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Brookfield Asset Administration and Sequoia Heritage, a $16bn fund that manages the wealth of Silicon Valley, are creating an funding automobile to capitalise on plunging valuations of enterprise capital-backed corporations.
The companies are investing $250mn every to discovered a brand new firm known as Pinegrove Capital Companions led by Brian Laibow, in accordance with two sources acquainted with the matter. Till not too long ago, Laibow was co-head of the North American operations of Oaktree Capital Administration’s flagship credit score fund.
Brookfield and Sequoia Heritage will every personal a 50 per cent stake within the funding firm, which can also be attempting to draw outdoors capital from giant institutional buyers. The agency hopes to boost greater than $2bn for its first fund, which can spend money on privately held corporations which have seen their valuations tumble amid a repricing of venture-backed teams.
Brookfield and Sequoia Heritage declined to remark.
The brand new automobile will reap the benefits of a funding crunch for start-ups and their venture capital house owners, who’ve struggled to exit their investments amid a dramatic slowdown in preliminary public choices. Traders in enterprise capital funds have, in the meantime, discovered it more durable to redeem their cash.
Pinegrove will purchase up stakes in start-ups from enterprise backers who’re below strain to ship returns to their very own buyers, in addition to shares in enterprise funds from individuals seeking to money out. It can additionally provide some forms of lending.
Begin-ups in hard-hit sectors comparable to cryptocurrencies and fintech are buying and selling at reductions of as a lot as 80 per cent, in accordance with contributors within the secondary market.
Sequoia Heritage was based in 2010 with cash from senior companions at enterprise capital agency Sequoia Capital, together with $150mn every from Doug Leone and Michael Moritz. The agency has since grown dramatically, and secured investments from Stripe co-founder John Collison and former Google boss Eric Schmidt’s household basis.
Sequoia Heritage invests individually from Sequoia Capital. Final month, Moritz stepped down from his position at Sequoia Capital to concentrate on his Heritage investments full time.
In January 2022, Brookfield entered a “strategic partnership” to construct logistics help for Sequoia China’s investments in native ecommerce start-ups. Brookfield additionally invested in Sequoia China, which is within the technique of being spun off from the US agency.
Bruce Flatt, chief govt of Brookfield, and high executives at Sequoia have been launched by Bruce Karsh, the cofounder of Oaktree. He made the introduction shortly after Brookfield acquired a controlling curiosity in Oaktree in 2019.