Texas-based family office commits $1B to fund investing in asset managers

CAZ Investments, a family office based in Houston, is expanding its reach into the private markets with a substantial commitment to an emerging private equity strategy.

Building on a two-decade track record of curating opportunities in the alternative investment space, the firm has committed $1 billion to Blue Owl GP Stakes Fund VI, a fund that focuses on minority stakes in private asset management firms.

"We are thrilled to expand our partnership with the talented team at Blue Owl and their well-established expertise," Christopher Zook, chairman and CIO at CAZ, said in a statement.

CAZ joins a number of other institutional and private investors who have collectively committed roughly $4.7 billion in Blue Owl’s latest GP stakes fund.

During Blue Owl’s most recent year-end earnings call, CFO Alan Kirshenbaum told attendees that the firm had raised $2.1 billion in capital commitments – which included both institutional and private wealth investors – in a first close for the fund in the fourth quarter.

The New York-based alternative asset manager did not reveal a specific target for its latest GP stakes fund during the call, but it is reportedly aiming for roughly $13 billion.

Citing anonymous sources, Bloomberg reported Blue Owl is offering a 100-bp management fee discount for the first 12 months for investors who close prior to June 15.

Ever since Rosemont Investment Group pioneered the strategy of taking minority stakes in asset and wealth managers during the early 2000s, the market for investing in GP stakes via a fund model has grown to include at least a dozen firms.

The strategy has grown increasingly popular in recent years as private equity firms find it more challenging to raise funds, partly due to a slowdown in exits and distributions that has dampened investors’ capacity to commit to new funds.

"We view GP stakes as an appropriate cornerstone allocation of an investor's portfolio, based on the rare combination of downside protection, upside optionality and attractive cash flow that this asset class can provide,” Zook said.

The cash yield potential from investing in GP stakes, he added, also offer “a compelling alternative” to traditional fixed income.

“Ultimately, we view this strategy as having equity-like upside with credit-like downside protection and cash flow,” Zook said.