UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 3.02 Unregistered Sales of Equity Securities.
On September 16, 2024, P10 Intermediate Holdings LLC, a Delaware limited liability company (“Buyer”) and a subsidiary of P10, Inc., a Delaware corporation (the “Company”), entered into an equity purchase agreement (the “Purchase Agreement”) with Qualitas Equity Funds SGEIC, S.A. (“Qualitas Funds”), Qualitas Funds Holdco, S.L. (“Seller”), Sergio Garcia Huertas and Eric Todd Halverson, pursuant to which, subject to the satisfaction or waiver of specified conditions, Buyer would acquire all of the issued and outstanding equity interests of Qualitas Funds (the “Transaction”).
The consideration payable to complete the Transaction consists of $42,250,000 in cash and a number of shares of Class A Common Stock, par value $0.001 per share (“Class A Common Stock”) of the Company equal in value to $20,750,000. Of this amount of Class A Common Stock, $16,750,000 will be delivered at closing, with $4,000,000 being subject to a five-year holdback to cover certain indemnification obligations of the Seller during the holdback period. The number of shares of Class A Common Stock to be delivered was calculated based on the daily volume weighted averages of the Class A Common Stock for the 20 consecutive trading days ending on September 11, 2024 which was $10.03 per share. Based upon this share price calculation, the Company will deliver 1,669,990 shares of Class A Common Stock to the Seller on the Closing Date, and up to an additional 398,804 shares by the lapse of the holdback period, as partial consideration for the Transaction.
Up to an additional €31,738,000 in consideration (an “Earn-Out Payment”) may be payable based on the run-rate net revenue as of December 31, 2027 from new funds for Qualitas Funds raised after closing. Any Earn-Out Payment will be paid in a mix of cash and Class A Common Stock at Seller’s election, with no more than 65% payable in cash.
All shares of Class A Common Stock to be delivered in connection with the Transaction will be placed pursuant to an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended.
The Transaction is expected to close in the first quarter of 2025, subject to customary closing conditions.
Item 7.01 Regulation FD Disclosure.
On September 17, 2024, the Company issued a press release announcing the execution of the Purchase Agreement. A copy of the press release issued by the Company is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
Additionally, on September 17, 2024, the Company posted an investor presentation to its website, a copy of which is furnished as Exhibit 99.2 to this Current Report on Form 8-K. The Company undertakes no obligation to update, supplement or amend the materials attached as Exhibit 99.2.
The information in this Item 7.01 of this Current Report on Form 8-K, including Exhibits 99.1 and 99.2 attached hereto, is being furnished and shall not be deemed “filed” for the purposes of Section 18of the Exchange, or otherwise subject to the liabilities of that Section, nor shall it be deemed subject to the requirements of amended Item 10 of Regulation S-K, nor shall it be deemed incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing. The furnishing of this information hereby shall not be deemed an admission as to the materiality of any such information.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. |
Description |
99.1 |
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99.2 |
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104 |
Cover Page Interactive Data File (formatted as inline XBRL) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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P10, INC. |
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Date: |
September 17, 2024 |
By: |
/s/ Amanda Coussens |
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Amanda Coussens |
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P10 Announces Agreement to Acquire Qualitas Funds, a Leading European Lower-Middle Market
Alternative Investment Solutions Provider
Establishes European presence and will add approximately $1 billion in fee-paying assets under management
Expands P10’s global client base by over 1,300 LPs
Expected to be modestly accretive to fully-taxed ANI per share in 2025
DALLAS, September 17, 2024 (GLOBE NEWSWIRE) - P10, Inc. (NYSE: PX) (“P10” or the “Company”), a leading private markets solutions provider, today announced that it has entered into a definitive agreement to acquire Qualitas Equity Funds SGEIC, S.A. (“Qualitas Funds”) for an initial purchase price of $63 million with the potential for additional earnout consideration.
Qualitas Funds is a Madrid-based private equity investing platform that provides fund-of-funds, direct co-investing and NAV financing opportunities in the European lower-middle market to more than 1,300 limited partners across the ultra-high-net-worth (UHNW), family office, and institutional channels. The firm has approximately $1 billion in fee-paying assets under management (FPAUM) and a strong expected growth trajectory. The firm was founded in 2014 and is wholly owned by co-founders and co-managing partners, Eric Halverson and Sergio Garcia.
“The Qualitas Funds acquisition establishes a European presence and meaningfully grows P10’s investor base, positioning us as a leading global, multi-strategy private markets firm focused on the middle and lower-middle markets,” said Luke Sarsfield, P10 Chairman and Chief Executive Officer. “Eric, Sergio, and their talented team have built an incredible firm with strong performance and a loyal investor base. Our strategy leaders have known and worked alongside the Qualitas Funds team for over a decade. They share our client-centric culture and dedication to serving clients with elite, access constrained investment opportunities in the middle and lower-middle markets.”
“We are thrilled to join P10’s diversified private markets ecosystem,” said Halverson and Garcia. “Luke and his team are building the preeminent global middle and lower-middle market private markets firm, and we look forward to working closely with them to generate accelerated growth and deliver continued value for our clients. Specifically, this transaction strengthens our existing relationships with RCP Advisors and Hark Capital as we seek to launch additional strategies and vehicles that meet the demands of global investors seeking to access a full range of opportunities in the middle and lower-middle markets.”
Transaction Overview
P10 has agreed to acquire 100% of the issued and outstanding equity interests of Qualitas Funds and 100% of its fee-related earnings. The transaction does not include any carried interest for legacy funds.
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The initial consideration of $63 million is composed of $42.25 million in cash and $20.75 million in P10 stock. The stock consideration is subject to a three-year lock-up period. Additionally, up to $35 million in earnout consideration may be payable based on the revenue associated with new funds Qualitas Funds raises after closing through December 31, 2027. The earnout consideration will be a mix of cash and P10 stock at the seller’s election, with no more than 65% payable in cash.
Qualitas Funds will continue to be managed by its current managing partners who will retain control of its day-to-day operations, including investment and investment committee processes, and there are employment agreements with each managing partner being put in place.
The transaction is expected to close in the first quarter of 2025, subject to customary closing conditions and regulatory approvals, including Spanish regulatory approval. For more information on the transaction, please visit the investor relations section of P10’s website, where an investor presentation is available, or access the Company’s filings on the SEC website.
Kirkland & Ellis LLP and Pérez-Llorca Abogados, S.L.P. are serving as legal advisors to P10. Cuatrecasas, Gonçalves Pereira, S.L.P. is serving as legal advisor to Qualitas Funds.
About P10
P10 is a leading multi-asset class private markets solutions provider in the alternative asset management industry. P10’s mission is to provide its investors differentiated access to a broad set of investment solutions that address their diverse investment needs within private markets. As of June 30, 2024, P10 has a global investor base of more than 3,700 investors across 50 states, 60 countries, and six continents, which includes some of the world’s largest pension funds, endowments, foundations, corporate pensions, and financial institutions. Visit www.p10alts.com.
About Qualitas Funds
Qualitas Funds is a Madrid-based private markets investing platform that provides fund-of-funds and direct co-investing opportunities in the lower-middle market to more than 1,300 limited partners across the UHNW, family office, and institutional channels. As of June 30, 2024, the firm has approximately $1 billion in fee-paying assets under management. Visit www.qualitasfunds.com.
P10 Investor Contact:
info@p10alts.com
P10 Media Contact:
Taylor Donahue
pro-p10@prosek.com
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Forward-Looking Statements
Some of the statements in this release may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Words such as “will,” “expect,” “believe,” “estimate,” “continue,” “anticipate,” “intend,” “plan” and similar expressions are intended to identify these forward-looking statements. Forward-looking statements discuss management’s current expectations and projections relating to our financial position, results of operations, plans, objectives, future performance, and business. The inclusion of any forward-looking information in this release should not be regarded as a representation that the future plans, estimates, or expectations contemplated will be achieved. Forward-looking statements reflect management’s current plans, estimates, and expectations, and are inherently uncertain. All forward-looking statements are subject to known and unknown risks, uncertainties, assumptions and other important factors that may cause actual results to be materially different; global and domestic market and business conditions; successful execution of business and growth strategies and regulatory factors relevant to our business; changes in our tax status; our ability to maintain our fee structure; our ability to attract and retain key employees; our ability to manage our obligations under our debt agreements; our ability to make acquisitions and successfully integrate the businesses we acquire; assumptions relating to our operations, financial results, financial condition, business prospects and growth strategy; and our ability to manage the effects of events outside of our control. The foregoing list of factors is not exhaustive. For more information regarding these risks and uncertainties as well as additional risks that we face, you should refer to the “Risk Factors” included in our annual report on Form 10-K for the year ended December 31, 2023, filed with the U.S. Securities and Exchange Commission (“SEC”) on March 13, 2024, and in our subsequent reports filed from time to time with the SEC. The forward-looking statements included in this release are made only as of the date hereof. We undertake no obligation to update or revise any forward-looking statement as a result of new information or future events, except as otherwise required by law.
Key Financial & Operating Metrics
Fee-paying assets under management reflects the assets from which we earn management and advisory fees. Our vehicles typically earn management and advisory fees based on committed capital, and in certain cases, net invested capital, depending on the fee terms. Management and advisory fees based on committed capital are not affected by market appreciation or depreciation.
Ownership Limitations
P10’s Certificate of Incorporation contains certain provisions for the protection of tax benefits relating to P10’s net operating losses. Such provisions generally void transfers of shares that would result in the creation of a new 4.99% shareholder or result in an existing 4.99% shareholder acquiring additional shares of P10.
P10 to Expand Internationally with Acquisition of Qualitas Funds September 17, 2024
Company Overview Qualitas Equity Funds SGEIC, S.A. (“Qualitas Funds”) is a leading European private equity fund-of-funds manager based in Madrid, Spain with ~$1 billion in fee-paying assets under management Qualitas Funds focuses on European private equity funds in the lower mid-market, typically with funds < €500M Extremely complementary with RCP Advisors Existing relationships with P10’s RCP Advisors and Hark Capital Joint venture with RCP Advisors began in 2017 Collaboration in NAV lending opportunity with Hark Expansion into direct (co-investment) and NAV lending strategies Wholly-owned by Founders and Managing Partners, Eric Halverson and Sergio Garcia, who will continue to run the business day-to-day P10 to Expand Internationally with Acquisition of Qualitas Funds AUM Mix by Investor Flagship Funds Deployment Profile2 FPAUM1 (6/30/2024): ~$1Bn | LP Count of 1,300+ HNWI 42% Family Office 43% Institutional 14% Other 1% Spain 91% Europe – Other 6% USA 1% Middle East 1% LATAM 1% APAC 0% Primary Funds 75% Secondary 14% Co-investments 11% UK & Ireland 30% DACH 27% Nordic 17% France 10% Benelux 10% USA 4% Italy 2% Fee-Paying Assets Under Management ($Bn) Excludes GP commitment 2. Excludes Fund VI. As of 3/31/24
Qualitas Funds Investment Approach Focus on the European lower mid-market Efficient fund size Data-driven investment selection Co-investment and secondaries Transparent results Value Drivers European funds <€500MM Fund fully committed in 12-18 months Unique proprietary data base following >7,000 funds Up to 30% invested in co-investment and secondaries Market-leading investor information Benefits Higher return and lower risk than large-caps Faster deployment and return of capital Better fund selection based on Qualitas Funds’ algorithm Faster deployment and return of capital Real-time results of the entire portfolio
Focus on European Lower Mid-Market Returns defined as annualized IRR. Risk defined as standard deviation of annual return. Favorable Capital Supply/Demand Balance in LMM Higher Returns1, Lower Risk2 in EU LMM Qualitas Funds Underlying Company Profile Mega (> €5Bn) Large (€2-5Bn) EU Private Equity Lower-Mid (€50-500MM) Large (> 250 employees) Mid (50-249 employees) Small (10-49 employees) Micro (1-9 employees) Weight in EU Economy Mid (€500MM-2Bn) Annualized Returns (2013-2023) Annualized Volatility (2013-2023) Buy at low multiples Ev/EBITDA 7-8x Low leverage Net/Debt/EBITDA 1.5-2x Mature companies Sales (€MM) 50-75 Profitable Target EBITDA margin 15-20% High growth Target EBITDA growth 20-25%
Transaction Summary Transaction P10 has agreed to acquire 100% of the issued and outstanding equity interests of Qualitas Equity Funds SGEIC, S.A. (“Qualitas Funds”) P10 is acquiring 100% of the fee-related earnings and the transaction does not include any carried interest for legacy funds 10% of future carry related to future funds will be allocated to P10 employees that play a role in the success of Qualitas Funds Upfront Consideration $63 million in upfront consideration $42.25 million in cash The vast majority of the net cash consideration is expected to be reinvested into Qualitas Funds products $20.75 million in P10 stock Stock consideration subject to lock-up release over 3 years Earnout Consideration Up to $35 million1 in earnout consideration driven by revenue from new funds Based on run-rate net revenue associated with new funds raised post-closing through 2027 Earnout consideration up to 65% cash at the option of the owners Management / Governance Qualitas Funds will continue to be managed by its current Managing Partners who shall have control of its day-to-day operations, including investment and investment committee processes P10 to control the Qualitas Board through three of five director seats Financial Impact Transaction is expected to close in Q1’25, including approval from the Spanish regulator Expected to be modestly accretive to fully-taxed ANI EPS in 2025 Upfront cash consideration financed with cash on hand and newly refinanced debt facility with very modest increase in leverage Based on EUR/USD exchange rate of 1.10278 as of 9/11/24
Strategic Rationale Demonstrates strong investor loyalty with re-up rates ~80% 3 Represents financially attractive terms, with fully-taxed ANI EPS accretion in 2025E and FRE growth accretion 5 Builds on existing strong relationship with P10 through RCP Advisors and Hark Capital 4 Establishes international presence in an important P10 asset class, lower-middle market private equity primaries and directs, with an investment approach extremely complementary with RCP Advisors 1 Expands access to the private wealth and UHNW channels through strong distribution relationships with leading European private banks and wealth management platforms 2 Creates alignment of incentives with P10 stock component of consideration and earnout focused on growth 6
FORWARD-LOOKING STATEMENTS Some of the statements in this presentation may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Words such as “will,” “expect,” “believe,” “estimate,” “continue,” “anticipate,” “intend,” “plan” and similar expressions are intended to identify these forward-looking statements. Forward-looking statements discuss management’s current expectations and projections relating to our financial position, results of operations, plans, objectives, future performance, and business. The inclusion of any forward-looking information in this presentation should not be regarded as a representation that the future plans, estimates, or expectations contemplated will be achieved. Forward-looking statements reflect management’s current plans, estimates, and expectations, and are inherently uncertain. All forward-looking statements are subject to known and unknown risks, uncertainties, assumptions and other important factors that may cause actual results to be materially different; global and domestic market and business conditions; successful execution of business and growth strategies and regulatory factors relevant to our business; changes in our tax status; our ability to maintain our fee structure; our ability to attract and retain key employees; our ability to manage our obligations under our debt agreements; our ability to make acquisitions and successfully integrate the businesses we acquire; assumptions relating to our operations, financial results, financial condition, business prospects and growth strategy; and our ability to manage the effects of events outside of our control. The foregoing list of factors is not exhaustive. For more information regarding these risks and uncertainties as well as additional risks that we face, you should refer to the “Risk Factors” included in our annual report on Form 10-K for the year ended December 31, 2023, filed with the U.S. Securities and Exchange Commission (“SEC”) on March 13, 2024, and in our subsequent reports filed from time to time with the SEC. The forward-looking statements included in this presentation are made only as of the date hereof. We undertake no obligation to update or revise any forward-looking statement as a result of new information or future events, except as otherwise required by law. KEY FINANCIAL & OPERATING METRICS Fee-paying assets under management reflects the assets from which we earn management and advisory fees. Our vehicles typically earn management and advisory fees based on committed capital, and in certain cases, net invested capital, depending on the fee terms. Management and advisory fees based on committed capital are not affected by market appreciation or depreciation. OWNERSHIP LIMITATIONS P10’s Certificate of Incorporation contains certain provisions for the protection of tax benefits relating to P10’s net operating losses. Such provisions generally void transfers of shares that would result in the creation of a new 4.99% shareholder or result in an existing 4.99% shareholder acquiring additional shares of P10. Disclaimers