Pennington Partners, a multifamily office with $2 billion in assets, has launched a private equity platform that allows its clients to both invest in and be strategic partners with middle market private equity firms. Pennington’s client base is made up of entrepreneurs who have built and sold companies, and their families.
The multifamily office hired Greg DeNinno, former managing director of private investments at the $27 billion endowment fund of Howard Hughes Medical Institute, to lead the platform. During his 14 years at HHMI, DeNinno oversaw private equity venture capital- to late-stage PE.
The launch of the platform, called Pennington Private Access, comes at a time when private market investing is becoming increasingly popular among wealthy individuals as well as smaller institutions. Compared to tax-exempt institutional investors, such as pensions, foundations, and endowments, individual investors in particular have had limited access to the best segments of venture capital and private equity. In recent years, more ultra high-net-worth famiilies and wealthy individuals have started to seek investment opportunities beyond traditional stocks and bonds, a trend that has prompted some of the biggest PE firms to open the door to wealthy clients.
“After decades of primarily benefiting its traditional tax-exempt investor base, access to private equity is expanding into the taxable world, where there is a burgeoning need for skilled investment partners,” DeNinno said.
Pennington’s private equity platform will focus on investing in private equity funds that specialize in the lower end of the middle market. According to Brian Gaister, co-founder and CEO of Pennington Partners, family office investors are often entrepreneurs who have successfully built and sold their own companies. Their expertise in all aspects of business operations can help portfolio companies that they invest in through these PE funds, particulalry those specializing in middle-market operating businesses, where most families create their wealth.
“Our families are often operating partners of private equity and venture capital firms because they have the expertise around specific disciplines and industries,” Gaister told II. “The funds that partner with [families] and firms like us value having limited partners [who can] serve as strategic advisors.”
Pennington’s platform will serve as an Outsourced CIO to families, family offices, and investment advisors that have or intend to build large private portfolios, according to DeNinno.
“[PE investing] has been dominated by endowments and foundations. That’s a great model, but there’s a strong appetite out there in the taxable world,” DeNinno said. “And the great thing about that is, in that part of the world, people are business founders, business owners, and entrepreneurs themselves. So they really have a lot to offer to a private equity firm [by] being more strategic partners than just being [investors]. Those people are also increasingly wanting to put their money to work as private equity matures as an asset class.”