Edgestone going it alone again?

Has it been over five years since GMP Capital (GMP:TSX) acquired private equity shop Edgestone Capital Partners? Indeed, that marriage is about to end, if the rumours are true. It sounds as though the original Edgestone leadership team of Sam Duboc, Stephen Marshall and Gil Palter is about to re-acquire the firm, leaving the promote behind for GMP. For those of you who are newer to the business, GMP paid $152.5 million in cash/stock for Edgestone back in the day; $62 million of that was in cash, and the balance was in stock at $22.50/share.

As was reported at the time in the National Post:

Edgestone’s later-stage private-equity funds, for example, have delivered an approximate 60% annual return since inception, said Gilbert Palter, managing partner and chief investment officer at Edgestone. Besides Hair Club, notable investments included waste management firm BFI Canada, which generated a return of more than four times Edgestone’s invested capital in under two years after BFI converted into an income trust.

With numbers like that, one can see why GMP wanted to do the deal. You can catch up on CPPIB’s Edgestone returns circa 2010 here or the June 2011 version directly from the CPPIB website.

With Edgestone President Sandra Bosela moving over to head up OPTrust’s Private Markets Group, the stars are starting to align for everyone.

For GMP’s investors, wealth management team and i-banking crew, their core businesses will continue to chug merrily along, regardless of the outcome on Edgestone. With the management buy-back out of the way, one might quickly leap to the natural conclusion that Edgestone Equity Fund IV is set to announce a first close, but let’s not jump that gun.

Congrats to all on the pending good news.

MRM