DRAFT — PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT
NOTIFICATION AND REPORT FORM FOR CERTAIN MERGERS AND ACQUISITIONS
Filed Pursuant to Section 7A of the Clayton Act, 15 U.S.C. § 18a, and the Hart-Scott-Rodino Antitrust Improvements Act Rules, 16 C.F.R. Parts 801–803
Prepared by:
Calderwood & Harkness LLP 425 Lexington Avenue New York, NY 10017
Contact: Howard Bellamy, Responsible Partner Antitrust & Competition Group Telephone: (212) 558-4000
Email: bellamy@calderwoodharkness.com
Prepared for:
Harrowgate Capital Management LLC (as Ultimate Parent Entity of the Acquiring Person)
1200 North Market Street, Suite 1400 Wilmington, DE 19801
This document is a draft prepared by Calderwood & Harkness LLP for the confidential use of Harrowgate Capital Management LLC. It is protected by the attorney-client privilege and the work product doctrine. This document should not be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP and Harrowgate Capital Management LLC. Do not file this document with the Federal Trade Commission or the Antitrust Division of the U.S. Department of Justice until it has been finalized and executed.
TRANSMITTAL NOTE TO CLIENT
June 15, 2024
VIA EMAIL — PRIVILEGED & CONFIDENTIAL
Marcus Hale, General Counsel Diane Ochoa, Deputy General Counsel Harrowgate Capital Management LLC 1200 North Market Street, Suite 1400 Wilmington, DE 19801
Re: Draft HSR Notification and Report Form — Acquiring Person Proposed Acquisition of Ridgemark Capital Advisors, LLC C&H Matter No. 1003-00001
Dear Marcus and Diane:
We are pleased to enclose for your review and comment a draft of the Hart-Scott-Rodino Notification and Report Form (the "HSR Form") to be filed on behalf of Harrowgate Capital Management LLC ("HCM"), as the Ultimate Parent Entity of the Acquiring Person, in connection with the proposed acquisition by Harrowgate Private Equity Fund IV, L.P. ("HPE Fund IV") of 100% of the outstanding membership interests of Ridgemark Capital Advisors, LLC ("Ridgemark").
We respectfully request that you review this draft and provide any comments, corrections, or confirmations by end of business on Sunday, June 16, 2024, in order to permit finalization of the form and its filing with both the Federal Trade Commission ("FTC") and the Antitrust Division of the U.S. Department of Justice ("DOJ") on Tuesday, June 18, 2024.
Please note the following:
1. Acquired Person's Form. The Acquired Person's HSR Form is being prepared separately by Blackwell, Oakes & Hardin LLP, counsel to Ridgemark Capital Advisors, LLC and the selling members. We have been in contact with Jessica Whitford at Blackwell, Oakes & Hardin and both forms are expected to be filed simultaneously on June 18, 2024. No action is required by HCM with respect to the Acquired Person's filing.
2. Bracketed Items. Throughout the enclosed draft, we have flagged certain data points with brackets (e.g., "[to be confirmed by client]"). These items require your confirmation or supplementation before the form can be finalized. A summary of all bracketed items is included in the drafting notes at the conclusion of this document. We ask that you prioritize these items in your review.
3. Item 4(c) and 4(d) Documents. As set forth in our separate Document Collection Memorandum dated June 7, 2024, the Item 4(c) and 4(d) documents must be finalized and assembled for production concurrent with the filing of the HSR Form. We understand that the document collection process is substantially complete, but we request your confirmation that all responsive documents from the custodians identified in the memorandum — including Gavin Trask, yourself, Diane, Franklin Broussard at Dunmore, and Mitchell Avery at Greycastle — have been collected and forwarded to us. Any additional documents identified between now and the filing date should be transmitted to us immediately.
4. Revenue Data. We require confirmation of certain revenue figures for Dunmore Asset Management LLC and other HCM-controlled entities, which we understand will be derived from the Pallister & Greaves Bramwell CPAs LLP audited financial statements and internal management reports. Please coordinate with your finance team to provide these figures at your earliest convenience.
5. Filing Fee. The filing fee of $160,000 will need to be remitted by wire transfer to accompany the filing. We will provide wire instructions separately.
Please do not hesitate to contact either of us with any questions.
Very truly yours,
Elliot Nguyen Lead Associate, Antitrust & Competition Group Calderwood & Harkness LLP Telephone: (212) 558-4217
Email: nguyen@calderwoodharkness.com
Aaron Liu Working Associate, Antitrust & Competition Group Calderwood & Harkness LLP Telephone: (212) 558-4389
Email: liu@calderwoodharkness.com
cc: Howard Bellamy, Partner, Calderwood & Harkness LLP
NOTIFICATION AND REPORT FORM FOR CERTAIN MERGERS AND ACQUISITIONS
ACQUIRING PERSON
ITEM 1 — IDENTIFICATION OF PERSONS FILING NOTIFICATION
Item 1(a) — Name and Headquarters of Person Filing Notification (Acquiring Person — Ultimate Parent Entity)
The person filing this Notification and Report Form is:
Harrowgate Capital Management LLC ("HCM") is a Delaware limited liability company that serves as the General Partner of Harrowgate Private Equity Fund IV, L.P. ("HPE Fund IV"), the entity that will directly acquire the membership interests of the target company. HCM constitutes the Ultimate Parent Entity of the Acquiring Person within the meaning of 16 C.F.R. § 801.1(a)(3), as no single entity or natural person holds 50% or more of the outstanding voting interests or membership interests of HCM. HCM is a privately held investment management firm that manages a family of private equity funds focused on middle-market acquisitions in the financial services, asset management, healthcare services, and business services sectors.
The Managing Partner and Chairman of HCM is Gavin Trask. Mr. Trask has served as Managing Partner and Chairman since HCM's formation in 2009 and is the senior-most executive responsible for investment decisions across all HCM-managed funds. Mr. Trask's business address is the same as HCM's headquarters address set forth above.
Item 1(b) — Name and Headquarters of Person Whose Voting Securities or Assets Are Being Acquired (Acquired Person — Ultimate Parent Entity)
The person whose non-corporate interests (membership interests) are being acquired is:
Ridgemark Capital Advisors, LLC ("Ridgemark") is its own Ultimate Parent Entity within the meaning of 16 C.F.R. § 801.1(a)(3). No single entity or natural person holds 50% or more of the outstanding membership interests of Ridgemark prior to the consummation of the proposed transaction. The pre-transaction equity ownership structure of Ridgemark is as follows:
Because no single holder holds 50% or more of the voting interests of Ridgemark, Ridgemark itself is its own UPE. Each of the individual members listed above holds less than 50% of the outstanding membership interests and therefore none constitutes the UPE of the Acquired Person.
Thornfield Growth Partners, LLC is a Delaware limited liability company with its principal place of business at 399 Park Avenue, 28th Floor, New York, NY 10022. Thornfield is a growth equity firm that acquired its 30% minority interest in Ridgemark in 2019. Thornfield is receiving a full cash exit in connection with the proposed transaction and will hold no interest in Ridgemark or any post-closing entity following the consummation of the acquisition.
Item 1(c) — Acquiring Entity (if different from Ultimate Parent Entity)
The entity that will directly acquire the membership interests of the Acquired Person is:
Harrowgate Private Equity Fund IV, L.P. ("HPE Fund IV") is a Delaware limited partnership that serves as the primary investment vehicle through which HCM deploys capital for its fourth generation of private equity investments. HCM, as the sole General Partner of HPE Fund IV, exercises exclusive management and control over HPE Fund IV's investment activities, including the authority to approve and consummate acquisitions on behalf of the fund. HPE Fund IV reached its final close in December 2023 with total committed capital of approximately $6.2 billion from a diversified base of limited partners consisting of institutional investors, including public and private pension plans, sovereign wealth funds, endowments, foundations, and insurance companies.
Item 1(d) — Entity Whose Voting Securities or Assets Are Being Acquired (if different from Acquired Person's UPE)
The entity whose membership interests are being acquired is the same entity identified in Item 1(b): Ridgemark Capital Advisors, LLC. HPE Fund IV will acquire 100% of the outstanding membership interests of Ridgemark directly, subject to the rollover equity arrangements described in Item 2 below.
ITEM 2 — IDENTIFICATION OF TRANSACTION
Item 2(a) — Type of Transaction
The proposed transaction involves the acquisition by Harrowgate Private Equity Fund IV, L.P. of 100% of the outstanding membership interests of Ridgemark Capital Advisors, LLC.
Transaction Structure: Membership interest purchase. HPE Fund IV will acquire all of the outstanding membership interests of Ridgemark from the existing members (Jonathan Kessler, Priya Narayanan, other employee partners, and Thornfield Growth Partners, LLC) pursuant to the terms of the governing agreement described below. Post-closing, Ridgemark will be a wholly owned subsidiary of HPE Fund IV (subject to the rollover equity arrangements described in Item 2(b) below, which will be structured at the level of a post-closing holding entity rather than at the Ridgemark level).
Governing Agreement: The proposed transaction is governed by a Membership Interest Purchase Agreement (the "MIPA"), dated as of June 4, 2024, by and among:
• Harrowgate Private Equity Fund IV, L.P., as Buyer;
• Ridgemark Capital Advisors, LLC, as the Company;
• Jonathan Kessler, Priya Narayanan, and the other employee partners listed on Schedule A thereto, as Sellers; and
• Thornfield Growth Partners, LLC, as Selling Sponsor.
The MIPA provides that the closing of the transaction is subject to, among other customary conditions, the expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), 15 U.S.C. § 18a.
Item 2(b) — Aggregate Total Value of Voting Securities, Non-Corporate Interests, and/or Assets to Be Held as a Result of the Transaction
The aggregate total value of the non-corporate interests (membership interests) to be held as a result of the proposed transaction is determined as follows:
The Equity Purchase Price of $328,000,000 is subject to customary post-closing adjustments for working capital, transaction expenses, and certain other items as set forth in Article II of the MIPA.
Post-Closing Equity Structure: The acquisition will be structured so that, following the closing, HPE Fund IV will hold a controlling interest in Ridgemark through a post-closing holding entity. Specifically:
• Jonathan Kessler (CEO) will retain rollover equity of approximately 10% of the post-closing holding entity. The rollover equity will be structured as a membership interest in the post-closing holding entity (not in Ridgemark directly) and will have terms and conditions set forth in a separate Rollover Agreement and Amended and Restated Operating Agreement for the post-closing holding entity.
• Priya Narayanan (COO) will retain rollover equity of approximately 10% of the post-closing holding entity, on substantially similar terms as Mr. Kessler's rollover equity.
• Thornfield Growth Partners, LLC will receive a full cash exit for its 30% membership interest, representing approximately $98,400,000 (30% × $328,000,000 equity value), subject to customary adjustments as set forth in the MIPA.
• Other employee partners will receive cash consideration for their collective 20% membership interest.
The rollover equity retained by Kessler and Narayanan will be held at the post-closing holding entity level and will not constitute a direct interest in Ridgemark Capital Advisors, LLC. Accordingly, HPE Fund IV (through the post-closing holding entity) will hold 100% of the outstanding membership interests of Ridgemark following the closing, with Kessler and Narayanan holding minority interests in the post-closing holding entity that sits above Ridgemark in the organizational structure. HPE Fund IV (through HCM as General Partner) will control in excess of 50% of the post-closing holding entity and will exercise exclusive management authority.
Item 2(c) — Percentage of Voting Securities or Non-Corporate Interests to Be Held
As a result of the proposed transaction, HPE Fund IV will hold, directly or through the post-closing holding entity, 100% of the outstanding membership interests of Ridgemark Capital Advisors, LLC. HPE Fund IV currently holds no interests of any kind in Ridgemark.
At the post-closing holding entity level, HPE Fund IV will hold a controlling interest exceeding 50% (approximately 80%) of the outstanding equity interests, with the remaining approximately 20% held by Jonathan Kessler (approximately 10%) and Priya Narayanan (approximately 10%) as rollover equity. HPE Fund IV, through HCM as its General Partner, will exercise exclusive management and control over the post-closing holding entity.
Item 2(d) — Filing Fee Information
Applicable Threshold Analysis:
The filing person has determined that the proposed transaction is reportable under the HSR Act based on the following threshold analysis, applying the 2024 threshold amounts as adjusted by the FTC pursuant to Section 7A(a)(2) of the Clayton Act:
Size-of-Transaction Test:
The aggregate total value of the non-corporate interests to be held as a result of the proposed transaction is $370,000,000 (based on the Total Enterprise Value set forth in the MIPA). This amount exceeds the 2024 size-of-transaction threshold of $119.5 million. Accordingly, the size-of-transaction test is satisfied.
Size-of-Persons Test:
Because the transaction value exceeds $119.5 million but does not exceed $478.0 million, the size-of-persons test must also be satisfied. The filing person has determined that the size-of-persons test is satisfied as follows:
• Acquiring Person (Harrowgate Capital Management LLC, as UPE): HCM has total assets exceeding $23.9 billion across all managed funds, which exceeds the $239 million threshold applicable to one party under the size-of-persons test.
• Acquired Person (Ridgemark Capital Advisors, LLC): Ridgemark has total assets on its balance sheet of approximately $87 million (excluding client assets under management, which are not assets of Ridgemark), and annual net revenues of approximately $58.3 million (TTM as of Q1 2024). Ridgemark's total assets exceed the $23.9 million threshold applicable to the other party under the size-of-persons test.
The size-of-persons test is satisfied because one person (HCM) has total assets or annual net sales of $239 million or more, and the other person (Ridgemark) has total assets or annual net sales of $23.9 million or more.
Filing Fee Calculation:
The filing fee of $160,000 will be remitted by wire transfer to the Federal Trade Commission concurrently with the submission of this Notification and Report Form.
ITEM 3 — INFORMATION ON EACH ENTITY WITHIN THE ACQUIRING PERSON
Item 3(a) — Entity Information for Harrowgate Capital Management LLC (UPE)
Harrowgate Capital Management LLC is a privately held investment management firm that serves as the general partner and investment manager of a family of private equity funds. HCM's total assets across all managed funds exceed $23.9 billion. HCM's operations are classified under the following North American Industry Classification System ("NAICS") codes:
• NAICS 523920 — Portfolio Management: HCM's core business involves the management of private equity fund portfolios on behalf of institutional limited partners.
• NAICS 551112 — Offices of Other Holding Companies: HCM serves as the general partner and holding company for its family of private equity funds and exercises management and control over the portfolio companies held by those funds.
HCM's annual net sales and total assets for the most recent fiscal year (ending December 31, 2023) are as follows:
Item 3(b) — Entity Information for Harrowgate Private Equity Fund IV, L.P. (Acquiring Entity)
HPE Fund IV is a Delaware limited partnership whose sole General Partner is Harrowgate Capital Management LLC. HPE Fund IV's investment strategy focuses on control and significant-minority acquisitions of middle-market companies in the financial services, asset management, healthcare services, and business services sectors. HPE Fund IV's operations are classified under the following NAICS codes:
• NAICS 523910 — Miscellaneous Intermediation: To the extent HPE Fund IV engages in intermediation activities through its portfolio investments.
• NAICS 523920 — Portfolio Management: HPE Fund IV's investment and management activities, conducted through HCM as General Partner.
Item 3(c) — Controlled Entities of the Acquiring Person with Revenues in Overlapping NAICS Codes
The filing person has identified the following controlled entity of the Acquiring Person with revenues in NAICS codes that overlap with those of the Acquired Person:
Dunmore Asset Management LLC
Dunmore Asset Management LLC ("Dunmore") is an SEC-registered investment adviser specializing in alternative credit strategies, including private credit, structured credit, and distressed debt investments, primarily through separately managed account mandates for U.S. institutional investors (pension funds, endowments, foundations, and insurance companies). Dunmore was acquired by HPE Fund IV in 2023 and is a wholly owned portfolio company of HPE Fund IV.
Dunmore has been identified as the primary source of competitive overlap with Ridgemark Capital Advisors, LLC. Both Dunmore and Ridgemark operate in the alternative credit SMA space and serve similar institutional client bases. The competitive overlap between Dunmore and Ridgemark is discussed in detail in the Item 5 narrative below.
[Note to client: Please confirm whether any other HCM-controlled portfolio companies across any HCM-managed fund operate in NAICS 523920 or 523910 or any other NAICS code in which Ridgemark derives revenue. If so, those entities must be identified here.]
Item 3(d) — Revenue by NAICS Code (Acquiring Person Entities)
Revenue by NAICS code for all entities within the Acquiring Person is set forth in Appendix B to this Notification and Report Form.
The filing person's primary revenue-generating activities within the overlapping NAICS codes are as follows:
[Note to client: All bracketed revenue figures in this section and in Appendix B must be confirmed based on the Pallister & Greaves Bramwell CPAs LLP audited financial statements for fiscal year 2023 and internal management reports. Please provide these figures by June 16, 2024.]
ITEM 4 — INFORMATION ON EACH ENTITY WITHIN THE ACQUIRED PERSON
Item 4(a) — Entity Information for Ridgemark Capital Advisors, LLC
Ridgemark Capital Advisors, LLC is an SEC-registered investment adviser that provides investment management services primarily through separately managed account mandates and sub-advisory arrangements. Ridgemark specializes in alternative credit strategies, including private credit, structured credit, and distressed debt investments, serving institutional investors such as pension funds, endowments, foundations, and insurance companies.
Financial Summary (Trailing Twelve Months as of Q1 2024):
The financial data set forth above is derived from the audited financial statements of Ridgemark prepared by Ashfield, Stroval & Co. LLP and from Ridgemark's internal management reports, as made available to HPE Fund IV during the due diligence process.
Item 4(b) — Revenue by NAICS Code (Acquired Person)
Revenue by NAICS code for the Acquired Person is set forth in Appendix C to this Notification and Report Form.
Ridgemark's revenue is classified under the following NAICS codes:
Ridgemark's primary business lines are as follows:
1. Separately Managed Accounts (SMAs) for Institutional Investors. Ridgemark manages customized investment portfolios on behalf of institutional clients, including public and private pension plans, endowments, foundations, and insurance companies. SMA mandates represent the largest component of Ridgemark's AUM and revenue.
2. Alternative Credit Strategies. Ridgemark's investment strategies focus on alternative credit, encompassing private credit (direct lending, mezzanine financing), structured credit (CLOs, asset-backed securities), and distressed debt. These strategies are offered primarily through SMA mandates but also through a limited number of commingled fund vehicles.
3. Sub-Advisory Services for Mutual Fund Complexes. Ridgemark serves as a sub-adviser to certain mutual fund complexes, providing investment management services for alternative credit-focused mutual fund products. Sub-advisory revenue is a smaller component of Ridgemark's total revenue and may be classified under NAICS 523910 (Miscellaneous Intermediation) to the extent it involves intermediation services that are distinct from portfolio management.
Item 4(c) — Documents Responsive to Item 4(c)
Pursuant to 16 C.F.R. § 803.1(b) and the instructions to the Notification and Report Form, the filing person is required to produce all studies, surveys, analyses, and reports that were prepared by or for any officer(s) or director(s) (or, in the case of unincorporated entities, individuals exercising similar functions) of the filing person for the purpose of evaluating or analyzing the proposed acquisition with respect to market shares, competition, competitors, markets, potential for sales growth, or expansion into product or geographic markets.
The filing person has conducted a reasonable search of the files and records of the following custodians to identify all documents responsive to Item 4(c):
• Gavin Trask, Managing Partner & Chairman, Harrowgate Capital Management LLC
• Diane Ochoa, Deputy General Counsel, Harrowgate Capital Management LLC
• Marcus Hale, General Counsel, Harrowgate Capital Management LLC
• Franklin Broussard, Chief Executive Officer, Dunmore Asset Management LLC
• Mitchell Avery, Managing Director, Greycastle Partners LLC (Harrowgate's financial advisor for the transaction)
The following categories of responsive documents have been identified:
1. Investment Committee Memoranda and Presentations. Memoranda and presentations prepared by the Harrowgate deal team (and, in certain instances, with input from Dunmore management) for submission to the HCM Investment Committee in connection with the evaluation and approval of the proposed acquisition of Ridgemark. These materials contain analyses of competitive dynamics, market positioning, and strategic rationale for the acquisition.
2. Competitive Landscape Analyses. Analyses prepared by the Harrowgate deal team evaluating the competitive landscape for alternative credit SMA mandates and sub-advisory services, including identification of principal competitors, market participants, and competitive positioning of Ridgemark relative to Dunmore and other market participants.
3. Market Share Analyses. Analyses estimating market shares for alternative credit strategies and SMA markets, including data derived from publicly available sources (e.g., Ostrander Management Consulting, Adriatic Software, Tidewater Health IT) and internal estimates.
4. Financial Models and Projections. Financial models and projections for Ridgemark prepared by the Harrowgate deal team, to the extent such models contain analyses of market shares, competition, competitors, markets, potential for sales growth, or expansion into product or geographic markets.
5. Board Presentations. Presentations prepared for the HCM Advisory Board or similar governing body regarding the acquisition rationale and competitive dynamics.
6. Greycastle Partners LLC Materials. Materials prepared by Greycastle Partners LLC (Harrowgate's financial advisor) in connection with the proposed acquisition, including the confidential information memorandum, financial projections, and comparable transactions analysis, to the extent such materials contain analyses of market shares, competition, competitors, markets, potential for sales growth, or expansion into product or geographic markets.
Documents from Dunmore Asset Management LLC have been included in the search to the extent they analyze or reference the proposed acquisition of Ridgemark or the competitive dynamics between Dunmore and Ridgemark in the alternative credit SMA and sub-advisory services markets.
A complete log of all Item 4(c) documents identified to date is set forth in Appendix D to this Notification and Report Form.
Total Number of Item 4(c) Documents: [To be finalized — preliminary count is in the range of 15–20 documents. Client to confirm that all responsive documents have been collected and that the final count is accurate.]
Item 4(d) — Documents Responsive to Item 4(d)
Pursuant to 16 C.F.R. § 803.1(b) and the instructions to the Notification and Report Form, the filing person is required to produce all confidential information memoranda, synopses, or offering memoranda (and, if none, the most recent annual report) relating to the proposed acquisition.
The filing person has identified the following categories of documents responsive to Item 4(d):
1. Greycastle Partners LLC Confidential Information Memorandum. The confidential information memorandum prepared by Greycastle Partners LLC regarding Ridgemark Capital Advisors, LLC in connection with the sale process. This document was prepared on behalf of Ridgemark and its selling members and was provided to HPE Fund IV and other prospective buyers during the marketing phase of the transaction.
2. Cairnstone Advisory Group LLC Materials. Materials prepared by Cairnstone Advisory Group LLC, Ridgemark's financial advisor, that were received by Harrowgate during the due diligence process, to the extent such materials constitute 4(d) documents that are in the Acquiring Person's possession.
3. Management Presentations. Presentations prepared by Ridgemark management for prospective buyers during the sale process, including any management presentation delivered to the Harrowgate deal team.
A complete log of all Item 4(d) documents identified to date is set forth in Appendix D to this Notification and Report Form.
Total Number of Item 4(d) Documents: [To be finalized — preliminary count is in the range of 3–5 documents. Client to confirm that all responsive documents in the Acquiring Person's possession have been identified.]
Production Format: All Item 4(c) and 4(d) documents will be produced in native format or as PDF, as applicable, in the manner specified by the Premerger Notification Office of the Federal Trade Commission.
ITEM 5 — DESCRIPTION OF THE TRANSACTION AND COMPETITIVE OVERLAP NARRATIVE
Item 5(a) — Description of the Transaction
Harrowgate Private Equity Fund IV, L.P. ("HPE Fund IV"), a Delaware limited partnership managed by Harrowgate Capital Management LLC ("HCM") as its sole General Partner and Ultimate Parent Entity, proposes to acquire 100% of the outstanding membership interests of Ridgemark Capital Advisors, LLC ("Ridgemark"), an SEC-registered investment adviser (CRD No. 298174) headquartered in Boston, Massachusetts, with approximately $4.7 billion in assets under management as of March 31, 2024.
The proposed transaction is governed by the Membership Interest Purchase Agreement (the "MIPA") dated as of June 4, 2024, by and among HPE Fund IV (as Buyer), Ridgemark (as the Company), Jonathan Kessler, Priya Narayanan, and other employee partners (collectively, the "Sellers"), and Thornfield Growth Partners, LLC (as the "Selling Sponsor").
The Total Enterprise Value of the proposed transaction is $370 million, resulting in an Equity Purchase Price of $328 million after deducting net funded debt of approximately $42 million. The acquisition consideration will be financed as follows:
• Senior Secured Credit Facility: HPE Fund IV has secured a commitment from Meridian National Bank, N.A. for a $280 million senior secured credit facility, pursuant to a commitment letter dated June 3, 2024 (the "Commitment Letter"). The credit facility will consist of a $230 million term loan and a $50 million revolving credit facility. The proceeds of the term loan, together with the equity contribution described below, will be used to fund the acquisition consideration, refinance existing indebtedness of Ridgemark, and pay transaction fees and expenses.
• Equity Contribution: The balance of the acquisition financing will be provided by an equity contribution from HPE Fund IV, funded from the fund's available committed capital.
Post-Closing Arrangements:
• Management Rollover. Jonathan Kessler (Chief Executive Officer of Ridgemark) and Priya Narayanan (Chief Operating Officer of Ridgemark) will each retain rollover equity of approximately 10% in the post-closing holding entity. The rollover equity will be governed by separate Rollover Agreements and an Amended and Restated Operating Agreement for the post-closing holding entity. Following the closing, Kessler and Narayanan will continue in their respective executive roles at Ridgemark.
• Thornfield Growth Partners, LLC Exit. Thornfield Growth Partners, LLC, which currently holds a 30% membership interest in Ridgemark, will receive a full cash exit for its interest, representing approximately $98.4 million (30% × $328 million equity value, subject to customary adjustments). Thornfield will retain no equity interest in Ridgemark or the post-closing holding entity following the closing.
Strategic Rationale:
HPE Fund IV's investment strategy focuses on middle-market acquisitions in the financial services and asset management sectors. The acquisition of Ridgemark is intended to expand Harrowgate's portfolio of asset management platforms and to complement the existing capabilities of Dunmore Asset Management LLC, an alternative credit-focused investment adviser that HPE Fund IV acquired in 2023. HCM believes that the combination of Dunmore and Ridgemark will create a diversified alternative credit platform with enhanced scale, broader product offerings, and expanded distribution capabilities, thereby positioning both firms for continued growth in the institutional asset management market.
Item 5(b) — Competitive Overlap Narrative
The filing person has identified the following areas of competitive overlap between the Acquiring Person (through its existing portfolio company, Dunmore Asset Management LLC) and the Acquired Person (Ridgemark Capital Advisors, LLC):
Identification of Overlap:
The Acquiring Person, through Dunmore Asset Management LLC ("Dunmore"), a portfolio company of HPE Fund IV acquired in 2023, operates in the same NAICS code (523920 — Portfolio Management) as the Acquired Person. Both Dunmore and Ridgemark are SEC-registered investment advisers that provide investment management services in the alternative credit space, primarily through separately managed account mandates for U.S. institutional investors. Both firms also provide sub-advisory services to mutual fund complexes in the alternative credit space.
Specific Areas of Overlap:
1. Separately Managed Accounts (SMAs) — Alternative Credit Strategies
Dunmore manages approximately $2.1 billion in alternative credit SMAs for U.S. institutional clients, including pension funds, endowments, foundations, and insurance companies. Dunmore's alternative credit SMA strategies encompass private credit (direct lending, mezzanine financing), structured credit (CLOs, asset-backed securities, commercial mortgage-backed securities), and distressed debt investments.
Ridgemark manages approximately $1.4 billion in alternative credit SMAs for substantially similar institutional client types. Ridgemark's alternative credit SMA strategies also encompass private credit, structured credit, and distressed debt investments, with a particular emphasis on middle-market direct lending and opportunistic credit.
Following the consummation of the proposed transaction, the combined alternative credit SMA AUM of Dunmore and Ridgemark would be approximately $3.5 billion.
2. Sub-Advisory Services for Alternative Credit Mutual Funds
Both Dunmore and Ridgemark provide sub-advisory services to mutual fund complexes in the alternative credit space, managing portfolios of private credit, structured credit, and distressed debt securities on behalf of mutual fund sponsors. Sub-advisory services represent a smaller component of each firm's total AUM and revenue.
Market Share Analysis:
The filing person has analyzed the competitive significance of the proposed transaction under several potential market definitions:
Broad Market Definition — All U.S. Institutional Asset Management:
Under a broad market definition encompassing all U.S. institutional asset management — including equity, fixed income, alternative investments, real assets, and all other asset classes managed on behalf of institutional investors — total industry AUM exceeds $50 trillion (based on publicly available data from Ostrander Management Consulting, the Investment Company Institute, and similar industry sources). Under this market definition, the combined market share of Dunmore and Ridgemark is de minimis, representing substantially less than 1% of total industry AUM.
Narrower Market Definition — Alternative Credit SMAs for U.S. Institutional Investors:
Under a narrower market definition limited to alternative credit SMAs for U.S. institutional investors — encompassing separately managed account mandates focused on private credit, structured credit, and distressed debt strategies — the combined AUM of Dunmore (approximately $2.1 billion) and Ridgemark (approximately $1.4 billion) would be approximately $3.5 billion. Based on publicly available data and internal estimates, the filing person estimates that the total addressable market for alternative credit SMAs for U.S. institutional investors is in the range of approximately $20 billion to $25 billion, resulting in a combined market share of approximately 14% to 18%.
The filing person notes, however, that this narrower market definition is likely too restrictive to constitute a properly defined relevant market for antitrust purposes, for the following reasons:
(a) Demand-side substitution. Institutional investors routinely evaluate and substitute between SMA mandates, commingled fund vehicles (including limited partnerships and offshore vehicles), exchange-traded funds, and other investment vehicles when making alternative credit allocation decisions. The choice between an SMA and a commingled fund is driven primarily by investor-specific considerations (e.g., minimum account sizes, desire for customization, tax efficiency, regulatory constraints) rather than by fundamental differences in the underlying investment strategy. Accordingly, alternative credit commingled funds should be included in the relevant market, which would substantially expand the denominator and reduce the combined share.
(b) Supply-side substitution. A large number of investment advisers — including traditional fixed-income managers, multi-strategy alternative managers, and bank-affiliated asset managers — have the capability and incentive to offer alternative credit SMA mandates in response to a small but significant increase in management fees. The barriers to entry and expansion in the alternative credit SMA space are relatively low for established asset managers with existing credit expertise.
(c) Competitive constraints from adjacent products. Institutional investors' alternative credit allocations are subject to competitive constraints from adjacent investment products, including leveraged loan funds, high-yield bond funds, and other credit-oriented strategies that serve as functional substitutes for alternative credit SMA mandates.
Conclusion:
The filing person acknowledges that the Acquiring Person (through Dunmore) and the Acquired Person (Ridgemark) both operate in the alternative credit SMA and sub-advisory services markets and that the proposed transaction will result in the combination of two participants in those markets. However, the filing person does not believe that the proposed transaction raises significant competitive concerns under any properly defined relevant market. Under the broader and more economically appropriate market definitions, the combined market share of Dunmore and Ridgemark is modest, and the markets in question are characterized by numerous competitors, low barriers to entry and expansion, and substantial demand-side and supply-side substitutability. Even under the narrowest plausible market definition, the combined share of approximately 14% to 18% is well below the levels that would typically give rise to a presumption of competitive harm under the 2023 Merger Guidelines.
Item 5(c) — Early Termination of Waiting Period
The parties have elected not to request early termination of the initial 30-day waiting period under the HSR Act.
[Note — Internal Guidance (Do Not Include in Filed Version): The parties anticipate that the FTC or DOJ may have questions regarding the competitive overlap between Dunmore and Ridgemark in the alternative credit SMA space. Requesting early termination could be viewed as inconsistent with the competitive overlap identified in the filing and could create an adverse inference. The parties are prepared to respond to any inquiries from the reviewing agency during the initial waiting period and, if necessary, to engage in voluntary discussions to address any competitive concerns. The deal team should be prepared for the possibility of a Second Request given the overlapping credit strategies between Dunmore and Ridgemark.]
ITEM 6 — ADDITIONAL INFORMATION
Item 6(a) — Prior Acquisitions
The filing person discloses the following prior acquisitions by entities controlled by Harrowgate Capital Management LLC within the NAICS codes relevant to this notification during the preceding five years:
1. Acquisition of Dunmore Asset Management LLC (2023). HPE Fund IV acquired 100% of the outstanding membership interests of Dunmore Asset Management LLC, an SEC-registered investment adviser specializing in alternative credit strategies, in 2023. The acquisition of Dunmore was reported on a Notification and Report Form filed with the FTC and DOJ, and the waiting period expired without any request for additional information. Dunmore remains a portfolio company of HPE Fund IV.
2. [Client to confirm whether any additional acquisitions by any entity controlled by Harrowgate Capital Management LLC (across all HCM-managed funds) of companies operating in NAICS 523920 (Portfolio Management), NAICS 523910 (Miscellaneous Intermediation), or any other relevant NAICS code have been consummated during the preceding five years. If so, those acquisitions must be disclosed here.]
Item 6(b) — Agreements, Contracts, or Understandings
The filing person identifies the following agreements, contracts, or understandings relating to the proposed transaction:
1. Membership Interest Purchase Agreement (MIPA), dated as of June 4, 2024, by and among Harrowgate Private Equity Fund IV, L.P. (as Buyer), Ridgemark Capital Advisors, LLC (as the Company), Jonathan Kessler, Priya Narayanan, and other employee partners (as Sellers), and Thornfield Growth Partners, LLC (as Selling Sponsor).
2. Commitment Letter, dated as of June 3, 2024, from Meridian National Bank, N.A. to Harrowgate Private Equity Fund IV, L.P., providing for a $280 million senior secured credit facility (consisting of a $230 million term loan and a $50 million revolving credit facility) to finance the proposed acquisition.
3. Rollover Agreement — Jonathan Kessler, to be executed at closing, pursuant to which Mr. Kessler will contribute a portion of his acquisition proceeds to the post-closing holding entity in exchange for approximately 10% of the equity interests of the post-closing holding entity.
4. Rollover Agreement — Priya Narayanan, to be executed at closing, pursuant to which Ms. Narayanan will contribute a portion of her acquisition proceeds to the post-closing holding entity in exchange for approximately 10% of the equity interests of the post-closing holding entity.
5. [Client to confirm whether any of the following ancillary agreements have been executed or are contemplated, and if so, to provide copies for review and potential disclosure:
(a) Employment agreements with Jonathan Kessler, Priya Narayanan, or other key employees of Ridgemark;
(b) Non-competition, non-solicitation, or restrictive covenant agreements;
(c) Transition services agreements;
(d) Consulting agreements;
(e) Any other ancillary agreements relating to the proposed transaction.]
Item 6(c) — Other Pending Transactions
[Client to confirm whether there are any other pending HSR-reportable transactions involving entities controlled by Harrowgate Capital Management LLC. If none, the following disclosure will be included in the final filing:]
The filing person is not aware of any other pending transactions that are reportable under the HSR Act involving entities controlled by Harrowgate Capital Management LLC.