Gallatin Point Capital: Differentiated Capital via Industry Expertise and Bespoke Solutions

Private investment firm Gallatin Point Capital (GPC) was founded in 2017 with a primary focus: making opportunistic investments in financial institutions, services, and assets.

Launched by Matt Botein and Lee Sachs, with backing from BlackRock, GPC invests across a wide range of subsectors within financial services, including banking and speciality finance, insurance, asset and wealth management, real estate finance, and financial technology.

GPC’s mission is to serve its investors by identifying, organising, acquiring — and then intensively overseeing — a portfolio of businesses and other holdings with the aim of generating attractive risk-adjusted returns. Its core belief is that it is capable of producing those returns by delivering distinctive, tangible value to its portfolio companies and partners.

In the three years since its launch, GPC has deployed nearly a billion dollars across nine investments, each transaction reflecting the company’s opportunistic and flexible approach to generating targeted returns while solving the transaction and capital needs of partnering companies and management teams. That is bolstered by the depth and breadth of the GPC team’s knowledge and experience across complicated and dynamic industries, regulatory environments, and assets.

Industry Focus and Experience

Focus and expertise are true differentiators and create a competitive advantage in financial services investing, in every aspect of the transaction lifecycle: origination, execution, and management.

GPC’s focus on financial services capitalises on its founders’ extensive careers in the sector, spanning four decades of combined experience identifying successful management teams and providing targeted assistance. That focus helps the firm to maintain a significant advantage in a complex, highly-regulated industry. Its founders have been leaders at institutions such as BlackRock, the US Department of the Treasury, Highfields Capital, Bear Stearns and The Blackstone Group. Each member of GPC’s investment team has dedicated their entire career to financial services.

Given the complex dynamics of each subsector, GPC’s industry focus gives it an edge in identifying management teams and opportunities that arise from dislocation or changes in technology, regulation, or market structure. GPC’s network allows it to pick up on opportunities, and most of its completed investments have originated from proprietary relationships.

GPC takes a tailored approach, focusing on transactions in which it believes it can be a value-added partner, with a differentiated angle compared to other sources of capital. This has resulted in a high success rate of completing transactions.

The experience, network, and connections that GPC bring to the table create unique opportunities post-closing to add value and support investments through strategic initiatives. GPC seeks to engage with management to add value in capital allocation, hiring, partnership, and other key decisions.

The ability to understand and navigate complex regulatory requirements and a credible track record with regulators is crucial. GPC’s professionals have a profound understanding of the system through private sector and policy experience.

Investment Flexibility and Structuring

GPC approaches each investment with a flexible framework and seeks to create an investment solution that achieves the appropriate risk-return profile while meeting the target companies’ objectives. Examples of GPC’s different forms of investments include:

• Control or minority equity: Buyout of leading Lloyd’s of London insurer Canopius
• Structured equity, debt or preferred instrument: Investment in family owned real asset manager Hunt Capital Holdings (and, indirectly, its prominent Amber Infrastructure Holdings subsidiary); debt and warrant investment in leading retail mortgage originator Fairway Independent  Mortgage Company; structured equity investments in Phoenix Holdings, the leading Israeli insurance company, and neobank Varo Money
• Direct asset ownership: Flow purchase agreement with higher education lender College Avenue
• Specific pools of insurance or credit risks: Sponsorship of specialised underwriting entities addressing workers compensation insurance (Pie Insurance) and professional liability insurance (not yet announced)

This flexibility creates a potential competitive advantage over capital sources offering a one-size-fits-all approach to investments by addressing the key considerations and constraints of target companies and management teams. GPC frequently develops structures for modifying an investment’s risk-return profile to protect downside, enhance security, and/or facilitate an exit, while also reaching its partners’ objectives.

With access to significant pools of capital from strategic partnerships beyond its $1.3bn of managed assets, GPC is also able to execute on a range of transaction sizes, from $50m to over $250m.

As economies and financial markets become increasingly dynamic, investors require a matching approach to generating returns. The companies and management teams seeking capital desire a thoughtful partnership as well. While capital remains abundant in the industry, GPC believes its expertise and flexibility will be key to a sustainable and differentiated value proposition.