The Capital Partnership Acquires Northgate Capital
- M&A Deals
- 18.04.2016 12:45 pm
The Capital Partnership, a private investment office and independent asset manager, today announced that it has reached an agreement to acquire 100% of the ownership of Northgate Capital, the California-based venture capital and private equity investment firm, from Religare and certain members of Northgate’s management team. Religare, the India-based diversified financial services group, acquired a majority interest in Northgate in 2010. Completion of the transaction is subject to the satisfaction of certain conditions precedent, including certain regulatory approvals. Terms of the transaction were not disclosed.
Founded in 2000, Northgate is a leading venture capital and private equity firm with $4.8 billion in assets under management (AUM) as of 1 April 2016 on behalf of institutional and private investors in North America, EMEA and Australia.The firm makes both direct company venture capital investments, where it leverages its network of global relationships to help create value for its portfolio companies, and indirect company investments by investing in venture capital and private equity funds. Northgate portfolio companies represent some of the most successful start-up companies across multiple verticals including Telecom, Fintech and Media. Northgate portfolio companies have had multiple IPOs and successful exits.
The Capital Partnership has maintained a strong relationship with Northgate for the past 12 years and its managed funds collectively represent one of the largest investors in the Northgate funds. The proposed acquisition will build on The Capital Partnership’s growing venture capital and private equity investment portfolio, which currently accounts for around 25 percent of its assets under management, and reinforces the firm’s commitment to the US market. This acquisition will enhance the alignment of interests between investors and shareholders of Northgate, creating “a firm owned by an investor, for the investors.” Following the acquisition, Northgate will retain its investment and operational autonomy as distinct from The Capital Partnership.
In conjunction with the transaction, it is anticipated that Ali Ojjeh, Managing Partner of The Capital Partnership and a 12-year member of Northgate’s Limited Partner Advisory Board, will assume the additional role of Chairman of Northgate. Dr. Hosein Khajeh-Hosseiny, a current member of Northgate’s Management Committee, will continue to lead the firm as its Managing Partner and as CEO. Following the closing of the transaction, it is proposed that each of Mr. Ojjeh and Dr. Khajeh-Hosseiny will participate as members of the Northgate Investment Committee, together with Brent Jones and Thomas Vardell, two of the co-founders of Northgate.
Commenting on the proposed acquisition, Ali Ojjeh, Managing Partner and co-founder, The Capital Partnership, said: “The Capital Partnership has a successful 18 year track-record in venture capital and private equity investments, which is highlighted by our existing 12-year relationship with Northgate. Silicon Valley plays an increasingly important role in global value creation across all sectors which is highlighted by technology companies’ share of the S&P 500, which has more than doubled in the last 30 years and represents approximately 20% of the index today. Technology remains a significant driver of global economic output and growth and we believe that expanding our commitment to Northgate will help our investors capitalize on the growth opportunities in one of the world’s major hubs for innovation and entrepreneurship.”
Dr. Hosein Khajeh-Hosseiny, Managing Partner, Northgate, said: “We are excited to expand our collaboration with The Capital Partnership, which manages funds with longstanding investments in our (Northgate) funds. Since purchasing its ownership stake in 2010, Religare has made tangible contributions to our institutionalization and the growth of our network beyond the US. We are delighted with Religare’s choice of The Capital Partnership as our buyer. With a strong understanding of Northgate, global technology and capital markets as well as investors in start-ups and funds, The Capital Partnership is well-suited to help us build on our growth and network to fully realize our potential as a strong, long-term, value-creating platform for our ecosystem of partners.”
Sunil Godhwani, Chairman and Managing Director, Religare, said: “Given the tremendous future growth potential that India offers for a diversified financial services platform like ours, we have taken a strategic view to consolidate and refocus our energies on our existing lending and other domestic businesses. Before deciding to divest our stake in Northgate and arriving at the best possible course of action, we had carefully considered a number of factors keeping in mind the best interests of the investors and the franchise. Our partnership over the years with Northgate has been enriching and we extend our best wishes to the team for their future endeavors.”
For The Capital Partnership, the deal was headed by Ali Ojjeh and led by Amy Harvey, head of legal and compliance, Casey Gordon, head of private equity and business development, and Tim Savage, CFO. Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as legal advisors to Religare. Morrison & Foerster LLP served as legal advisor to The Capital Partnership.
The Capital Partnership’s team will continue to work with Northgate to help identify resources necessary to build on its leadership position, expand globally, and continue to deliver world-class investments to its investors.