Patria Investments' Merrick McKay Discusses Alpha Generation in Middle Market Private Equity at PAX Talks III

Patria Investments Limited (PAX) hosted a conference, PAX Talks III, to discuss their Global Private Markets Solution and how they generate Alpha in middle market private equity. The event featured Merrick McKay, Partner and Head of Private Equity for GPMS, and Charles Keenan, portfolio manager at Life Capital. The conference was a fireside chat Q&A format, with attendees submitting questions for discussion.

Patria Investments Limited (PAX) recently hosted the third edition of its PAX Talks series, focusing on their Global Private Market Solutions (GPMS) platform. The event featured Merrick McKay, Partner and Head of Private Equity for GPMS, and Charles Keenan, portfolio manager at Life Capital. The conference was conducted in a fireside chat Q&A format, allowing attendees to submit questions for discussion.

Merrick McKay provided insights into his background and how he ended up running the Private Market Solutions business at Aberdeen. He highlighted his experience in corporate finance advisory and direct investment, before joining Standard Life Capital Partners and eventually leading the European private equity business at Aberdeen Asset Management. The decision to seek a new owner for the business was driven by the need for investment in systems and people, as well as a desire to maintain a separate process for the public market model.

The carve-out acquisition of Aberdeen's middle market private equity solution business by Patria was a significant event. Merrick McKay explained that the transaction began with discussions in early 2023, with exclusivity agreed in mid-2023. The transaction was signed in October 2023 and completed in April 2024. The acquisition allowed Patria to expand its GPMS platform, which now includes over $13.9 billion in assets under management (AUM), with $11.4 billion being fee-earning AUM.

The acquisition also involved the transfer of clients, with Merrick McKay noting that the majority of clients were with separate managed accounts (SMAs), which allowed them to modify their strategies at any point. The high degree of transparency and close relationships with clients contributed to a high success rate in the transfer process. Merrick McKay also mentioned that there were a number of pool products with specific change of control consents, but the nature of the business ensured that clients were happy with the acquisition.

The GPMS platform is a key component of Patria's growth strategy, with the company expecting fee-earning AUM to close to double within the next three years. The platform invests mainly in middle market, private equity primaries, secondaries, and co-investments in Europe and to a lesser extent in the U.S. The listed trust, Patria Private Equity Trust (PPET), represents over $1.6 billion of permanent capital fee-earning AUM to Patria.

In conclusion, the PAX Talks III event provided valuable insights into Patria's GPMS platform and the acquisition of Aberdeen's middle market private equity solution business. The event highlighted the importance of investment in systems and people, as well as the need for a separate process for the public market model. The acquisition has allowed Patria to expand its GPMS platform and generate significant fee-earning AUM.