Argentem Creek Partners and Emerge9 form a joint venture focused on WealthTech.

In order to link non-institutional investors with General Partner (GP)-led private equity (PE) investments, Emerge9 Inc. ("Emerge9") and U.S. investment firm Argentem Creek Partners ("ACP"), a specialist investment firm specializing in emerging countries, have partnered to create a strategic joint venture.

Madilyn Swift

March 05, 2024

2Min Reads

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Banking

Through the joint venture, ACP's global connections and presence in the Middle East, Latin America, and Asia will be combined with Emerge9's origination and tailored finance solutions.

According to Evercore, the transaction volume of GP-led secondary agreements would increase from $7 billion in 2015 to $51 billion in 2023, making them a rising sector of the PE secondary market. In light of the limited M&A and IPO markets, an increasing number of GPs are giving their LPs liquidity by moving valuable assets into so-called continuation vehicles, which are financed by fresh investors. GPs typically roll over most, if not all, of their carried interest into the continuation vehicle in these types of transactions, providing investors with visibility into the historical performance of a particular asset while under the GP's stewardship.

"The GP-led market is especially appealing because of the high-quality transactions and the supply/demand imbalance that benefits investors. Our knowledge base and approach to investigating the market potential in PE secondary markets are enhanced by this joint venture. In addition, we are able to carry out this plan far more quickly and effectively because to our collaboration with Emerge9," said Daniel Chapman, the CEO and founder of ACP.

The GP-led market is still undercapitalized, even though a large number of high-quality deals have entered the market during the last five years. The PE secondary market is buyside constrained, as highlighted by PJT Partners in their January 2024 Investor Roadmap. This is indicated by a capital overhang ratio (deal volume vs. dry powder) of 1.3x anticipated for 2024 compared to 2.0x in 2022, which is at historical lows. PJT anticipates sustained returns of more than 2.5 times net MOIC in a capital-constrained environment.

Both companies will work together on a number of projects as part of the joint venture with the goal of increasing non-institutional investors' access to private equity. John Abbott, CEO and co-founder of Emerge9, stated, "We believe that this joint venture positions us to accelerate our growth, particularly as we develop our distribution network in the Middle East, Europe, and Latin America. Emerge9 aims to democratize private equity through innovative technology tools, including our new AI Assistant."