Brookfield acquires DWS private equity secondaries unit

The deal closed on 30 January 2023, with Brookfield selected due to the fact that its existing global PE platform would provide a strong base for the growth of the business, according to a press release from DWS.

The acquisition will see seven dedicated secondaries investment and investor relations professionals located in London and New York move over to Brookfield.

The Canadian asset manager already manages strategies in private equity, real estate and infrastructure. In its Q1 2023 earnings call, Brookfield said that it had already hired secondaries teams in real estate and infrastructure. The firm has previously expressed interest in the opportunity available in the secondaries market, with CEO Bruce Flatt estimating that this market segment could be a USD 25bn-USD 50bn business for Brookfield.

DWS (the asset management arm of Deutsche Bank) launched its secondaries strategy in 2017. The GP held a final close for its debut secondaries fund, DWS Private Equity Solutions I, in November 2021 on USD 550m, following a fundraise that began in 2019.

The strategy focuses on “mid-life” secondaries opportunities for growing companies. The vehicle makes deals valued at USD 20m-USD 250m but can selectively back larger opportunities with LP co-investments, according to Unquote Data.

DWS’s existing team will continue to manage the fund, with DWS remaining an LP in the structure, according to a press release. The fund’s LP base comprises 20 investors, including state pension funds, insurance companies, corporate institutional investors and family offices from North America, Europe and the Middle East, according to Unquote Data.

Following the transfer of the PE secondaries business, DWS intends to divert its attention to its “key areas of strength", including its real estate and private debt strategies, DWS CEO Stefan Hoops said in a press release.

The growing appeal of the secondaries market has seen several asset managers enter the space in the past two years via acquisitions in a spate of consolidation. CVC Capital Partners acquired Glendower Capital (also formerly part of Deutsche Bank) in September 2021, with Franklin Templeton announcing its acquisition of Lexington Partners two months later.

Other multi-strategy asset managers have been present in the space for longer; Carlyle entered the secondaries market in 2011 with its acquisition of AlpInvest, while Blackstone and Ardian also have long-established secondaries strategies.

The advisory space has also seen consolidation, with Raymond James acquiring private capital adviser Cebile Capital in 2021.

With LP liquidity constraints and the denominator effect out in full force in 2023, LP portfolio secondaries are expected to gain traction in 2023. GP-led secondaries continue to be a popular means for sponsors to move their best assets into continuation funds while also generating returns for LPs in their flagship strategies. This area is likely to hold its popularity in 2023, with more penetration in the mid- and lower-mid market, albeit with a more selective universe of buyers, who will be bearing in mind valuations and the prospects for their own fundraises.

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• GPs
• Secondaries
• UK / Ireland
• Secondaries