THE CAPITAL PARTNERSHIP REACHES AGREEMENT TO ACQUIRE NORTHGATE CAPITAL, VENTURE CAPITAL AND PRIVATE EQUITY FIRM WITH $4.8 BILLION IN ASSETS UNDER MANAGEMENT
Proposed acquisition will help ensure continuity of investment strategy while enhancing the firm’s capabilities to drive private value creation
London / San Francisco / New Delhi – April 18, 2016 – 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 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.
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Venture capital and private equity have seen record inflows as institutional and private investors turn to alternatives to generate absolute returns. The tech sector in particular presents a significant opportunity for venture capital and private equity funds. Over the past three decades, tech sector revenues have grown significantly, with venture capital and private equity funds playing a pivotal role in identifying and accessing growth opportunities in the sector. Investor interest in the sector is expected to grow further as future-focused companies become major sources of growth, a trend which is already reflected in the changing composition of the S&P 500 and other major global stock market indices.
About The Capital Partnership
The Capital Partnership is an independent asset manager providing institutional and private investors with a comprehensive range of asset management and wealth preservation services. Established in 1998, The Capital Partnership was created to provide sophisticated investment services to the families of its founding partners. The success of the firm’s approach allowed it to expand its services and capabilities and offer them to institutions and other large families in EMEA with similar asset management requirements.
Northgate Capital was founded in 2000 to provide institutional and high net worth family investors with superior identification of and global access to a very select group of alternative investment opportunities. Its majority stake was sold to Religare in 2010. With offices in the United States, United Kingdom and Mexico and representatives in other countries, Northgate enjoys a global network of deep and relevant relationships, rigorous selection processes, focused analysis, and an experienced and opportunistic investment team.