January 16, 2020 / 8:20 PM / a month ago

U.S. investment firm StepStone taps banks for IPO -sources

Jan 16 (Reuters) - StepStone Group LP, one of the world's biggest investors in alternative assets such as private equity and real estate, has hired investment banks for an initial public offering (IPO) that could take place as early as the first quarter of this year, people familiar with the matter said on Thursday.

StepStone's listing would follow peer Hamilton Lane Inc's $190 million IPO in 2017. Hamilton Lane shares have quadrupled in value since then, as the management fee revenue the firm generates from allocating investments to private equity funds makes it attractive to stock market investors.

StepStone has hired Goldman Sachs Group Inc, Morgan Stanley and JPMorgan Chase & Co as lead underwriters of its IPO in New York, two of the sources said. It has also registered its IPO confidentially with the U.S. Securities and Exchange Commission, one of the sources added.

StepStone could go ahead with its IPO in late February or March, subject to market conditions, according to the sources. The IPO could value StepStone in line with Hamilton Lane, which has a market capitalization of $3.3 billion, the sources said, requesting anonymity because the preparations are confidential.

StepStone and the banks declined to comment.

Based in La Jolla, California, StepStone has over $58 billion in assets under management spread across multiple private market asset classes, including private equity, real estate, infrastructure and private debt.

Its clients are investors, such as public pension funds and endowments, which outsource their capital allocation to other investment managers. StepStone invests this money with fund managers such as Blackstone Group Inc and KKR & Co Inc , and gets paid management fees for making the best selections.

Being a publicly listed company would turn StepStone's shares into a currency it can use to pay staff, fund acquisitions and raise more capital.

Last August, StepStone Chief Executive and founding partner Monte Brem announced the elevation of Scott Hart to co-CEO, a move that foreshadowed the firm's IPO plans and made Hart the most likely successor to Brem, who has been at the helm since 2007.

That same month, StepStone sold shares worth $115 million to 12 investors, according to a Securities and Exchange Commission filing. Bringing in institutional investors through a private share sale is often seen as a precursor to going public.

Funds managed by Fidelity Investments and T. Rowe Price Group were among those which bought shares, Bloomberg News reported in October. (Reporting by David French, Chibuike Oguh and Joshua Franklin in New York)

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