Milwaukee-area investors looking to place a piece of their net worth in alternative investments such as real estate, private equity, venture capital, specialty finance, mezzanine or bridge lending funds, have a new option.
Typically, individual or institutional investors are required to give minimum contributions toward those types of funds. Those minimum investments can be as high as several million dollars, which scares off many would-be investors.
However, Blackthorne Partners Ltd., a Milwaukee firm formed early this year, has an alternative approach.
Blackthorne Partners pools the investments of multiple investors, which it then invests in the funds, said John Syburg, president of the firm.
“Our philosophy is that high net worth investors should have exposure to asset classes other than stocks and bonds,” he said. “They are a diversifier and have little correlation to the markets. And the best way to get exposure is through a pooled fund.”
Typically, the funds that Blackthorne Partners looks at are the realm of institutional investors such as pension funds, family offices or hedge funds. When Blackthorne Partners finds one type of fund it would like to invest in, it creates a new limited liability corporation. Individual investors’ funds flow to the LLC. The LLC then invests in the fund, Syburg said.
Each LLC can make multiple investments in the same type of fund, such as real estate. When the firm decides to invest in another type of fund, such as private equity, it will create a new LLC, he said.
“There are lots (of alternative investment funds) out there that the investor doesn’t know about, have access to or the inclination to analyze whether or not they are a good investment,” Syburg said. “Our value is providing access and due diligence up front. We’re looking at all of the things out there and finding which make sense.”
Syburg was a partner at the firm now known as Cleary Gull Inc., a Milwaukee investment bank and financial service company, until 2000. Since then, he’s been working with private investments and has taken part in several pooled investments for alternative investment fund buy-ins.
“I started to think that this is a better way to do it (pooled investments),” Syburg said. “At the first of the year I started to formalize it and made a business plan.”
By May, Syburg started to sit with potential clients and potential funds they might invest in, to explain what Blackthorne Partners is and make introductions.
Syburg is the only active employee at Blackthorne Partners. While he has two partners in the firm, whom he declined to name, they are not active now.
Blackthorne Partners is working from temporary space now, but will move into office space this fall in downtown Milwaukee, Syburg said.
Blackthorne Partners has selected its first fund to invest in – a $150 million real estate turnaround venture based in New York that specializes in commercial real estate.
“Most of the investors in that are institutional firms, hedge funds or family offices,” Syburg said.
Blackthorne Partners Ltd.
Web site: www.blackthornepartners.com
Phone: (414) 315-3700
Services: Alternative investments, including real estate, private equity, venture capital, specialty finance, mezzanine and bridge lending funds.