Kudu to step up boutique GP stake deals in Europe

The evergreen investor, which typically makes three to five deals per year, wants to add more infrastructure and specialised equity managers, while also expanding its more traditional private equity, private credit and real estate portfolio.

It is focused on mid-market asset managers with around EUR 5m-EUR 20m of EBITDA in the local currency and typically managing around USD 500m-USD 1bn of assets, although it can invest at up to USD 5bn AUM.

In addition to its European focus, Kudu is also reviewing a strong pipeline of UK-based, Canadian and Australian GPs as it seeks to expand beyond its US-weighted portfolio. The sponsor recently made its third deal in the UK with direct lender Apera and has also backed an undisclosed Germany-based private credit manager.

Alongside private credit and infrastructure, Kudu is also keen to assess deals for specialised equity GPs in sectors like healthcare, following a deal for San Francisco-based Martis Capital, which closed a USD 779m fund to target the North American mid-market healthcare companies in June 2023.

The firm does not operate via a fund structure, differentiating it from other GP stakes investors, including Blue Owl and Europe-focused firm Armen, but is rather backed by insurance firm MassMutual. Jakacki sees a benefit in this, saying that Kudu never underwrites with a goal to exit and that “the rest of the movie hasn’t been written” when it comes to how fund-based GP stakes investors will return capital to their LPs.

Kudu typically sees the GPs that it backs use its capital to help launch new strategies, back up bigger GP commitments, or to help with succession. However, it often sees an interesting inflection point when a GP reaches its third or fourth fund, because a significant portion of wealth is still tied up in the first two vehicles.

The role of the GP stake is also changing, Jakacki said. While many GP stakers remain passive, non-voting investors, they also need to think about the value-add beyond capital, he added. That can entail distribution strategies, inorganic growth and the use of human capital.

Kudu also takes stakes in wealth managers, which form around 20%-25% of its portfolio, as they have different risk-reward models.

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• Topics
• GPs
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• DACH
• UK / Ireland
• United Kingdom