Desmarais-backed Sagard buys stake in U.S. private equity firm, boosting assets under management to $25 billion

Connecticut-based Performance Equity Management has $8.9 billion in assets under management

Sagard, an alternative asset management firm controlled by Quebec’s Desmarais family, is acquiring a strategic stake in Connecticut-based Performance Equity Management, boosting Sagard’s assets under management to more than $25 billion from around $15 billion.

PEM has a two-decade track record that includes managing venture capital and private equity strategies through co-mingled funds and separately managed accounts for institutional clients and wealth management platforms. The transaction brings a “significant expansion” to the scope of Sagard’s activities with co-investing and fund of funds expertise, the firms said.

“PEM has an impressive investment track record, high-quality team and trusted long-term … relationships,” said Paul Desmarais III, Sagard’s chairman and chief executive officer. 

“We look forward to leveraging our complementary capabilities to scale PEM’s existing business and to enter adjacent strategies.” 

PEM’s senior management team is staying on to lead the private equity business, which has more than $8.9 billion in assets under management. The agreement includes a path to Sagard acquiring the remaining equity it doesn’t already own on Dec. 31, 2028.

“Our acquisition of a strategic stake in PEM will enable Sagard to accelerate the development of its product offering to retail networks, wealth management firms and family offices,” Desmarais said. 

Sagard, which has 125 portfolio companies including Wealthsimple, invests in venture capital, private equity, private credit, real estate and royalties through offices in Canada, the United States, Europe and the Middle East.

John Clark, PEM’s president, said Sagard’s impressive growth trajectory since 2016 and its access to a powerful global ecosystem of partners and shareholders are two of the key reasons for the partnership. 

“We are confident that our combination will enable significant strategic benefits, while allowing our investment team to continue delivering strong investment results as we have for two decades,” he said. 

PEM clients can access a range of private equity strategies including venture capital, growth equity and global small and mid-market buyouts through primary fund investments, co-investments and secondary investments.

The transaction, which will be funded with cash on hand, is expected to close during the first quarter of 2024, subject to regulatory approvals. 

Sagard was launched in 2002 by the Desmarais family, which controls Montreal-based financial services giant Power Corp. of Canada, alongside other industrial families in Europe. The aim was to invest in entrepreneurs and support the growth of middle-market businesses there. It expanded to North America a few years later. 

Paul Desmarais III took the lead in 2016 and expanded Sagard, branching out into fintech, healthcare and climate technology funding — and lending — through divisions including Portage Ventures, Portage Capital Solutions, Diagram, Sagard Credit and Sagard Healthcare. Sagard Private Equity Canada, aimed at the middle market with a focus on business and financial services, was launched in 2021.

In July 2023, Bank of Montreal and ADQ, an Abu Dhabi-based investment and holding company, acquired minority equity stakes in Sagard and agreed to commit additional long-term capital to existing and future investment strategies. Power Corp. remains Sagard’s controlling shareholder.

• Email: bshecter@postmedia.com

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