Leucadia Asset Management, an arm of Jefferies Financial Group Inc., is backing a new investment firm led by former Blackstone Group LP and Carlyle Group LP executives that will buy stakes in middle-market private equity, real estate, infrastructure, hedge fund, private credit and venture capital companies.
Stonyrock Partners LP, based in New York, is led by managing partner Craig Schortzmann and partner Sean Gallary, former managing directors at Blackstone and Carlyle’s AlpInvest Partners, respectively. The two previously worked together at Asset Management Finance, or AMF, a Credit Suisse Group AG affiliate that focused on buying and selling slices of investment managers.
Stonyrock is seeking $750 million to $1 billion for its debut fund, which will be a permanent capital vehicle, according to people with knowledge of the matter. Representatives from Stonyrock and Jefferies declined to comment on the fundraising target.
By focusing on smaller managers, Stonyrock doesn’t expect to compete directly with Blackstone, Neuberger Berman Group LLC’s Dyal Capital Partners and Goldman Sachs Group Inc.’s Petershill, each of which has raised billions of dollars for funds dedicated to buying stakes in investment managers.
“There’s a really interesting opportunity to build strategic partnerships with a subset of managers in the middle-market space,” Schortzmann said in an interview.
Stonyrock will target stakes of 15 percent to 25 percent of firms it partners with, he said.
“We can be a source of capital for managers across the globe who are exploring succession planning, new product development and other initiatives that can grow their businesses,” Gallary said.
Leucadia has been ramping up exposure to investment managers. Last year, it announced a strategic relationship with Weiss Multi-Strategy Advisers LLC and acquired a revenue-sharing interest in Schonfeld Strategic Advisors LLC’s global fundamental equities business.
Stonyrock’s launch will “address a growing market opportunity,” Jefferies Chief Executive Officer Rich Handler and President Brian Friedman said in a joint statement.
Other investment firms that target manager stakes include Investcorp, Wafra Inc., Landmark Partners and Magnetar Capital. Recent transactions in the industry include Petershill’s purchase of minority stakes in Industry Ventures and General Catalyst, Dyal’s acquisition of a minority interest in private equity firm HGGC and Blackstone’s minority investment in New Mountain Capital.