Mubadala Capital buys into LSV Advisors as continuation funds boom

The deal and where the money goes

Mubadala Capital, the asset management arm of Mubadala Investment Co., took a minority stake in LSV Advisors to tap the growing continuation fund market. The price was not disclosed.

LSV founder and CEO David Tisch said the proceeds will fuel more single asset continuation deals, which let private fund managers hold favored assets longer. "We're going to invest a substantial majority of that liquidity into our deals," he said.

How they linked up

According to Tisch, his first meeting with Oscar Fahlgren - Mubadala Capital's CIO overseeing private equity - happened at a Jean Georges Vongerichten venue in New York City two years back. Both said the lunch conversation on the merits of a partnership eventually led to this transaction.

Evercore Inc. advised Mubadala Capital and Houlihan Lokey Inc. advised LSV, according to a statement Tuesday.

Strategy and the market backdrop

LSV, a New York firm founded in 2005, primarily backs single asset continuation vehicles arranged by private fund managers that want to own certain assets for longer. The firm oversees $5 billion in assets.

Mubadala Capital invests across private equity, venture capital and credit, and has more than $60 billion under management. It opened its New York office in 2019. "We're conscious that if we try to do everything in-house we're going to dilute our returns and stretch ourselves too thin," Fahlgren said. "So for those strategies where we think there's an overwhelming market demand, we try to find the best managers, and David was an obvious choice."

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Continuation funds are gaining traction. PJT Partners Inc. estimates roughly 125 of these funds will approach the secondaries market during the fourth quarter, and added that most single-asset continuation vehicles are expected to come in below $1 billion.

Recent moves and what to watch

Last year, Mubadala Capital bought a 42 percent interest in Silver Rock Financial, a credit manager, and at the time said the firm planned to put over $1 billion into its funds. Also in 2023, it launched Aldar Capital alongside Aldar Properties, aiming to access real estate and infrastructure prospects throughout the United Arab Emirates and the broader region.

Fahlgren said the firm may explore more strategic partnerships, including in infrastructure, structured finance and hybrid credit. "There are many areas that we're exploring, but we're in no rush," he said. "We're doing it selectively and we want to do it with the right partners."

The bottom line for your portfolio: continuation funds are drawing more capital and specialist managers, while large investors partner up rather than build in-house. Watch how LSV deploys new liquidity and whether Mubadala extends similar tie ups in credit and infrastructure - both signal where secondary deal flow could head next.

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