Louise Watson

Flexstone Partners (Flexstone), an affiliate of Natixis Investment Managers, has completed its 100th co-investment as it continues to expand its global, mid -market co-investment practice.

Flexstone has committed €6.3m and reserved a significant amount of additional capital to support the next phase of growth of Pastas Gallo, alongside ProA Capital.

Pastas Gallo was founded by a Spanish entrepreneur and has become the market leader for dry pasta sales in Spain. It also sells pasta sauces, flours and breadcrumbs and is currently expanding into the ethnic dry chilled food market to tap growing demand for chilled ready meals.

Zélie Saint-Zéby, an investment Director in Flexstone’s Geneva office, commented: “Pastas Gallo is a sweet spot mid cap investment for Flexstone, alongside one of Spain’s most successful managers. The company is a hidden gem with great production facilities and, according to our analysis, has the potential to add plenty of value. It is a family business where management can be strengthened and there are multiple levers of value creation including the development of the brand and launch of new categories, sometimes through acquisitions.”

Specific due diligence was conducted by an independent and specialized advisor to assess environmental, social and governance risks associated with the activities and production facilities of Pastas Gallo.

With over 100 co-investments completed since 2008, Flexstone Partners has demonstrated the strength of its global investment platform by increasing its capacity to access attractive private companies backed by small and middle market buyout and growth managers through its network of local offices in the US, Europe and Asia.

“Our co-investment approach is based on decades of investment experience, a large deal pipeline and a systematic, data driven selection process. Over time, based on our experience as well as academic research, we have developed and refined a proprietary “Sweet Spot” selection tool which, together with our detailed due diligence process explains the success of our co-investment practice.”, said Eric Deram, Managing Partner at Flexstone.

Louise Watson, Managing Director: Head of Institutional Sales, Australia & New Zealand for Natixis Investment Managers, said, “We’re proud to announce this milestone investment for our private equity affiliate, Flexstone Partners. Flexstone’s co-investment approach means that we’re able to offer clients exposure to both attractive and profitable deals that live outside of a typical private equity fund structure, giving local wholesale investors access to attractive risk-adjusted returns.”

Flexstone’s co-investing philosophy focuses on providing increased exposure to high conviction managers in their core areas of expertise in terms of core sectors, geographies, type of deals, or investment size bracket.

“This framework is a key element to strengthening our GP relationships and to delivering attractive risk adjusted returns through negative selection risk mitigation.”, continues Eric Deram.

Flexstone’s outstanding co-investment track-record shows the quality of its deal flow and the strength of its investment selection process. Out of 100 co-investments completed since 2008, 38 are fully realized, generating an attractive risk & return performance with a combined 3.0x multiple of invested capital, a 34% gross IR and a loss ratio of 3.4%^[1].

“All our mature co-investment vehicles rank first quartile in their category. In particular, our first quartile DPIs show our ability to deploy our clients’ capital and distribute profits in a time efficient manner”, concludes Eric Deram

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[1] Past performance is not a guarantee of future results. Investing in a fund involves significant risks, including loss of all your investment

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The emerging managers program will see Flexstone Partners invest over the next three years in the first, second or third funds of US mid-market private equity managers on behalf of the industry superannuation fund.

“We believe successful US emerging managers program members tend to deliver higher fund returns, on average, compared to the returns of their former funds. In addition, with their successes, when they become more established, emerging managers may become increasingly difficult to access, as Limited Partners compete to get capacity.”

“The breadth and experience of the Flexstone team allows us to detect, access, and perform due diligence on emerging managers that may become a core of the future allocation of our client,” said Nitin Gupta, Managing Partner at Flexstone Partners. “We are excited to start this long-term initiative with a strong partner like Hostplus.”

“For Hostplus, developing and maintaining long-term partnerships with investment managers is critical to securing privileged access to successor funds and future deal flow,” said Sam Sicilia, Chief Investment Officer of Hostplus. “More than anywhere else, managing relationships with market leaders is particularly important for access to private markets. We are very pleased to team up with Flexstone Partners, who have proved to be a strong partner in the US market.”

“This partnership between Hostplus and Flexstone is a demonstration of super funds’ search for new and diverse income streams for their members, and how our global multi-affiliate model can provide institutions with tailored solutions in new markets, while supporting innovation,” said Louise Watson, Managing Director for Australia at Natixis Investment Managers. “I look forward to continuing the conversations with Hostplus on a wide range of unique investment strategies, with Natixis’ highly active managers.”

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