Hedge Fund Alert – Stonehaven Expanding Affiliate Base

Capital-markets services business Stonehaven is continuing its expansion plans. The firm, which expects to provide an array of technology-fueled functions to some 95 staffers at affiliated fundraising groups by yearend, is seeking to expand that number to 150 to 200 next year, up from just 50 in the first half of 2020.

Those individuals are currently working at about 50 affiliates, and Stonehaven is also looking to add larger affiliates. Those groups raise capital for individual companies and market alternative investment funds. While Stonehaven has some affiliates that have close to 10 staffers, most have in the low-single digits.

To aid in that growth, Stonehaven partner Mark Sullivan has moved into a role in which he is focusing on adding affiliates. Sullivan joined Stonehaven in 2013 from Man Investments, where he headed U.S. sales. Most recently, Sullivan had been focused on vetting and managing the addition of new fundraising mandates.

That function is now being filled by Brian Gaffney, who started at Stonehaven this month as head of due diligence and mandate management. Gaffney joined from Singapore sovereign wealth fund GIC, where he headed operational due diligence in the Americas and Europe for alternative investment funds. Global SWF estimates GIC is the fourth-largest sovereign wealth fund, having managed from $550 billion to $774 billion of assets as of March 31. Gaffney started at GIC in 2018 and earlier worked for Blackstone as an assistant vice president.

Stonehaven expects to provide an array of technology-fueled functions to some 95 staffers at affiliated fundraising groups by yearend and is seeking to expand that number to 150 to 200 next year.

Led by founder David Frank, Stonehaven got its start as a placement agent business, later shifting to a company that services fundraisers in all facets of their business but that doesn’t raise capital itself. More than half of Stonehaven’s affiliates focus on raising capital for individual investment deals, rather than funds.

Stonehaven maintains a broker-dealer license used by all of its affiliates, for whom its central staff of slightly more than 20 provides technology, management and legal services.

Stonehaven also encourages affiliates to enter into so-called cross-marketing arrangements – in which a group that originates a mandate may share it with others and determine who else may market the mandate, and to which investors.