Has anyone else noticed a huge increase in the LMM space in Canada over the past few years? My thesis is because Canadian PE firms like Onex / Birch Hill / etc are so top heavy and (frankly) cheap with carry, you have VP / Ps leaving to either be a fundless sponsor or work with smaller pools of capital for less cash comp but material carry.
Diverse example set, but I’m referring to Pillar49, Kent Road, Alcorn, and a bunch of others. Some really great folks with good backgrounds here.
And I get it. Why would you grind your way up at Torquest in the off chance they don’t fire you to potentially get material carry, all the while underwriting execution risk on them being able to continue to raise capital. Hell, look at how poorly ONCAPs fundraise is going
Agreed. You can add Altas (although not recent) and Alphi to that list.
Altas doesn’t seem to be having fundraising issues though
Probably meant as in adding to the list with the spin-offs. Altas founded by ex Onex MD.
The street is littered with ex-Altas directors who get pushed out or were burnt out. The crazy thing is a bunch of them are still on the banner photos on their website lol
I think a lot of it too is because Canadian companies tend to be smaller, so if you're a Canadian fund focused on Canadian opportunities, there aren't really that many big companies that would even be viable for a megafund.
Obviously even our LMM market is MUCH smaller than the US, but it's still big enough to support PE activity.
CANada? More like CAN'Tnada
Pretty sure the examples you mentioned are search funds and not true LMM funds, better examples would be Imperial/Novacap, although they might be classified as MM and not LMM by Canadian standards
Who threw MS? Pillar49 and Kent Road have like 1 acquired company between the two of them, Imperial/Novacap's latest fund size was $800MM and $417MM CAD respectively, that's firmly LMM territory by non-Canadian standards
Not sure about the MS, but I wouldn’t call them search funds as their goals are owning multiple businesses. Kent Road also has a team of like 10 people, so it isn’t structured as a search fund. In the other comment above, Alphi is another good example where its ex BH / Northleaf people leaving to start their thing in a smaller cheque size.
These are groups that have committed capital through a fund structure, permanent capital structure, or sufficient networks to be successful fundless sponsors. This isn’t unique to buyouts either, look at venn growth partners. They don’t have a fund but have like 8 growth equity investments
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