Armen eyes 2023 final close for debut fund after first close and stake sale

Rachel Lewis
29 March 2023

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GP stakes investor Armen is aiming to hold a final close on its inaugural GP stakes fund by year-end following a EUR 150m first close, having sold a stake in itself as its fundraise continues, CEO Laurent Benard told Unquote.

Armen has set a EUR 400m target for Armen GP Stakes Fund I.

The sponsor's first investment is coming soon, Benard said, as the first close gives Armen concrete ability to close a deal and to address a wider need in the market as GPs increasingly need liquidity.

Armen has committed EUR 24m to its own fund, he added, saying that its 6% skin in the game follows a long trend of GPs needing to up their own fund contributions from 1-2% to near 5% to demonstrate an alignment of interests.

"We are facing the same difficulties as other firms fundraising but LPs like the strong visibility on the cash flows that comes with the management fees. On a yearly basis, we will get dividends that will be distributed to LPs," said Benard.

Co-founder Dominique Gaillard earlier told Unquote that Armen is pushing a "new frontier" of GP stakes in Europe, following peers in the US market.

The GP is expecting to benefit from private asset funds' need to create some liquidity as many are struggling to fundraise and make exits, he said, adding that a stake sale can help build the balance sheet to invest in its own capacities.

Investors
The fund has a wide base of institutional, family office and high-net-worth individual LPs, which are mostly in France, but the pool has started expanding to the UK, Belgium, Luxembourg and Switzerland.

Stake sale
Alongside the first close, Armen announced that it has sold around 20% of its own share capital to three French family offices: the Dassault (Groupe Industriel Marcel Dassault), Faiveley (Issarts Capital) and Laine-Foriel-Destezet (Allegria Capital) families.

This will enable it to hire in the Nordics and Benelux regions, as well as Switzerland and southern Europe, while expanding its cybersecurity, regulatory and ESG capabilities.

Family offices are taking an increasing interest in private assets, as many are not caught up in the same capital allocation problems as institutional LPs.

"Many have the capital and the willingness to go into these strategies, with private assets posting strong and resilient returns through any kind of cycle," said Benard.

Investments
The fund will take stakes in 12-15 GPs, including the coming inaugural deal, across various private capital asset classes.

Armen will look to acquire between 10-30% of a GP and will hold a board seat depending on the willingness of the vendor, Benard said.

It will not look at emerging managers, he added, instead targeting GPs with up to EUR 10bn AUM, with its sweet spot being EUR 1bn-EUR 4bn. Around 20% of the fund is reserved for small sponsors, perhaps on their second fund, with the goal to inject new cash and develop new skills.

People
Armen - Laurent Benard (CEO)