Dyal Invests in HGGC

Dyal Capital Partners, a division of Neuberger Berman and an active investor in private equity firms, has acquired a non-voting minority stake in HGGC.

HGGC (formerly Huntsman Gay Global Capital) makes leveraged buyout, recapitalizations and growth equity investments in middle market companies. The firm invests from $25 million to $100 million of equity per transaction in companies that have revenues of $100 million or more, enterprise values of $100 million to $500 million, and EBITDA of $15 million or more. Sectors of interest include business services, consumer, financial services, healthcare, industrial services, information services, and software.

Dyal Capital Partners, a division of Neuberger Berman Group, makes minority equity investments in institutional alternative asset management businesses worldwide. The firm’s current portfolio includes 20 minority investments in private equity firms and 14 minority investments in hedge funds. Dyal’s investment in HGGC follows its October 2018 non-voting investment in New York-based American Securities and its August 2018 investment in middle market lender and New York-based Golub Capital.

“We’re very excited to partner with Dyal Capital, which has a stellar reputation for investing in best-in-class firms,” said Rich Lawson, chairman, CEO and co-founder of HGGC. “Dyal’s investment provides HGGC with balance sheet capital to continue to develop our strong platform while increasing commitments to our own funds and strengthening alignment with our limited partners.”

Earlier this year the firm closed Dyal Capital Partners IV LP with $7 billion of committed capital. The firm’s earlier fund closed with $5.3 billion of committed capital in December 2016. Dyal was founded in 2011 and has offices in New York, London and Hong Kong (www.dyalcapital.com).

HGGC markets its investment strategy as “Advantaged Investing” that, according to the firm, enables it to source and acquire businesses at attractive multiples through partnerships with management teams, founders and sponsors who reinvest alongside HGGC creating an alignment of interests. “HGGC has very quickly become a premier middle market investment firm through its ‘Advantaged Investing’ model that creates true partnerships with founder-owners, management teams and sponsors,” said Michael Rees, a managing director and head of Dyal Capital. “We are excited to partner with HGGC given this differentiated approach, the strong and growing team, and the firm’s demonstrated commitment through being one of the largest investors across its own funds.”

HGGC’s current portfolio includes more than 19 investments including AutoAlert, a provider of data analytics and lead-generation services to automotive dealers; Nutraceutical, a manufacturer, marketer, distributor and retailer of branded nutritional supplements; and Integrity, a developer and distributor of life and health insurance products to the senior market. In December 2016, HGGC closed its third fund, HGGC Fund III LP, with total capital commitments of $1.8 billion, surpassing its target of $1.5 billion and reaching its hard cap. HGGC is based in Palo Alto (www.hggc.com).

“Attracting this minority investment from Dyal is further evidence of our successful strategy and the results we are generating for our limited partners,” said Steve Young, president and co-founder of HGGC. “We look forward to putting this capital to work in growing our portfolio of great businesses.”

Neuberger Berman, founded in 1939, is a private, independent, employee-owned investment manager. The firm manages equities, fixed income, private equity and hedge fund portfolios for institutions and advisors worldwide with $304 billion in client assets as of December 31, 2018. The firm has offices in 22 countries and is headquartered in New York (www.nb.com).

Evercore (www.evercore.com) was the financial advisor to HGGC and Kirkland & Ellis (www.kirkland.com) provided legal services.

© 2019 Private Equity Professional | March 27, 2019