Finding value in lower middle market private equity

Nitin Gupta of Flexstone Partners discusses the benefits of focusing on the smaller companies in the global private equity markets.

Flexstone’s Unique Approach: Focused on Diversification and Sustainability
To help meet the dynamic challenges of today’s markets, a number of investors are turning to alternatives in their pursuit of long-term growth opportunities. In response to this demand, Natixis Investment Managers integrated the knowledge and expertise of three private equity affiliates to launch Flexstone Partners in 2018. The result is a truly different approach to private investments. Flexstone Partners is a global network of private equity, real estate, private debt, and infrastructure specialists that employs 25 years of private market experience to create tailor-made solutions designed to meet the distinct needs of clients.

Providing Opportunities, Adding Value
Nitin Gupta, Managing Partner at Flexstone, says the firm takes a different approach to the private investment space. “Our core expertise is providing focus on the lower and middle market segment globally. Access to primary capital, primary funds, co-investments, and secondaries,” he says. “We believe the lower and middle market is more attractive in terms of valuations – and it’s where we see various avenues for us to really add value.” For Gupta, these value-adds can include add-on acquisitions, as well as operations and management team enhancements.

Focused on Diversification and Sustainability
Flexstone’s focus on building a portfolio that can have long-term sustainability across all market segments translates in part to careful consideration of diversification. “In terms of portfolio construction, we believe it’s all about diversification,” remarks Gupta, “in terms of vintage, geography, managers, and consideration of how companies and funds might perform in down markets.” Acting as a responsible investor is also an important component of Flexstone’s approach. “Whether directly, or through funds, we look to invest in well-managed, ethically responsible companies that are sensitive to ESG criteria. That includes things like minimal negative environmental impact and adherence to fair labor practices.”

Global Reach, Local Touch
According to Gupta, one of Flexstone’s key value-adds for clients is its ability to consider markets and opportunities from a global and regional perspective simultaneously. “We’re a global firm, but we source on a local basis. We have teams in Asia, Europe, and the US – each with a strong pipeline of opportunities and a strong network of placement agents. For us, it’s about mapping out the entire private equity landscape and looking at new ideas that are coming to market. If you’re a long-term investor, you can find pockets of opportunities; you just have to be selective.”

A Client-Centered Approach
At the core of Flexstone’s methodology lies a unique focus on close collaboration with clients and their unique needs. “We know that no two clients are the same and that one size doesn’t fit all. That’s why we’re focused on an active approach to private investing, one that’s high-touch and responsive to distinctive objectives and goals.” Whether it’s risk management, asset underwriting, or accounting, the Flexstone team serves as a ready and willing business partner for its clients worldwide.
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