- Despite the recent rebound in public markets, many investors remain overallocated to PE and need to deal with the denominator effect
- Reduced institutional investors’ allocations and active portfolio management are driving an increase in the overall LP interest volume offered on the secondary market
- Challenging market environment has impacted traditional exit routes creating strong supply of GP-Led secondary opportunities at attractive valuations
Reasons to invest
- Focus on leading Small- & Mid-cap GPs with strong track records; avoid index buying
- Leveraging Flexstone Primary Platform
- Seeking to exploit competitive information advantage in our sourcing and underwriting
- Targeting assets at an identified inflection point in value creation / near-term liquidity
- Returns driven by underlying portfolio company growth orientation and value creation
- Acquiring funds at an opportune time in their life (typically 3-8 years)
- Attractive unlevered returns balancing money multiple and IRR and uplift at closing
- Fundamental underwriting approach / pricing methodology
- Acquiring assets at prices below intrinsic value / Strong focus on downside protection
- Proprietary ESG framework to help identify value creation risk and opportunities
The alpha thesis
Tenet
- Long-term investor in businesses
- Develop deep understanding of each investment
- Selective investing focused on high-quality companies (Quality)
- Sustainability of profitable growth drives long-term value creation (Growth)
- Invest with a margin of safety** (Valuation)
- Define risk as a permanent loss of capital
Process
- Time arbitrage
- 7-step bottom-up fundamental analysis (Quality-Growth-Valuation Framework)
- Starting point is quality of business, not weight of company in the benchmark; look for difficult-to-replicate business models
- Identify long-term secular growth drivers; analyze cash flow return on investment
- Intrinsic value compared to price-implied expectations; purchase price at meaningful discount to intrinsic value; contrarian
- Active risk management; absolute-return oriented
Proof points
- Low turnover
- High-conviction portfolio with relatively concentrated holdings
- High active share* (typically 80% or higher) and high percentage of wide moat companies in the portfolio
- Strong up-market capture with low down-market capture; low turnover
- Strong up-market capture with low down-market capture; strong risk-adjusted returns
- Low down-market capture; standard deviation at or below benchmark
We believe active investment management and active risk management are integral to alpha generation.
The firm
Flexstone Partners was established by bringing together three specialized private investment firms of Natixis Investment Managers – Caspian Private Equity, Euro Private Equity, and Eagle Asia Partners – to form one integrated global team to best support the distinct needs of clients worldwide.
With more than 20 years of private market experience, we’re immersed in the world’s most compelling markets across North America, Europe, and Asia, to actively capture responsible growth opportunities for our clients. In addition to an extensive global network, our team of more than 40 private investment specialists have well established market presence in their respective markets. Close proximity with clients also enables each team to design tailor-made solutions.
LOCATION
USA
XX
Employees
Featured strategies
Thematics Safety
The Thematics Safety strategy looks to tap into the fast-growing safety and security themes.
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Important information
All investing involves risk, including the risk of loss. Investment risk exists with equity, fixed income, and alternative investments. There is no assurance that any investment will meet its performance objectives or that losses will be avoided. There could be other differences across similar products in the same strategy. Investors should fully understand the risks and other relevant details associated with any investment prior to investing.