Altas Partners is delighted to welcome David Lawee to the firm’s Advisory Board. David has a deep appreciation for how technologies can enable businesses, and transform industries, stemming from his experience as both an investor and a leader over many years at Google and CapitalG. David will bring valuable insight and a differentiated perspective to Altas and our businesses. David joins Yves de Balmann, Tony Bowe, John Francis, Andrew Hauptman, Joe Natale and Katie Taylor as advisors to the firm.

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ABOUT MR. LAWEE

David Lawee is a Partner at CapitalG. Previously, David was Google’s Vice President of Corporate Development, managing the company’s acquisitions and investments. Over David’s five-year tenure Google acquired approximately 100 companies. Before that, as Google’s first Vice President of Marketing, David managed all of Google’s consumer, advertiser and partner marketing, globally.

Before joining Google, David was a founder of Xfire, a leading online gaming community, which was acquired by Viacom. Previously, David co-founded three other start-ups including Mosaic Venture Partners, a leading Toronto-based venture capital firm. He also worked as a management consultant at McKinsey & Company.

David holds degrees in law and philosophy from McGill University and the University of Western Ontario respectively, as well as an MBA from the University of Chicago.

Altas Partners is delighted to welcome Joe Natale to the firm’s Advisory Board.

Joe brings tremendous executive, leadership and broad-based technology experience to the Advisory Board. He joins Yves de Balmann, Tony Bowe, John Francis, Andrew Hauptman and Katie Taylor on the Advisory Board.

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ABOUT MR. NATALE

Joe Natale is the former President and Chief Executive Officer of Telus Corporation. During his 12-year tenure at Telus, he held positions of increasing responsibility, helping build a national communications company that is recognized globally for its financial and operating performance, customer loyalty, team member engagement and corporate social responsibility.

Prior to Telus, Joe held senior leadership roles at KPMG Consulting, including Global Managing Director in consumer and industrial markets, Country Leader for Canada and Managing Partner for Business Transformation Services. Joe joined KPMG Consulting after the company he founded, PNO Management Consultants Inc., was acquired by KPMG in 1997. He began his career at Accenture in 1987 in strategy and transformation services.

Joe currently serves as Vice Chair of the Board of Directors of Celestica. He is a member of the Board of Soulpepper Theatre Company and the Board of Trustees of Toronto’s Hospital for Sick Children. He sits on the University of Waterloo, Dean of Engineering Advisory Council. Joe and his wife Melissa are active members of the community, supporting initiatives in healthcare and the arts.

Joe is a past recipient of Canada’s Top 40 Under 40 Award and holds a Bachelor of Applied Science degree in Electrical Engineering from the University of Waterloo.

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ABOUT ALTAS

Altas Partners is an investment firm with a long-term orientation focused on acquiring significant interests in high-quality, market-leading businesses in partnership with outstanding management teams. Key elements of our approach include prudent capital structures, active ownership through strategic and operational support and an emphasis on sustainable value creation. We strive to deliver outstanding investment returns for our investing partners. Altas was founded as a collaborative partnership and is led by seasoned private equity professionals and experienced operating executives.

WARREN BUFFETT’S Berkshire Hathaway is celebrated for identifying undervalued companies, buying them, holding on to them for years and reaping handsome rewards for its shareholders. Private-equity firms, by contrast, habitually deal in shorter timespans. Funds with a typical life of ten years aim to turn round troubled companies and sell them profitably within just three to five years. Recently, though, the private-equity industry has taken a page from Mr Buffett’s playbook.

Several buy-out firms have been setting up funds that intend to lock up investor funds for 20 years and to hold individual companies for at least ten. Their target net annual return of 10-12% is well below the 20% usually aimed for by ten-year funds, but they promise less volatility and lower fees—1% or so, rather than the customary 2%. Among the largest private-equity firms, Blackstone, the Carlyle Group and CVC have all set up dedicated long-term funds. The largest, Blackstone’s, has raised nearly $5 billion. Specialised upstarts such as Altas Partners of Toronto, which raised $1 billion for its first fund in the spring, are also getting in on the act.

Private-equity houses are establishing these funds mainly because their clients have an appetite for them. With interest rates at rock-bottom, investors are keen to find assets that can offer decent returns. Sovereign-wealth funds, which can invest for indefinite periods, are happy to accept long-term funds’ illiquidity. Endowments, too, are locking up money for longer.

Creating long-term funds is not simple. Ludovic Phalippou, from Said Business School at Oxford University, says that getting fee and incentive structures right can be “very tricky”. Fees, typically fixed for the life of a fund, may look reasonable at first but prove wrong later. Low fees may lure investors but give private-equity firms insufficient incentives to manage the investments diligently; high fees could allow firms to siphon off most of investors’ returns. In quick turnarounds, new managers are usually brought in with the promise of juicy bonuses linked to the sale; how, Mr Phalippou asks, could that be done with a 20-year horizon?

Some have concerns about conflicts of interest. One worried investor fears that large private-equity firms might earmark promising companies for their short-term funds—which remain their core business—leaving only mediocre ones for the new long-term funds.

Small, long-term specialists like Altas Partners should avoid that pitfall. Andrew Sheiner, Altas’s founder, says he intends to hold on to investments for up to 15 years, but to retain the flexibility to “own each business for as long as it makes sense”, so some may be sold sooner. Altas says it has attracted a lot of interest not only from investors but also from the owners and bosses of target companies, many of whom are tired, in Mr Sheiner’s estimation, of being handed from one private-equity owner to another, and instead seek a more stable, longer-term partner.

Despite their recent surge, longer-dated private-equity funds are likely to remain a niche. Last year investors committed $384 billion to the whole industry; the amount going into long-term funds is a small fraction of that. Only 5% of funds set up in 2016 have an intended lifespan longer than 12 years, according to Preqin, a data provider. The large, sophisticated investors who would be the best fit for such long-term funds can often build internal private-equity teams more cheaply. For others keen to invest in a portfolio of companies for the long term, there is another option. If even Henry Kravis, co-founder of KKR, a buy-out behemoth, has called Mr Buffett’s method “the perfect private equity model”, might it not make sense to invest directly in Berkshire Hathaway?

Altas Partners is pleased to announce that Damon Conway has joined the Firm as a Principal.

Prior to joining Altas, Damon worked at Mill Road Capital in Greenwich, Connecticut where he focused on private equity and public equity investments, and at Onex Corporation in Toronto, where he was actively involved with the acquisition and subsequent ownership of Husky Injection Molding Systems. Damon began his career in the Mergers & Acquisitions group at CIBC World Markets. Damon earned a Bachelor of Commerce degree with First Class Honours from Queen’s University and a Master of Business Administration degree with Distinction from Harvard Business School.

Fund can hold investments much longer than the industry standard

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Altas Partners, a four-year-old private equity firm based in Toronto, has raised $1 billion for a fund that can hold investments much longer than the industry standard.

Altas is the first of several firms pitching long-lived vehicles to wrap up its fund as the private-equity industry begins to experiment with breaking standard investment time limits. Some of the world’s largest firms, including Blackstone Group and Carlyle Group, also are raising vehicles that exceed the typical five-year hold period for individual investments and 10-year fund life.

But Altas Partners, founded in 2012 by former Onex Corp. executive Andrew Sheiner, has beaten them to the finish line. The firm closed its debut vehicle in about a year and exceeded the initial $600 million goal to hit the fund’s upper limit, also referred to as the hard cap. Altas Partners Holdings LP closed on April 30 and was raised with the help of placement agent Park Hill Group LLC.

Altas’s fund is unusual in three ways. It gives the firm the option to own each company it invests in for up to 17 years, charges management fees on the money it has actually invested rather than the entire pool it raised and concentrates an unusually large share of the fund’s capital in each deal.

The desire to start a fund like this led Mr. Sheiner to strike out on his own after a 17-year career with the Toronto-based Onex. Onex’s investment in Sky Chefs, which it held for 15 years and built into the largest airline caterer in the world, is a model for the type of long-term investment he hopes to make, he said.

“With some businesses under the traditional private-equity model, there is pressure to sell before it’s time,” Mr. Sheiner said. “Great businesses are hard to find, and if you’re fortunate enough to own one, it’s tragic to have to sell for structural reasons.”

Although relatively new, longer-term funds are finding traction with institutional investors. Blackstone Group’s long-life fund collected $670 million in the first quarter, and the firm expects it to exceed its $5 billion target. Carlyle has raised around $3 billion for a 20-year fund and may collect more, Co-Chief Executive David Rubenstein said on a recent earnings call.

Altas’s strategy differs from those of its larger peers. While Blackstone has said it wants to make safer, lower-return investments that it will hold for a long time, Altas will aim for typical private-equity returns and isn’t specifically pursuing long-term deals. It may sell some companies within just a few years but has the flexibility to hold them as long as necessary, Mr. Sheiner said.

The approach is designed in part to appeal to business owners and managers. Sponsor-to-sponsor deals, when one private-equity firm sells a business to another, make up a steadily increasing percentage of private-equity exits, and some business owners are eager to get off the treadmill, Mr. Sheiner said.

“So many [businesses] are on their second or third private-equity owner that the notion of having a more stable, longer-term capital partner is really appealing to them,” he said.

With a longer investment horizon, Altas will invest deliberately, making three to five investments total from the new fund. It hopes to deploy $150 million to $500 million at a time in one or two deals a year, Mr. Sheiner said.

Altas already has invested in deals totaling about $1 billion of invested capital, relying partly on capital raised before launching its fund. The firm funded at least part of its most recent deal, Capital Vision Services, a Virginia-based optometry practices management platform, out of the new fund. Previously, it invested in St. George’s University, a medical school in Grenada, and NSC Minerals, a Canadian company that makes salt for deicing roads.

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CHRIS CUMMING, THE WALL STREET JOURNAL

ALTAS DOUBLES DOWN ON LONG-TERM VISION WITH $1-BILLION FUNDRAISING

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Patience is proving to be a real virtue for private-equity firm Altas Partners LP, which raised $1-billion (U.S.) for its new fund.
The Toronto-based firm, founded by Onex veteran Andrew Sheiner in 2012, is effectively doubling its size with this latest fundraising. Altas now manages about $2-billion that it uses to invest in businesses over an uncommonly long horizon of up to 17 years.

That holding period is Mr. Sheiner’s way of spending more time thinking about owning businesses, rather than focusing on when and how to sell them. He said some funds with plans for shorter ownership stints have been “chasing their tails from the outset” in recent years.
Altas also wants to set itself apart from the swelling group of about 400 private equity firms in North America that manage more than $500-million in capital .

“It’s intensely competitive, but there are not a lot of firms that have a longer-term orientation. It is still truly a handful,” said Mr. Sheiner. The fund was oversubscribed in this latest round, exceeding fundraising goals to hit its $1-billion cap.

Altas limits itself to just one or two major purchases a year. It also likes to keep debt levels lower than average to ensure its businesses can weather downturns. The firm targets equity investments of about $150-million to $600-million, partnering with other institutional investors on larger deals. That means the $1-billion it has raised will be good for three or four deals, Mr. Sheiner said.

Even outside of Altas, average holding periods for private-equity investments edged up in recent years as some firms needed extra time to clean up after the crisis, and others were forced to wait longer for acceptable returns on assets bought at high multiples post-crisis.

That began to reverse last year as high asset valuations encouraged more PE funds to head toward the exit and clear out their inventory of older assets. Median holding periods for investments owned by private-equity firms dropped to 4.9 years in 2015, from 5.8 a year earlier, according to a report from private-equity giant Bain & Co.

Altas is looking to invest in businesses that will be important and relevant in another decade. “It’s actually a very tough filter,” Mr. Sheiner said. Investing in media or technology is typically off the table.

The first $1-billion was primarily spread between three investments. First was NSC Minerals, provider of salt for de-icing roads and for agricultural applications. Then came a hub for international medical students with the purchase of St. George’s University in Grenada. Most recently, the firm bought Virginia-based Capital Vision Services, which provides support services to independent optometrists under the brand name MyEyeDr. These deals were done with partners, including institutional investors such as pension funds.

With those transactions successfully closed, Altas set out to raise more committed capital about a year ago, bringing in a mix of existing and new investors to back its strategy of owning businesses over the longer term, typically for at least 10 years. The firm will participate in auctions under some circumstances, but prefers to go after opportunities where it can build relationships with owners and management teams looking for particular solutions.

In the case of Capital Vision, the business was owned by another private-equity firm that was looking to exit. The company’s founder wanted to buy the business alongside a partner that could stick around, Mr. Sheiner said.

The next step for Altas will be to staff up – by the end of the year Mr. Sheiner plans to add three investment professionals to the team of eight already in Toronto.

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JACQUELINE NELSON, THE GLOBE AND MAIL

HIGHLIGHTS STRONG SUPPORT FOR ITS DIFFERENTIATED APPROACH TO PRIVATE EQUITY INVESTING

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Altas Partners LP, a North American private equity firm, announced today that it has completed a US$1 billion fundraise for Altas Partners Holdings LP. The fund closed at its hard cap and was oversubscribed.

Altas was established in 2012 to pursue a differentiated approach to private equity investing.  The firm seeks to invest in only one or two businesses each year, and has a longer-term outlook than many private equity firms.  The firm’s partners believe that this orientation allows Altas to make strategic and capital decisions that support attractive growth in value over time, and that its flexible time horizon, with the ability to own each business for more than ten years, provides a meaningful benefit to its investors and is greatly valued by the CEOs and executives that lead Altas’ operating companies. Altas and its partners have made three acquisitions since the firm’s establishment: NSC Minerals, St. George’s University, and Capital Vision Services.

“We are very grateful for the support we have received from the outset of the fundraising process,” said Andrew Sheiner, who founded Altas following a 17-year career with Onex Corporation.  “This capital will allow us to continue the process of building our portfolio carefully in the coming years, working with exceptional management teams and on behalf of like-minded investors.”

Adhering to its game plan, which calls for one or two new deals a year, Altas Partners has secured its third private equity investment.

Founded by Andrew Sheiner, who spent 17 years at Onex, the Toronto-based firm was set up in 2012 as a longer-term private equity player looking to write equity cheques of between $100-million and $500-million a transaction.

Instead of sticking to the traditional private equity script, which calls for portfolio companies to be sold within five to seven years, Altas is happy to be a strategic partner and invest for longer. The hope is that this differentiation will set the firm apart.

Altas is also taking its time with deals. Instead of piling into new investments, Mr. Sheiner has stressed patience and would rather tack on one or two annually.

The latest deal, announced Monday, is for Capital Vision Services, a Virginia-based company that provides management services to MyEyeDr. CVS, as it is known, offers back office functions, such as finance, human resources and accounting services to a patchwork of independent optometrists.

The deal follows Altas’s recent investments in NSC Minerals, which provides salt for road de-icing and agricultural applications, and in St. George’s University in Grenada, which offers medical degrees that are applicable in the United States.

Although Altas is still in its infancy, its management team is well-connected, with work history at places such as Onex and Providence Equity Partners, and has relationships with established private equity players. These connections are paying off, helping Altas bring in big players to co-invest in its deals.

The latest, for CVS, is being inked alongside the Caisse de dépôt et placement du Québec. Last year Altas teamed up with OPSEU Pension Trust (OPTrust), the pension plan for Ontario public sector employees, for its investment in St. George’s.

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TIM KILADZE, THE GLOBE AND MAIL

ALTAS AND CDPQ INVEST ALONGSIDE MANAGEMENT TO SUPPORT CONTINUED GROWTH

Capital Vision Services, LP (“CVS”), which provides management services to MyEyeDr. O.D. (“MyEyeDr.”) optometry practices, today announced that it has received an equity investment from a group led by Altas Partners (“Altas”) and Caisse de dépôt et placement du Québec (“CDPQ”). Altas and CDPQ are investing in partnership with CVS’ Co-Founder and Chief Executive Officer Sue Downes and other members of management who will continue leading the company in their current roles. Joining the investor group are several leading institutional and private investors, including Andell Inc. Financial terms of the transaction were not disclosed.

Founded in 2001 by Ms. Downes and Robert Samit, O.D., CVS focuses on supporting affiliated, independent MyEyeDr. optometrists and their practices with a complete array of financial, marketing, human resources and accounting services, along with managed care credentialing and claims processing. MyEyeDr. practices offer patients exceptional vision care services, a wide selection of prescription eyeglasses and sunglasses, and standard and specialty contact lenses. CVS has grown from managing a single practice in the Washington D.C. metro area to managing 165 optometry practice locations in Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia and Washington D.C. MyEyeDr. affiliated practices have grown steadily through new location openings and collaborative acquisitions, and today have nearly 2,000 employees serving approximately 1.8 million active patients throughout the United States.

“This news is about growth and opportunity and underscores the success of CVS to-date, the tremendous talent we have at every level of the organization, and our bright future,” said Ms. Downes. “I am thrilled to partner with Altas and CDPQ as we continue to grow CVS, support the MyEyeDr. optometrists, and offer MyEyeDr. patients high-quality service and care that they greatly value. Altas and CDPQ are long-term investors who share our ownership philosophy and value our passion for helping patients. We are excited to build on the success of the organization together in the coming years. As our company grows, we will stay focused on what we do best – meeting all patients’ full-service vision care needs through a doctor-driven model. Also, we thank our original investors, Monitor Clipper and Charlesbank, for their many years of support that helped drive the initial expansion of the business, and in particular thanks to Charles Yoon who has been a great partner and source of guidance.”

David Sheffer, Executive Vice President of Corporate Development at CVS, said, “We appreciate Altas and CDPQ’s confidence in CVS and our affiliated MyEyeDr. optometry practices. This new investment underscores the strength of CVS’ financial position and market leadership, providing further capital as we pursue acquisitions and bring more outstanding optometrists into the MyEyeDr. family of affiliated practices around the country.”

Scott Werry, a Partner at Altas, commented, “Under Sue’s leadership, CVS has developed into a world-class organization that preserves and supports a doctor-driven model while delivering both high-quality care and a great selection of products and services to nearly 2 million patients. We believe the company has tremendous opportunities for continued success. Consistent with our investment philosophy, we bring a long-term outlook to supporting the company, and we look forward to working collaboratively with Sue and the talented team at CVS in the years ahead.”

“With this investment, CDPQ contributes to the further expansion of a company that has made a name for itself in its sector over the past 15 years with a distinctive business model,” added Andreas Beroutsos, Executive Vice President, Private Equity and Infrastructure, of CDPQ. “From a long-term investment standpoint, CDPQ’s contribution will enable the company to carry out its growth plan.”

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ABOUT CAPITAL VISION SERVICES, LP

Founded in 2001, Capital Vision Services, which provides management services to full-service optometry practices, is a market leader. Its affiliated MyEyeDr. practices offer patients exceptional full-service vision care, a wide selection of prescription eyeglasses and sunglasses, and standard and specialty contact lenses. Capital Vision Services provides affiliated, independent optometrists with a complete array of financial, marketing, human resources and accounting services, along with managed care credentialing and claims processing. The company has grown from managing a single practice in the Washington D.C metro area in 2001 to managing 165 locations in Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia and Washington D.C. MyEyeDr. practices have grown steadily through new location openings and collaborative acquisitions, and have nearly 2,000 employees serving approximately 1.8 million active patients throughout the United States.

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ABOUT ALTAS PARTNERS

Altas Partners is an investment firm with a long-term orientation focused on acquiring significant interests in high-quality, market-leading businesses in partnership with outstanding management teams. Key elements of Altas’ approach include prudent capital structures, active ownership through strategic and operational support and an emphasis on sustainable value creation. Altas strives to deliver outstanding investment returns for its partners. Altas is led by seasoned private equity professionals and experienced operating executives. For more information, please visit www.altas.com.

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ABOUT CDPQ

Caisse de dépôt et placement du Québec (CDPQ) is a long-term institutional investor that manages funds primarily for public and parapublic pension and insurance plans. As of June 30, 2015, it held $240.8 billion in net assets. As one of Canada’s leading institutional fund managers, CDPQ, which marks its 50th anniversary this year, invests globally in major financial markets, private equity, infrastructure and real estate. For more information: www.cdpq.com.

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Media Contacts:

Andrew Cole/Julie Rudnick
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212-687-8080