August 15, 2017

The business of placement agents, or firms acting as intermediaries between firms seeking to raise capital and potential investors, is one that has been marked by noteworthy scandals. Kentucky, New York, California, and other states conducted bribery investigations surrounding their use in high profile cases.[1] The SEC proposed banning their use, and New York, Illinois and New Mexico eventually did so.[2]  Of more general concern, investors frequently do not get value from using placement agents, according to one prominent analysis. [3]

A 2015 study titled “Intermediation in Private Equity: The Role of Placement Agents” examined placement agent investments from 1991 to 2011, covering 32,526 investments in 4,335 private equity funds.[4] Steven Davidoff Solomon, one of its authors, wrote in the New York Times that “For the most part, private equity funds using placement agents underperformed the market by as much as 3.5 percent annually. In other words, most pension funds appear not to get value from placement agents.”[5] Solomon also noted that new funds appear useful for placement agents, and that the top placement agents appear to place the better-performing funds.[6]

Investors should consider why GreenOak needed to shell out a reported $20 million to placement agents through May 2016.[7] GreenOak funds have used marketers Capra Global Partners, Park Madison Partners, Hodes Weill Securities, and Raymond James LTD.[8]

While GreenOak’s Form ADV Brochure filed March 31, 2017 states placement agent fees are paid by GreenOak or by the Fund through a corresponding offset to the management fee, GreenOak includes placement agents’ travel and expenses in “organizational expenses” borne by its Funds.[9]

While GreenOak is phasing out placement agents, PERE News reported in March 2016 that the firm won’t discontinue their use until 2021.  If that remains GreenOak’s timeline, investors could pay travel and expenses associated with GreenOak’s placement agents for another four years.

I urge investors to ask GreenOak the following questions:

  • Why has GreenOak needed to pay $20 million to placement agents for assistance fundraising since it was formed in 2010?
  • Why does GreenOak policy, as of its March 2017 ADV, require investors pay for placement agents’ travel and expenses? How much have investors been charged as a result of this policy?
  • Why does GreenOak need another four years to wean itself off placement agents?








[8]GreenOak form ADV filed 8/8/17,

[9] GreenOak Form ADV Part 2A: Firm Brochure. Filed March 31, 2017,

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