EUROPE - Andrew Hartley makes secondary move

Kim
27 April 2009

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In a further sign of the sea change in the industry, August Equity founder and former managing director Andrew Hartley has joined Chamonix Private Equity, a direct secondaries player founded in 2006 when it took over a buyout portfolio from 3i.

"The primary market right now has all sorts of problems," Hartley says. "The real value now is in providing fresh liquidity and helping to restructure the industry. There are few people in the space at the moment, so it is very exciting."

The funding structure for such deals may be done alongside existing secondaries investors with funds to deploy. Chamonix has recently submitted several bids for portfolios with backing from 'some big secondaries names' acting as the financial support. "There remains scope to raise institutional funds to invest alongside these secondaries investors, and also to do new deals - for example acquiring assets from banks they'd acquired in loan-to-own scenarios. It's where the real action is."

This action will take time to get underway, however. Companies are now reporting Q1 figures, meaning backers/parents are only just learning the true financial situations they face. Thus any prospective dealflow is likely to take time to materialise. "This will prove a very powerful growth trend in our sector over the next few years," Hartley muses.

Hartley joins as Partner, and his move comes seven months after he left August, the firm he spent 13 years with, after eight years at 3i. It was during his time at 3i that he worked with Chamonix founders Jane Crawford and Christopher Edge.

At the time of his departure, Hartley told unquote": "The traditional 10-year, 2 and 20 limited partnership is viable, but I no longer believe it is the only way of using capital and the skill sets of private equity professionals. We should be looking to more flexible ways and, as people do, this model will be challenged. There has been a lot of inertia between GPs and LPs over the last 12-15 years: strong performance has attracted investors and they've come to expect returns of at least 15-20%. But that is not always sustainable and especially not in a downturn. So are investors getting value with this model? Not necessarily. Long term commitments may no longer be the best way forward."

The Chamonix team comprises nine people with backgrounds in banking, private equity and turnarounds. There have already been "a couple of good exits" from the 2006 acquisition, according to Hartley.