Pinnacle Group invests in VSS Capital, Pacific Asset Management

Pinnacle Investment Management Group announced A$143 million of investments ($92 million) in two asset managers, U.S.-based VSS Capital Partners and U.K.-based Pacific Asset Management, giving the Australian money manager a greater foothold in private markets.

Pinnacle will take a 22.5% stake in private investment firm VSS for $60.5 million, according to a company announcement dated Nov. 20. VSS focuses on the U.S. lower middle-market, especially on the healthcare, education and business services industries. VSS has approximately $961 million in assets under management.

Pinnacle expects a “substantial long term growth potential” from VSS, pointing to a new Fund V with a capital raising target of $800 million expected in 2025. Pinnacle also pointed to VSS “providing a springboard for further growth in North America.”

New York-based VSS said in a news release that the investment and strategic partnership with Pinnacle “will serve to also add new products complementary to VSS’s core Structured Capital Funds in coming years and support new strategic initiatives.”

“The VSS structured (“flexible”) capital platform serving the lower middle market is well established and poised for growth in the North American marketplace,” said Ian Macoun, managing director at Pinnacle in the news release. “We believe Pinnacle’s global distribution capabilities and our world-class middle office and fund infrastructure platform will be an asset to VSS as it aims to scale over the long term.”

Pinnacle also announced a A$50 million ($32 million) investment for a 25% stake in asset management platform Pacific Asset Management which has $11 billion in assets under management. Pinnacle highlighted PAM’s history of incubating and distributing “wholly-owned and minority-owned Affiliates and distributing third-party investment boutiques” and noted it would deepen Pinnacle’s “international private wealth footprint.”

Pinnacle is raising $400 million “via an underwritten institutional placement representing 9.7% of existing shares on issue” to fund the investments.

Pinnacle’s private capital markets growth has been driven through investments in managers. The firm noted that in June 2018 it had A$1.8 billion ($1.1 billion) in private markets funds under management and as of Sept. 30 that figure had grown to A$24.5 billion ($15.8 billion).

Headquartered in Australia, Pinnacle has approximately A$128.1 billion ($83 billion) in assets under management as of Sept. 30 across 16 affiliates.