Thomas H. Lee Partners has bought itself more time to manage an investment in wealth-advisory firm Hightower Advisors LLC through a secondary transaction with investors that include Goldman Sachs Group Inc.
The size of the deal ranges between $700 million and $800 million, according to a person familiar with the transaction who did not provide any additional financial details.
The firm has recapitalized Chicago-based Hightower partly with new capital from secondary specialist Coller Capital as well as the secondary investment units of Neuberger Berman Group and Goldman Sachs. THL, as the Boston firm is known, will remain Hightower’s lead investor and continue to manage the wealth adviser, according to a press release.
Secondary investments involving a single company or asset represent a small but growing part of the market for second-hand private-equity stakes. In such deals a private-equity owner often refinances a single asset using a new vehicle that typically provides it with a fresh five- to seven-year investment term, bringing in new capital from secondary buyers. The structures let firms hold onto assets for longer periods than they might otherwise be able to had the assets remained in the funds that originally backed them.
Shea Goggin, a managing director at investment bank Houlihan Lokey Inc., which advises firms on such deals, said there are several other single-asset deals in the market that firms are pitching to investors.