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Boutique alternatives investor Grafine Partners, which was founded in 2019, is working to innovate on the traditional investment structure in private equity.

The firm’s founder and chief executive Elizabeth Weymouth spent 10 years as a partner at Riverstone Holdings after coming from JPMorgan where she oversaw $80 billion of client assets. The New York-headquartered firm boasts a set of senior alumni from Goldman Sachs, Ontario Teachers’ Pension Plan, McKinsey and Co., and Mercer Investments, among other brand-name shops.

The firm invests in alternative asset managers, via seed funding and minority stakes, direct deals, and alongside operating partners. Employing the flexibility of a large family office model, Grafine aims to bring capital closer to deals.

Private Equity International caught up with Weymouth to discuss her vision for the firm and the opportunity set it seeks to capture.

What type of LPs does Grafine partner with? How is the firm and fund structured to accommodate that?

We are partnering with several different types of LPs, but all of them want to be more involved in direct investments in some way. The challenge is that many do not have the infrastructure or the human capital to source, evaluate and structure deals and manage ongoing risks. We set up Grafine to be in the flow of direct investment opportunities and we have seen a number of interesting off-market deals recently. We are a principal investment platform, where investors commit capital to Grafine to invest and build sector-specific verticals alongside veteran investment teams. We are also a merchant bank where we can structure customised one-off investments alongside our capital partners. This helps us build a strong relationship network alongside our GPs and operational partners that leads to more customised solutions and better returns.

We have built a talented and multi-disciplinary team with backgrounds at leading financial institutions and investment firms. The team has expertise building and scaling businesses and we will use our collective experience to add value to our vertical partners and other investment opportunities.

What kind of GP/investor does Grafine expect to bring onto its platform?

To date we have reviewed over 140 investment opportunities with highly talented investment partners and our pipeline remains full. Nearly half of the opportunities we have reviewed are individuals or teams spinning out of very large firms. These are people who are very talented dealmakers and want to get back to doing transactions without having to deal with the bureaucracy and constraints of a larger organisation. As mentioned, we are flexible in how we form our partnerships with the singular focus on creating and scaling investment opportunities for our investor base.

In past conversations we’ve talked about the ‘white space’ between GPs and LPs. Can you explain that gap?

Many sophisticated LPs, such as SWFs, large families and endowments, increasingly want to invest directly into operating companies rather than participate in traditional blind-pool private equity funds with the standard fee structure. They also have the capacity to provide much more than capital – strategic input, industry expertise, governance, complementary network – all of which enhance the ultimate value of the investment.

They also want more flexible deal structures including longer holding periods and other customised solutions that aren’t available in large funds with hundreds of LPs. Simply put, today’s market does not meet the evolving needs of sophisticated private markets investors. This is where Grafine comes in – in an effort to fill this “white space”, we have built a direct investing platform with the flexibility of a large family office model in which Grafine can act as a principal investor to build profitable and scalable businesses by partnering with talented industry investors and operators.

Grafine disrupts the traditional model and makes capital partners co-owners of investment vehicles, or co-GPs, sharing in all economics of the model and letting them occupy the driver’s seat alongside Grafine and our investment teams.

How does your position as a woman in the private markets industry, who has already seen enormous success, inform your approach to this endeavor?

Our mission is to use our collective strengths, experience and networks to disrupt the traditional private equity model in order to bring quality dealflow and flexibility to those institutions that are looking to innovate. While doing so, I intend to advance women in business. Women need to help other women, and I am determined to create Grafine Partners as a platform that contributes to that goal. We’ve been lucky to bring on some very talented and experienced women to the firm and will continue to do so.

What’s next for Grafine?

It has been a busy year to date. We have successfully executed on dealflow as well as formalised partnerships with sophisticated capital partners. Our model has really come to life as we have seen firsthand the network effect as we continue to both curate capital and attract high-quality dealflow. We are really excited about what the second half of 2021 will bring. Stay tuned!

Elizabeth Weymouth is the founder and managing director of Grafine Partners. Previously, she was a partner at Riverstone Holdings, where she spent 10 years; before that she was a managing director and head of investments for the U.S. Northeast region at JP Morgan Private Bank. Weymouth earned a B.A. from the University of Virginia and her M.B.A. from the Darden Graduate School of Business, where she served as chair of the board from 2016 through 2019.