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How Kayne Anderson uses Carta to manage its private equity portfolio


Kayne Anderson

 


 

Founded: 1984

Assets under management: $35 billion

Investment strategies: Real estate, credit, energy infrastructure, energy private equity, growth capital

Growth capital focus: Software, technology

 

Andrew DeYoung

Managing Director, Growth Capital, Kayne Anderson

 

Ronald Pierre

Vice President, Growth Capital, Kayne Anderson

Kayne Anderson is a middle-market private equity firm with a 40-year track record and some $35 billion in assets under management. One of its primary strategies is its growth capital arm, where Andrew DeYoung works as a Managing Director and Ronald Pierre is a Vice President. The growth strategy team invests across several sectors, but specializes in software and tech. 

Andrew, Ronald, and their team are always searching for their next deal. They’re also always searching for ways to help their current portfolio companies perform even better. 

Sometimes, the answer is to follow where those companies lead. Many of Kayne’s companies have long used Carta to manage their cap tables and other functions related to equity ownership. The Kayne growth team saw how these tools made life easier for those companies—and how they made it easier for Kayne. Working with standardized data and reports from Carta allowed the firm’s investors to stay on top of cap table information and generate quarterly reports much more efficiently. 

We can integrate some of Carta’s technology through the use of APIs to make our operational processes more standardized. 

Andrew DeYoung, Managing Director, Growth Capital
Kayne Anderson

Recently, Kayne formed a partnership with Carta aimed at making Carta’s tools ubiquitous across the growth team’s investments, allowing the firm to further streamline the way it collaborates with companies.  

“We already had some portfolio companies that were on Carta, and then we identified an opportunity to partner with Carta to drive more adoption across the portfolio,” Andrew says. “That way, we can integrate some of Carta’s technology through the use of APIs to make our operational processes more standardized.” 

“It’s just more convenient,” Andrew continues. “It’s accessing the key information you need in a more efficient way.” 

‘A one-stop-shop solution’

Kayne Anderson’s portfolio companies rely on Carta’s platform to accomplish critical tasks. First, there’s the baseline function of building and maintaining a cap table. But Kayne’s companies also use Carta to organize their stock certificates. They use it to generate annual 409A valuations. They use it to manage their option pools. They create scenario analysis models for how their cap tables might change over time. And they can do it all in a centralized, transparent way that’s easy to share with investors. 

“Carta is kind of a one-stop-shop solution for companies, especially companies that are within our niche,” Ronald says. “I think Carta offers a solution that encompasses everything they need from a capitalization management perspective.” 

Saving time and money 

Ronald works in operations within Kayne’s growth strategy, which means he’s no stranger to generating quarterly reports and other aspects of managing portfolio company equity. 

When every company manages its cap table information and related documents in different ways, creating those reports can be time-consuming. He points to the standardization that Carta provides as one of its biggest benefits. 

Our companies are always sensitive to pricing. … One of the things they like about the program that we’ve put in place with Carta is that they can derive cost savings.

Andrew DeYoung

“It definitely saves time working with Carta,” Ronald says. “You know exactly where to look when you’re looking at a Carta document. The output is going to look exactly the same. In terms of our review of cap tables and any additional questions we may have or an auditor may have, it’s always easier to work with a Carta cap table, because we know exactly where everything is.” 

Saving time is great. But for most private equity investors and their portfolio companies, the bottom line is the bottom line. In addition to improved efficiency, Andrew pointed to the financial benefits that Carta provides compared to other options for managing cap tables and equity. 

“Our companies are always sensitive to pricing,” Andrew says. “I think one of the things they like about the program that we’ve put in place with Carta is that they can derive cost savings. Anytime you can save a few dollars in this environment, that’s always a positive.” 

A constant source of truth

Cap tables can be complicated, particularly as a company matures and raises more and more rounds of investment. For Ronald and the rest of the Kayne growth team, getting an accurate picture of a company’s cap table is one thing; explaining that picture to company leaders can sometimes be another. 

“A lot of times, when things get pretty complex with cap table management from additional investment, companies actually lean on us to help them unpack those changes,” Ronald says. “And I find that for the companies that are on Carta, Carta has that capability to ingest those changes and spit it back out in a way that’s very understandable for us.” 

Carta is kind of a one-stop-shop solution for companies, especially companies that are within our niche.

Ronald Pierre, Vice President, Growth Capital
Kayne Anderson

Carta’s cap tables are also a living document that can be updated at the instant of any new transaction, ensuring that Kayne and their companies always have up-to-the-minute information.

“When we’re doing any of our evaluation functions on a quarterly or annual basis, we have access to this stuff on our own timeline,” Ronald says. “And it’s always in real time, so there’s a real level of authenticity there. Anytime that capital activity happens within a company, within a day or two, you should see that reflected when you go in and pull up the cap table. 

“For our companies that have Carta and allow access for us, it’s just a great benefit.”

A platform primed for growth

As Kayne aims to bring these offerings to more and more companies in its portfolio, Carta is prepared to help. Ronald says the process for adding both new Kayne colleagues and new portfolio companies onto the platform has been quick and simple. 

“For us, adding seats is one email,” Ronald says. “Referring a company to Carta, it seems like after one or two emails, they have a call set up. I think the customer success angle of Carta is really awesome.” 

In his view, it’s a sign of where private equity is headed in the 2020s. As firms aim to stay lean and maximize their efficiency, a traditionally conservative industry is seeing more and more benefits from the embrace of software and tech. 

 “Private equity is more inclined than ever to use technology. I think post-COVID, there’s more of an onus on the lean teams to be able to do as much as possible. And technology can expand what’s possible,” Ronald says. “Anything that can increase productivity or help ensure that the team stays lean is something that’s always going to be welcome in private equity.” 

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