G1 Capital Partners: Navigating Private Equity Without a Fund

Fundless sponsorship, known as independent sponsorship, is gaining traction as investors pursue  deals outside traditional PE fund structures. Independent sponsors, often ex-PE professionals,  identify potential assets, negotiate acquisitions, and secure financing later. These sponsors work  with a select group of investors—private market firms or family offices—for specific deals,  bypassing commingled funds. 

Amidst challenges in fundraising for established funds, independent sponsors are finding favor.  They raise smaller capital pools compared to commingled funds, with benefits in the current  climate, as evident from G-1 CapitalyticsTM report of a 40.9% drop in private capital fundraising  and 22.6% dip in private equity activity. 

The independent sponsor model offers distinct advantages in this environment. Notably, these  sponsors raise a more modest capital pool compared to the targets of commingled funds.  Christian Gore, the Founder of G-1 Capital based in Dallas, Texas, explains that their average  equity request ranges between $20-35 million, often accompanied by prudent leverage. 

Gore’s trajectory illustrates an ideal path for emerging fundless sponsors. Beginning with  significant experience on the sell side, followed by involvement with prominent buy-side firms, a  sponsor can progressively cultivate a track record of successful returns, positioning themselves 

as attractive partners for LPs. “We believe every opportunity we present to our partners can  perform on its own and prefer the separate account and/or direct JV model as a fiduciary to our  LP’s performance”, said Cooper who leads G-1’s Acquisitions team. 

From the investors’ perspective, supporting independent sponsors—often including discretionary  PE funds, family offices, and co-investing mezzanine funds— offers greater control over the deal  and underlying assets compared to traditional fund investments. Unlike the blind pool approach  of commingled funds, LPs engaging with independent sponsors play a more direct role in deal  selection, funding decisions, and investment strategy. 

However, independent sponsors face tight competition for assets, sometimes even from firms  they seek backing from. These sponsors might secure competitive bids and then request funding  from defeated competitors, presenting intriguing dynamics as noted by Cooper. 

In summary, independent sponsorship provides an alternative route into private equity, enabling  investors to participate without adhering to traditional fund structures. Despite hurdles, their  tailored approach offers strategic maneuverability and control, complementing the evolving  investment landscape.