Investment fund manager David Tepper, best known for his stock-picking prowess, is devoting a piece of his personal fortune to private equity investing.
Tepper – worth about $14.5bn – has become the founding investor for a private equity firm that plans to invest in growth companies, special situations and the media and sports sectors, according to regulatory filings and a person familiar with the matter.
The firm, Andalusian Private Capital, was co-founded by one of Tepper’s most trusted executives – Jeffrey Kaplan, a former Merrill Lynch mergers head who helped his one-time boss make the record-setting $2.3bn acquisition of the National Football League’s Carolina Panthers.
Andalusian, with about $800m in assets, will invest on behalf of Tepper and more than 10 family offices who are banding together to do their own transactions rather than committing capital to private equity firms. Family offices have been adopting this approach because they believe big buyout firms are increasingly prioritizing asset growth over returns, according to Elizabeth Weymouth, the founder of Grafine Partners.
“They really want to get closer to the source of alpha rather than being walled off from the action in a traditional private equity fund,” said Weymouth, who was speaking in general terms, based on her firm’s specialty of investing in individual buyouts on behalf of wealthy investors, endowments and sovereign wealth funds. “These investors want more control, they want more flexibility in holding periods, and they want superior returns.”
A spokesman for Tepper’s hedge fund firm, Appaloosa Management, declined to comment. Tepper didn’t return calls or emails.
Tepper has backed other Appaloosa executives and portfolio managers who have gone on to form their own fund companies, including Eric Cole, Matthew Knauer and Drew Casino. His arrangement with Kaplan is no different, the person familiar with Tepper’s thinking said.
Subscribe to our Newsletter to increase your edge. Don’t worry about the news anymore, through our newsletter you’ll receive weekly access to what is happening. Join 120,000 other PE professionals today.
Passive Roles
While Tepper won’t be involved day-to-day in Andalusian, it bears his imprimatur. The firm is located in the same Short Hills, New Jersey, office building that has housed Appaloosa for decades and also uses an equine-related name – a practice that Tepper, 63, adopted in founding his own firm and several of its main funds, including Palomino and Azteca Partners.
Tepper was listed as a co-founder of Andalusian, along with Kaplan and Vice Chairman Nicholas Savasta, in an April filing with the U.S. Securities and Exchange Commission. Earlier this month, the firm revised the filing to say that Kaplan and Savasta launched the company last year “with its founding investor, David Tepper.”
Tepper will have a strictly passive role, said the person, who asked not to be identified discussing private matters.
Aside from Tepper, the firm also has a minority investor, according to the SEC filing. While also described as a passive player, the investor — who isn’t named in the documents — will have the opportunity to make co-investments alongside the firm’s clients, provide services or financing to its portfolio companies and share in some of Andalusian’s profits, the filing shows.
Tepper has given few hints publicly that he or other members of his firm were branching into private equity. The firm quietly opened in 2020 and few knew about it until Andalusian filed earlier this year to be a registered money manager.
Sports Moves
A person familiar with the firm’s plans said Andalusian’s equity investment would range from $100m to $500m. In addition to investments in the sports industry — along with technology and media companies — the firm has an affiliate called Andalusian Sports Partners, according to the filing. The company will provide sports-related advisory services and management services to “certain sports-focused investment funds”.
Meanwhile, Tepper’s sporting interests have expanded since becoming the owner of the NFL. He is planning a new Panthers stadium and in 2019 the Tapers agreed to pay a record $325m to bring Charlotte a major league soccer franchise. He was also among the investors who helped Epic Games Inc., the company behind the blockbuster Fortnite game, raise $1.78bn.
As for Kaplan, he is a seasoned dealmaker who spent three decades at Merrill to become its global head of mergers and acquisitions. In 2011, he joined Appaloosa as chief operating officer, leading the firm’s acquisitions and managing its investment banking relationships. Another person with knowledge of the firm’s operations said he also personally worked on finding private deals for Tepper to invest in.
Yet even when Kaplan forms his own firm, regulatory filings reveal an unusual arrangement in which he is working for another firm at the same time.
Kaplan serves as the head of business development for Accelerate Acquisition Corp., a blank Czech company that went public in March and is run by Robert Nardelli, the former chief executive officer of Chrysler LLC and Home Depot Inc.
Accelerate has a partnership with Andalusian that asks Kaplan to bring transactions to that firm, even as it seeks opportunities on its own.
“We are confident that property sellers will look favorably on Andalusian’s partnership with us,” Accelerate said in offering documents filed with the SEC.
Source: Bloomberg BNN
Can’t stop reading? Read more
Sports’ Saturday: Top sports news in private equity
Sports' Saturday: Top sports news in private equity Justin Ishbia, founder of private equity firm...
J.C. Flowers to retain control as Jefferson Capital launches $1.1bn Nasdaq IPO bid
J.C. Flowers to retain control as Jefferson Capital launches $1.1bn Nasdaq IPO bid J.C. Flowers...
Apollo and Irth Capital eye Papa John’s in $1.7bn take-private bid
Apollo and Irth Capital eye Papa John’s in $1.7bn take-private bid Apollo Global Management and...