SuperReturn Middle East LP snapshot: Christiaan de Lint, Headway Capital Partners

In October, SuperReturn Middle East once again takes over the Ritz-Carlton in Dubai. The event will bring together 500+ senior attendees including 175+ LPs and 200+ GPs from MENA & beyond, to discuss the the hottest trends and biggest challenges facing private markets in the region.

In the coming months we're shining the spotlight on some of the LPs and GPs speaking at the event, giving you a sneak peak on the insights they will share, whilst highlighting key developments in the region. This week we're speaking to Christiaan de Lint, Managing Partner at Headway Capital Partners about differentiating sponsors in the region, the biggest opportunities in the Middle East and how he expects those to develop in the next 1-3 years.

What differentiates independent sponsors from traditional private equity funds and how can their unique deal sourcing approach benefit LPs?

Independent Sponsors operate on a deal by deal basis, financing each acquisition separately with a specific set of investors – in contrast to private equity funds that invest from blind pools of capital.

When done right, investing through independent sponsors has many advantages, including allowing investors to invest in a less competitive set of transactions as independent sponsors typically source their deals outside of formal processes. In addition, investors can benefit from stronger alignment with underlying sponsors if transactions are appropriately structured. Finally, investors can choose to invest in specific assets that best fit their investment strategies and risk return appetites.

What considerations should Middle East LPs prioritise when assessing opportunities in this nascent strategy?

Independent sponsor transactions need to be analysed very carefully. In addition to appropriate structuring and governance, and effective due diligence of both the sponsor and the acquisition target, full alignment with various stakeholders must be carefully assessed. Therefore, investing in Independent Sponsors only makes sense with the right resources, relevant expertise, and access to sufficient deal flow (to compare the merits of various transactions and select only the best opportunities.

How is this method changing the overall private capital market?

The fundraising crisis of the past years has helped bring the independent sponsor model into the spotlight as an attractive alternative to fundraising blind pool funds for new private equity firms. This sector is poised for growth over the coming years and will eventually be a sector that LPs will consider allocating to on a more systematic basis. The acceptance of this model by LPs will also provide private equity professionals with more opportunities to build new firms, as the deal by deal approach is often used to create an independent track record ahead of raising a blind pool fund.

Following up on this, where do you see the biggest opportunities developing both in the near as well as the long term (1-3 years) future?

The private equity industry is undergoing significant changes. Whilst the larger end of the market is developing into an asset management (ie. fee gathering) play, survival of the fittest remains the theme for the smaller end. The most attractive opportunities will likely be on the smaller end of the market, driven both by quality managers with track records of outperformance as well as motivated and well aligned new entrants who want to take advantage of a less competitive deal environment.

As an LP, why does it make sense to attend the SuperReturn Middle East conference and to learn more about Independent Sponsors ?

The independent sponsor model has been around for some time, mostly in the US, but has operated under the radar of institutional investors as these sponsors were traditionally backed by local family offices. Recent fundraising challenges have brought the deal by deal model to the forefront, and the sector is poised for significant growth in the coming years. SuperReturn Middle East offers a great opportunity to hear about the drivers of this nascent but fast growing market