evercore has proved resilient through the recession, recovering most of its losses from the market’s precipitous 2008 tumble. That November, shares fell to a low of $7.11 from a high two years earlier that was nearly $40. Wednesday, shares closed at $30.36, up about 2% on the news of the bank’s latest expansion; along with its recent partnerships, Evercore has added professionals, including the 2009 opening of a Houston branch.
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