Blackstone Nears Deal for New Mountain Capital Stake

20 Sep 2018, 06:28 AM IST

(Bloomberg) -- A Blackstone Group LP unit that buys stakes in alternative asset managers is nearing a deal for a minority investment in New Mountain Capital LLC, according to people familiar with the matter.

Blackstone Strategic Capital Holdings is in talks to acquire less than 10% of New Mountain, said one of the people, who asked to not be identified because the information is private. The New York-based firm plans to use proceeds from the deal for growth investments, this person said.

The transaction hasn’t been finalized, the people said.

Representatives for Blackstone and New Mountain declined to comment.

Blackstone and rivals including arms of Goldman and Neuberger Berman Group have raised multibillion-dollar funds to acquire interests in firms that manage private equity, real estate and other alternative investments.

Some firms have used proceeds to cash out founders, while others have used the investments to diversify or commit additional money to existing funds. For investors, buying a minority interest in these types of asset managers gives them a share of ongoing fee income, which is relatively predictable for firms with several closed-end funds.

Blackstone’s strategic capital group has stakes in firms including Leonard Green & Partners, Rockpoint Group, Kohlberg & Co. and PAG, an Asia-focused investor.

In July, Blackstone teamed up with Goldman Sachs’ Petershill arm to acquire a minority stake in the technology-focused private equity firm Francisco Partners.

New Mountain manages private equity, public equity and credit funds with more than $20 billion in commitments, according to its website. It was founded in 1999 by Steven Klinsky, who previously worked at Goldman Sachs Group Inc. and Forstmann Little & Co.

New Mountain raised $6.2 billion for its most recent private equity fund, which closed last year. The firm seeks to make three or four acquisitions a year of mid-size companies worth $100 million to $1 billion, according to its website.

To contact the reporters on this story: Gillian Tan in New York at gtan129@bloomberg.net;Kiel Porter in New York at kporter17@bloomberg.net

To contact the editors responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net, ;Elizabeth Fournier at efournier5@bloomberg.net, Matthew Monks, Michael Hytha