P10 Holdings Inc. acquired middle-market private equity firm Five Points Capital Inc. for an undisclosed amount of cash and convertible preferred equity.
After the deal closes, likely in the first half of 2020, Five Points will operate as a wholly owned subsidiary of P10, which also owns RCP Advisors 2 LLC and RCP Advisors 3 LLC.
Five Points will receive cash and convertible preferred equity in a newly formed limited liability company owned by P10, called Holdco, which will own both RCP Advisors and Five Points.
The cash portion of the transaction will be funded by P10 cash on hand, alongside the issuance of additional convertible preferred equity to Keystone Capital Inc., a Chicago-based private investor. A representative of Keystone will also join the board of directors of Holdco.
Five Points will continue to be managed by its existing team.
As part of the deal, all the partners of RCP will convert about $10 million of their tax receivable agreement into $10 million of convertible preferred equity in Holdco.
At the closing of the deal, $60 million of convertible preferred equity will be issued and outstanding, which will be convertible into approximately 18% of Holdco, with the remaining 82% of Holdco being held by P10. The deal completion is conditional upon the approval of the Small Business Administration and consent from the limited partners in Five Points funds.
Raymond James was the exclusive financial adviser to Five Points for the deal.