Limited Partner
The institutional investor
perspective on private equity,
venture capital, real estate
and infrastructure funds
www.LimitedPartnerMag.com
Q2 2016
Defining the future
Pantheon prepares to reap the rewards of its
early push into defined contribution pension
capital
Should all LPs be committing
more to alternative asset classes?
www.LimitedPartnerMag.com
Why the power of relationships
is more important than ever
How turning the spotlight on
transparency has shifted fees
The promising gap in the US real
estate investment market
Plus: news and expert insight
on funds, deals, regions,
sectors and private equity
appointments
Q2 2016
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Introduction
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T
aking the long view has always been at the heart of private
equity investing, and successfully predicting and profiting from
long-term trends a key component of successful funds. One of
the biggest upheavals in the current market is centred on the inexorable
shift in the pension industry from defined benefit to defined contribution
schemes, and veteran investors Pantheon explain in this issue how
they’re pulling the trigger on the vast DC market.
Elsewhere in this issue we look at the importance of LPs also playing
the long game by taking advantage of private equity - something plenty
of institutional investors are still underweight on despite consistently
strong performance of the asset class. Could the significant PE allocations of top performers like
the Yale Endowment help persuade other LPs to up their game?
Adveq explains the power of quality relationships within the private equity industry, explaining
that having access to capital and funds is simply not enough in today’s world. And we look at the
efforts being made by the Institutional Limited Partners Association in bridging the gulf between
the needs of LPs and GPs in the wake of huge concerns over transparency and fee arrangements.
As always, we also bring you our pick of the private equity and venture capital fundraises, deals
and people moves from the year so far, as well as insights into real estate, infrastructure and
secondaries, together with news highlights from across Asia, the Middle East, Africa and Latin
America.
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Limited Partner Magazine (ISSN 2049-3908) is published
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Online Editor, AltAssets
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1
CONTENTS
Features
04 The long game
Private equity has delivered – yet most
LPs are way below the allocation of top
performers like Yale. Should more LPs be
playing the long game and committing
more to alternative asset classes?
12
16
Helping to
build bridges
Huge strides have been made in bridging the apparent gulf
in understanding between the needs of LPs and GPs thanks
to the work of the ILPA
Investing
in people
Private equity player Adveq puts its focus firmly on building
quality relationships with clients. As the old saying goes,
you don’t buy products, you buy people
2
Q2 2016
Q2 2016
News & Views
LP Perspectives
08
DC pensions – the holy grail
for private equity?
Pantheon channels $33bn of LP capital
to GPs. Its business is built on delivering
outperformance over 25-plus years – now it is
ready to pull the trigger on the vast DC market
20
Funds
32
People
36
Sector Perspectives
36
40
46
52
62
66
68
Analysis
50
Mind the gap
David Valger
DVO Real Estate
DVO’s David Valger believes he has found a promising gap
in the property market – investing in Class B US real estate
www.LimitedPartnerMag.com
3
Insider perspectives and exclusive coverage on
fundraising, new funds in the market and the latest
industry developments
Appointments, spin-outs and people moves from
both limited partners and general partners across
the globe
Essential news, views and opinions on the most
relevant developments, trends and investor activity
across the private equity and venture capital industry
Secondaries
Infrastructure
Real Estate
Buyout
Venture Capital
Cleantech & Sustainability
Regional Perspectives
Regional insights into emerging markets and key
locations within the global investment space
68
Asia
72
Middle East
74
Africa
78
Latin America
FEATURE
Playing the
long game
Private equity has delivered – yet most
LPs are way below the allocation of top
performers like Yale. Should more LPs be
playing the long game and committing
more to alternative asset classes?
W
hat sort of return can an investment portfolio achieve?
The Yale Endowment has grown at an average of 13.9
per cent every year for the past 20 years, generating
$20.5bn in relative value. The secret of its success? A long-term
commitment to equities and non-traditional assets.
Over the past 25 years, the endowment has dramatically reduced
its dependence on domestic marketable securities by reallocating
assets to non-traditional asset classes. In 1990, more than 70
per cent of AUM was committed to US stocks, bonds and cash.
Today, domestic marketable securities account for 10 per cent of
the portfolio, while foreign equity, private equity, absolute return
strategies, and real assets represent 90 per cent. The heavy allocation
to non-traditional asset classes stems form their return potential and
diversifying power, and the portfolio now has significantly higher
expected returns and lower volatility than it did in 1990.
In its latest (2015) fiscal year review, the endowment returned 11.5
per cent. Its largest asset classes were: private equity (16.2 per cent),
real estate (14 per cent), absolute return (20.5 per cent), foreign
equity (14.7 per cent), natural resources (6.7 per cent), fixed income
(4.9 per cent), domestic equity (3.9 per cent) and cash (2.8 per cent).
4
Q2 2016
PENSION FUNDS
The actual allocation of assets produces a portfolio expected to grow
at 7 per cent, with risk of 13.8 per cent. Private equity has been at the
heart of the endowment’s strategy since 1990. Yale’s 32.5 per cent
target allocation for PE and VC far exceeds the 10 per cent average
for educational institutions. Over the past 20 years, the asset class
has generated about 36 per cent per annum.
Yale says: “Private equity offers extremely attractive long-term
risk-adjusted returns, stemming from the university’s strong stable of
value-adding managers that exploit market inefficiencies.”
Ask an investment professional what proportion of assets they
should allocate to private equity and you rarely get a simple answer.
Dennis McCrary, a senior partner at global private equity investor
Pantheon, admits he is biased - but is prepared to put a number on it.
“We’ve done a study that shows the optimal allocation within a
portfolio of listed equities, depending on your liquidity constraints, is
between 24 per cent and 38 per cent,” he says.
“There are other considerations, of course – the investor’s risk
tolerance, the objective of the portfolio, the structure of the investing
entity. For example, some endowments and family offices have
strategies that are highly skewed towards private equity because of
their ability to manage their liquidity needs.”
Marc Friedberg: If you want some alpha, it’s only natural to look at PE
The right balance
Alternatives are certainly becoming a more popular option for
most investors. “We’re seeing LPs increase their allocations over
time as they’ve been dissatisfied for quite some time with yields and
the credit markets. They feel like they’ve put as much as they want
to into public equity markets,” says Hugh MacArthur, head of the
private equity practice at consultancy Bain & Company.
“It’s only natural to look at private equity, infrastructure, real
estate and other options where you could potentially generate some
alpha. Institutional investors are satisfied with private equity and are
trying to find a way to put more money to work in the asset class.”
Pension funds, corporate pension funds, endowments, foundations,
insurance companies and family offices all have differing objectives
and risk parameters. “There’s no ‘one size fits all’ across the different
plans or even dependent on the stage of the plan,” says Friedberg.
“Is it a closed defined benefit plan? Is it open? If it’s a corporate
fund, how underfunded is it? Those are the type of variables that are
going to help you determine what type of illiquidity you could take to
achieve your objectives, but also how much risk you want to take in
terms of achieving those excess returns.”
Private equity is an illiquid asset class and investors need to be
compensated for that. Secondaries specialists argue they are bringing
liquidity solutions to LPs, with the value of secondary transactions
hitting $42bn in 2014, according to research from JP Morgan. The
investment bank noted the average price as a percentage of net asset
value (NAV) rose from 63 per cent in 2009 to 91 per cent in 2014.
Alternative asset investment bank Cogent Partners estimates there
is $84bn in near-term capital available for secondary transactions.
Despite this, it remains a fringe activity.
A 2014 report by Capital Dynamics noted: “Despite the
sophistication of the secondary market, current secondary
Pantheon’s March 2015 study suggested the optimal portfolio of
risky assets included a 23.6 per cent commitment to private equity,
a figure that is adjusted to reflect the fact that private equity is
less liquid than public equities. The analysis suggested that for
investors with no liquidity constraints, the optimal allocation to
private equity would have been 38 per cent. Based on historical
data from 1992 to 2014, private equity added value to a portfolio
of public equities via an annualised alpha of 3.16 per cent.
If 24 per cent is the liquidity-adjusted optimal allocation, why
is the average allocation across all types of investor less than 10
per cent? Allocation varies by type of investor, with family offices
at 28 per cent, endowments at 12.9 per cent, foundations 11.6 per
cent, superannuation schemes 6.5 per cent, public pension funds
6.2 per cent, private sector pension funds 5.7 per cent and insurance
companies 2.7 per cent, according to Preqin data on 2014. Preqin
found that 39 per cent of investors intend to increase allocations, 55
per cent will maintain it and 8 per cent will decrease it.
Among those likely to decrease their allocations are corporate
pension funds. This is partly because of the rapid switch from
defined benefit (DB) to defined contribution (DC) schemes and
partly because of new regulations.
“With the onset of the Pension Protection Act 2006, corporate
plans are not really rewarded for seeking higher longer term returns,”
says Marc Friedberg, managing director at investment adviser
Wilshire Private Markets. “They’re more rewarded for matching
their liabilities and reducing the volatility of their contributions.
You’ve seen their exposure to all private markets decrease. The
median across corporate plans is zero, while the average is around
2.5 per cent.”
www.LimitedPartnerMag.com
5
FEATURE
There is little data to support the idea that private equity puts
investors’ capital at risk. “Private equity is often called a risky asset
class because of the use of leverage,” says MacArthur. “The average
buyout tends to be a bit more leveraged than a public company
counterpart. But it’s very difficult to find any data that actually
suggests it’s truly riskier than other asset classes.
“If you look at things like corporate default data on loans going
back 40 years, it says that public companies are more likely to
default on their debt than private equity companies, even though
private equity companies are more highly leveraged.”
Nor is private equity as volatile as public equity. “Private equity
is certainly not as volatile in terms of the way the performance
moves around,” says Jim Strang, managing director of the European
investment committee at investor and adviser Hamilton Lane.
“We’ve created daily volatility for private equity and been able to
use the Sharpe ratio to compare and contrast. It looks pretty good.
If you are a CIO of an institutional asset manager looking for alpha,
where are you going to get that? You’ve got the bond and the equity
markets, which are a few hundred trillion dollars, or private markets,
which are about four trillion dollars. On a Sharpe ratio basis, private
markets look pretty compelling.”
“If you look at corporate
default data on loans
going back 40 years, public
companies are more likely
to default than private
equity companies”
Hugh MacArthur,
Bain & Company
Asset allocation: be flexible
It’s not really worth bothering with private equity unless you have
a substantial allocation, however. The precise amount is determined
by the liability profile of the investor, though PE specialists
unsurprisingly recommend a higher allocation.
If you take the traditional sectors, buyouts get 60 per cent of
the cash, 25 per cent goes to venture and growth and 15 per cent
to distressed opportunities. By geography, North America takes
60 per cent of the capital, Europe 25 per cent and Asia 15. There
are fluctuations of around 5 per cent on each class or geography,
but the percentages have been remarkable consistent over the past
five to 10 years.
“You should use that broad market allocation as a starting point,
and then with an understanding of the risk-and-return objectives
of your plan to really deviate and understand where you’re making
your bets,” says Marc Friedberg at Wilshire Associates.
“Are you making those bets as a strategic view because of targeted
risk and return, or are you making them opportunistically because of
where you see a specific opportunity in the market? We think there is
the ability to be opportunistic or tactical over a shorter term period of
three to five years.”
Most LPs allocate fixed percentages of their assets under
management (AUM), though there is an increasing move by more
sophisticated investors towards flexible bands.
“The standard model of investing is that you can rebalance your
portfolio all the time, instantly. In private equity that’s much more
difficult,” says Peter Cornelius at Alpinvest. “Over the past three
to four years GPs have liquidated a very significant part of their
portfolios because public markets were conducive. Distributions
have increased very significantly.
transaction volume still represents less than 5 per cent of the
corresponding aggregated US and European private equity supply.”
As well as the liquidity premium, most institutions are looking for
a risk premium. Private equity specialists are less convinced about
the need for this, however. “It depends on the way you define risk,”
says Peter Cornelius, managing director responsible for strategic
asset allocation at private equity fund manager Alpinvest.
“Arguably, the traditional concept of risk that comes from
marketable instruments is not fully appropriate in the context of
illiquid asset classes. An investor in private equity funds should not
worry too much about quarter-on-quarter changes in NAV. If you
want to harvest a long-term illiquidity risk premium, why should you
worry about quarter-on-quarter changes in the NAV?
“Liquidity risk matters more. Private equity investments cannot
easily be liquidated, despite the growing importance of the secondary
market. Further, there is commitment risk, a particular form of
liquidity risk. An LP should be aware that there needs to be enough
liquidity to honour capital calls, otherwise it’s a default, which could
have serious consequences. I believe in the global financial crisis this
kind of risk was underestimated.”
The second type of risk is capital risk. At the end of the investment
period an investor expects to get back their capital, plus a return.
“The traditional concept of risk, which is the variance of returns,
matters much less in the context of private equity,” says Cornelius.
“As long – and this is a very important qualifier – as investors
have sufficient liquidity to honour capital calls and are not forced
into fire sales, the short-term variance of returns over the lifespan of
the investment shouldn’t really matter so much.”
6
Q2 2016
PENSION FUNDS
“The question for an LP is, ‘What do I do with that capital?’ Many
investors define their exposure in terms of their total assets under
management. In periods when distributions are strong, LPs may find
themselves under-exposed to private equity relative to their targets.
“To maintain their target allocation, they will need to rebalance
their portfolios by reinvesting the distributed capital to maintain
their target allocation. However, one shouldn’t slavishly follow a
particular target, which is also true for periods when distributions
slow as they did during the global financial crisis. One of the
important lessons from that period is that private equity should be
managed flexibly.”
In the post-crisis years, commitments to private equity funds fell
Returns: will PE deliver?
When writing about private equity there is an important
assumption: that the asset class delivers better absolute longterm returns than comparables. Historically this has been true,
with US private equity generating a net return of 13.5% to LPs
over the 25 years to 2014, according to Cambridge Associates.
But will this assumption continue to be true? A year ago
private equity’s performance was looking less than spectacular.
Advisers and fund managers were stressing the importance
of investing with top-quartile GPs, which continues to be
the mantra. Over the past year, however, private equity’s
performance has improved relative to public equities. According
to the latest Cambridge Associates data (to June 2015), private
equity returns to large public pension funds outperformed the
S&P 500 by 3.7%, net of fees.
“If you look at median returns and expectations, then for me
the illiquidity premium does not always get you there,” says Marc
Friedberg at Wilshire Associates. “But the dispersion between
the median and upper quartiles is vast. It’s much larger than any
other asset class. Being able to select well and pick the right spots
over time really pays off.”
As competition increases with the supply of capital increasing,
relative returns will theoretically fall. “It’s only normal in microeconomics to continue to see money pile into this industry until
the average returns get closer and closer to the average returns
for public equities,” says Hugh MacArthur at Bain & Company.
“I don’t think those lines will ever actually meet because there
is an illiquidity premium to investing in private equity. We expect
the long-run rate of return on average for private equity to be a
few hundred basis points higher than the public markets.”
It is easy to confuse private equity’s growth with the growth
of the broader private market category, which includes credit,
infrastructure and real estate.
“The definition is getting much more broad and the
distribution of returns is changing quite rapidly,” says Jim Strang
at Hamilton Lane. “A lot of private market strategies are setting
out to deliver a lower rate of return. So, if you look at the returns
from private markets in aggregate, they’re going to be lower. Will
they still meet the needs of the customers? Yes.”
www.LimitedPartnerMag.com
Hugh MacArthur: Data suggests PE is no riskier than any other asset class
dramatically. In 2008, GPs raised $685bn. In 2009 it was just $318bn
and in 2010 it was $295bn. As distributions picked up, funds have
flowed back in and in 2015 GPs raised $527bn.
Anyone with even a passing knowledge of the history of private
equity, however, would know that the 2009, 2010 and 2011 vintages
were excellent. “It’s very difficult to time the market in private
equity,” says Jim Strang of Hamilton Lane. “The best way to make
money on a consistent basis is to keep going and not try to pull
out and come in. Post-crisis a number of people stopped investing.
They have had no exposure to what has turned out to be really good
vintages. Market timing turned out to be a really bad call.”
The structure of the private equity industry, particularly around
the fundraising cycle, necessitates a different approach to public
markets. “It’s very dangerous to have public market, mean-variance
thinking when you’re constructing a private equity portfolio, because
this is not a passive asset class,” says MacArthur.
“In public equity investing you can gain access to different
markets, allocate your money accordingly and understand what your
risk-return profile really looks like. In private equity it is impossible
to do that. You may want some exposure to China in a given year
but, if the only GPs raising funds are fourth quartile GPs, you don’t
want that exposure. You need to go where the best active managers
are raising capital in any given year.
“It makes sense to take a long view over a multi-year horizon and
gain exposure to different geographies and sub-asset classes, but you
need to be flexible and wait until the best managers are raising.
“You need to be patient and invest when that happens, rather
than rushing to construct a portfolio in a public market kind of way.
Institutional investors have got into trouble doing that in the past.”
7
LIMITED PARTNER PERSPECTIVES
DC pensions – the holy
grail for private equity?
Pantheon channels $33bn of LP capital to GPs through funds of funds, co-mingled funds,
secondaries and co-investments. Its business is built on delivering outperformance over
25-plus years. Now the firm is ready to pull the trigger on the vast DC market
I
f you want to be a successful private equity investor, you need
to think long term. Manager selection will always be the key to
outperformance at the investment level, but it helps if you can
identify and target long-term trends. Finding and creating value is
much, much easier in a growing market.
The biggest trend in the $25tn (that’s $25,000,0000,000,000 in
numbers) global pensions industry is the inexorable shift from defined
benefit (DB) to defined contribution (DC) schemes. At the end of
2014, DC assets accounted for 46.7 per cent of P7 pension funds
(Australia, Canada, Japan, the Netherlands, Switzerland, the US and
the UK), according to consultancy Towers Watson, with DC schemes
now accounting for the majority of assets in Australia and the US.
DC schemes have grown 7 per cent per annum over the past
decade, compared with 4.3 per cent in DB. In the US it has been a
takeover by stealth. In the early 1980s people were encouraged to
invest in a ‘401K’ tax-efficient savings plan, alongside their pension.
8
Q2 2016
PANTHEON
About Pantheon
Pantheon was founded in 1980 in London by Rhoddy Swire,
a scion of Hong Kong’s famous trading family. It opened its
first office in London in 1982 and made its first investments in
Europe, the US and Asia the following year.
Geographic expansion has been steady, with offices opened
in San Francisco in 1987, Hong Kong in 1992, New York in 2007,
and Seoul and Bogota both opening for business in 2014.
The firm has been an early participant in the evolution of the
private equity industry, making its first secondary investment
in 1998, launching its first US fund of funds in 1993, quickly
followed by an Asian fund of funds and an infrastructure fund
of funds in 1994, with a European fund of funds following in
1997. A maiden global secondaries fund was launched 2000,
co-investments started in 2005, infrastructure in 2009 and real
assets in 2015.
A key moment in its development came in 2003 when
Swire sold the business, which then managed $7bn, to Russell
Investment Group, pocketing a reported £35m in the process.
Pantheon enjoyed stellar growth in AUM to $22bn under
Russell’s stewardship but it was not a strategic fit for the
investment manager.
Pantheon was sold to New York-listed financial services
specialist AMG and its own management in February 2010 for
$775m in cash, with the potential for additional payments over
the next five years contingent on the growth of Pantheon’s
business. With Pantheon now managing $33bn of assets, it is
probable that AMG had to dig further into its pockets.
Denis McCrary: Private equity has long-term structural advantages
Corporations slowly convinced employees the 401K should replace
their pension fund, sweetening the deal by increasing match funding
or some other machination that made it palatable.
Within a couple of decades everyone thought of the 401K as their
pension. Corporations had successfully moved the liabilities – and the
risk – from themselves to their employees. Where the private sector
has led, the public sector will inevitably follow.
Michael Riak, former director of savings and affiliate plans at
Verizon Communications, to lead the push. The vehicle allows
DC participants and plan sponsors to incorporate comprehensive,
institutional-quality private equity investments into their retirement
savings plans.
The vehicle is also designed to attract individual investors through
their Individual Retirement Accounts (IRAs). Pantheon hired
Sheldon Chang, Susan Giacin and Doug Keller from Merrill Lynch
Investment Management to access the private wealth market.
“Each of those markets has different regulatory regimes and
different preferences,” says Albert. “DC plans look for daily pricing,
daily liquidity, a treasury function to deal with capital calls and
distributions and reinvesting.
“Individuals focus more on commitment size than daily pricing,
transparency and valuation. They don’t need to know what it’s worth
on a daily basis, but they want to know what it’s worth on a quarterly
basis. Liquidity is also an issue. Individuals have a hard time locking
up their money for 15 years, whereas DB plans didn’t.”
Albert concedes it has been a slow burner. Nonetheless the
schedule remains on track. “In terms of our positioning, we’re in the
seventh innings and – if you know anything about baseball – there are
nine innings to a game,” he says. “But in terms of really contributing
Creating a market
Historically, PE has relied on DB funds and investors with a very
long-term time horizon, such as endowments and family offices. If
the industry is to attract more pension fund money in the future, it will
need to appeal to DC funds.
Pantheon is one of the oldest private equity fund managers.
Founded in 1982, it now has approximately $33bn assets under
management, with 70 investment professionals and 200 staff
operating globally from offices including London, San Francisco,
New York and Hong Kong. Now it is trying to crack the DC nut.
“It’s taken a long time but the move from DB to DC schemes by
corporations and governmental entities, where they are not on the
hook for the results, is becoming palpable,” says Kevin Albert, New
York-based partner at Pantheon. “It started small and hasn’t really
advanced that far in the public sector because it becomes political,
but it has taken off like wildfire in the corporate private sector. It is
catching on in the public sector, which is the biggest funder of private
equity and has been for many years.”
Pantheon established Pantheon Defined Contribution back
in 2013 to tap into the $3.5tn US DC market. The firm hired
www.LimitedPartnerMag.com
9
LIMITED PARTNER PERSPECTIVES
CVs
“Our objective is to raise
hundreds if not billions of
dollars from the DC market
over the coming years. We
think we’re now well
positioned to do that”
Kevin Albert
A pioneer in the private equity industry, Kevin Albert’s career
includes 24 years with Merrill Lynch, where he was managing
director and global head of the Private Equity Placement Group.
In 2005 he joined Elevation Partners as managing director,
helping raise $1.9bn for the firm’s first fund for investment in
media and entertainment businesses. Elevation was founded by
Silver Lake veterans Roger McNamee and Marc Bodnick, but is
better known for its association with U2 front man Bono.
He joined Pantheon in 2010 as global head of business
development and is a partner, a member of the partnership
board, and holds responsibility for global business development
and client service. He holds a BA in Economics and an MBA in
Finance, both from the University of California, Los Angeles.
Dennis McCrary
Kevin Albert
Dennis McCrary is a partner based in San Francisco and Chicago.
He is a senior member of the investment team and is a member
several investment committees, including the international
investment committee.
Before joining Pantheon in 2010, Dennis was head of the US
partnership team at Adams Street Partners. He has also worked
at Bank of America and Continental Bank. McCrary holds a BA
in Accounting from Michigan State University and an MBA from
the University of Michigan.
to our AUM, we don’t expect our DC channel to deliver immediate
meaningful growth. Our longer-term objective is to raise hundreds,
if not billions of dollars over the coming years. We think we’re now
well positioned to do that because of the early groundwork and
infrastructure we’ve built. A key focus for investors will be to see us
invest to give them a feel for the kind of investments we’ll be making
and an early look at the performance. We’ve been creating materials
so the information is available when and to whom it needs to be.”
The Washington State Investment Board, which has $71.1bn AUM
in DB schemes and $14.1bn AUM in DC, earlier this year approved
a 2016 strategic plan that will look at whether the board should offer
options for deferred compensation and defined contribution members
to invest in private equity and real estate strategies.
Washington State, which was one of the first five US state funds to
invest in private equity, is looking at managing the move internally
and could make a start by shifting some of its DB exposure into the
DC pot. “I expect DC to grow geometrically after two, three or four
investors come into the market,” says Albert. “I expect it to take two
or three years to get two, three or four early adopters to buy into it.
Then, just like the DB market which started with just a handful of
pension funds in the early 1980s, it will take off at a very steep rate.”
There are also establishment calls for DC funds to take a good
look at private equity. In his 2012 Report on Institutional Investment,
British politician Baron Paul Myners noted that “it cannot be right
to argue that an asset class is by its nature too risky to form any
proportion, however small, of the scheme’s overall investment
offering. There is a danger here that just when more defined benefit
schemes are coming to reject as irrational an investment strategy that
ignores certain asset classes on the grounds that they are ‘too risky’,
defined contribution schemes may repeat similar mistakes.”
Solid foundations
For all the attention it has been given, the DC programme is merely
a new wrapper on the present model. “It will not change what the
GPs we invest with are doing,” says Albert. “When we make an
investment in a co-investment, a secondary, or a primary, we may be
making it across our investor base.
“For DC investors we need to keep a certain amount of illiquid
assets, say about 20 per cent, so that we can make capital calls and
handle the daily switching. Instead of having 100 per cent of the
money invested in private equity the way our traditional clients do,
these vehicles are likely to have about 20 per cent of their money in
a liquid vehicle that will produce a market return, but not a private
equity return. The private equity investments will be identical.”
Private equity is a gift that has continued giving. A year ago,
global private equity performance was in the same ball park as
public equities over a five-year time horizon, largely a result of major
stock markets doubling in value from their nadir in 2008-09, due
in no small part to the efforts of central banks to pump money into
economies. The US Federal Reserve printed $4.5tn of new money
10
Q2 2016
PANTHEON
under its QE1, QE2 and QE3 programmes. While there is heated
debate over whether QE programmes in the US, the UK, Europe and
Japan did anything to boost economic growth or bank lending, they
certainly helped push asset prices higher.
Now the performance gap between private and public equity is
widening again. In its 2016 Global Private Equity Report, consultancy
Bain & Company talked about private equity returns under the
heading ‘Confidence Regained’. Using data from Cambridge
Associates, widely regarded as the most reliable among a frustratingly
variable data set, PE’s 10-year returns to large public pension funds
outpaced the S&P 500 by 3.7 per cent net of fees. Bain said that as
the legacy effects of the financial crisis retreat further into the past,
PE should “consistently perform at a level close to or above public
equities over one-, three- and five-year time horizons”.
Dennis McCrary, a senior investment partner at Pantheon,
believes private equity has long-term structural advantages over the
performance of the public markets. “Private equity can generate better
returns if you’re with the right managers,” he says.
“An important differentiator is the private equity corporate
governance model. Management can be better motivated and
shareholders better aligned in terms of their interest because of the
tight ownership structure, which means there is greater accountability
to the board. It’s that part of the model, along with strong operating
expertise, that allows private equity in general, if it’s properly
executed, to outperform.”
Kevin Albert: The move from DB to DC schemes is accelerating
more responsive to requests for tailored portfolios. Requesting veto
rights is another trend Albert has noted.
Then, of course, there are the fees. “We are much more flexible in
terms of offering different fee models” he says. “Instead of insisting
on a committed capital fee and a carry, we offer invested capital
fees, a higher management fee with lower carry, higher carry with
lower management fee. We can really be responsive to what the
client wants.”
The composition of Pantheon’s business has changed over time,
with more emphasis today on secondaries, co-investment and
managed accounts, though the original fund-of-funds business is still
a substantial operation. In 2015, of the $4bn-plus the firm raised,
a meaningful chunk was for traditional fund-of-funds vehicles,
compared with just $1bn in 2010. “It does make a difference how you
allocate to buyouts, growth, special situations, venture, credit or real
estate,” says McCrary. “You get some benefit from doing that wisely.
But the bottom-up manager selection is critical.
“Over recent years we’ve moved the portfolio in the US to
include more sector-focused groups. We believe sector-focused
groups have advantages of not only creating value at the company
level strategically and operationally because they understand that
particular industry better and can guide it better, whether it’s through
acquisitions or otherwise, but also at the origination level. The more
GPs understand the industry, the more context they have, the better
their network, the more wisely they can buy.
“Generalist buyout funds – and there are some very good ones
– are often competing in auctions for their deals. Over time I think
the sector-focused groups are likely to outperform generalist firms
competing in a given sector.”
Governance structures
It is not that public companies are prevented from following the
governance and incentivisation structures that are common in private
equity, it’s just that they don’t as a rule.
“Some publicly traded businesses have great boards that do
hold their management accountable. They have well-structured
compensation systems that allow for strong alignment and great
managers that perform really well,” says McCrary.
“It’s not that it can’t be done in a public company context, but
we see the opportunity in that environment for the model becoming
distorted. In the private equity model, the owners, the board, and the
management team are typically very well aligned and focused on
long-term performance and value.”
Pantheon has taken this belief into parallel investment classes,
including credit, infrastructure and real assets. Some of the mechanics
are different, but the principles that make a group successful are the
same. These businesses are at an earlier stage of their evolution than
the core private equity business, but that will change and LPs will
develop from funds of funds through secondaries, co-investment and
management accounts.
Albert is happy to acknowledge that Pantheon is more open to
taking LPs’ money on different models than it was in the past. “We
now offer format options,” he says. “If an LP is big enough and wants
to have even more control over how it works with us, we are much
more willing to do separate accounts or have a consultative type
relationship with that investor. At the smaller end we are able to be
www.LimitedPartnerMag.com
11
LP PROFILE
Helping build bridges
between LPs and GPS
Huge strides have been made in bridging the apparent gulf in understanding between
the needs of LPs on the one hand, and GPs on the other. Much of the progress has been
thanks to the work of the ILPA in introducing new industry standards
A
Those strategies include industry-leading education
programmes, independent research, best practices, networking
opportunities, and global collaborations.
But key to ILPA’s push has been drawing together LPs and
GPs to hammer out sets of standardised best practices and
reporting templates to improve transparency and generate industry
efficiencies.
Previous publications have included work on capital calls
and quarterly reporting standards. But recent high-profile media
coverage questioning large fee payouts to PE firms and concerns
about opaque fee agreements led to ILPA producing a new fee-
n open and cooperative LP-GP partnership has long been
seen as vital to making strong returns in private equity.
However in recent years the relationship has become
increasingly strained, with management fees, carried interest
information and expenses all brought into question by LPs as the
industry calls for greater transparency about what is reasonable –
and what is not.
Founded as an informal networking group in the early 1990s,
The Institutional Limited Partners Association (ILPA) looks to
help bridge the gap between LPs and GPs and provide greater
collaboration between the two sides.
12
Q2 2016
ILPA
reporting template in January this year. ILPA claims its Private
Equity Principles contains best practice concepts targeting the
alignment of interest between GPs and LPs, fund governance,
transparency and reporting.
Jennifer Choi, managing director of industry affairs at ILPA,
told Limited Partner magazine, “The launch of the ILPA Principles
revealed that many LP investors had a shared views on many
topics.
“Where negotiations are a bilateral exercise between a single
LP and a single GP, it is often difficult to know what other LPs are
asking a particular GP to provide.”
The Principles formed a conversation outside of that bilateral
negotiation, highlighting how other investors viewed issues such
as fund governance, reporting and disclosures and the role of
advisory committees, Choi adds.
“Instead of hearing from managers that their requests were
unique and out of step with other LPs, investors appreciated the
validation that their requests actually mirrored those that other
investors were making as well.
“Following the release of the Principles, the market underwent
a wholesale shift for several meaningful terms, particularly around
governance.”
About the ILPA
The ILPA is the leading global, member-driven organisation
dedicated to advancing the interests of private equity limited
partners through industry-leading education programmes,
independent research, best practices, networking opportunities
and global collaboration.
Initially founded as an informal networking group, the ILPA
is a voluntary association funded by its members. The ILPA
membership has grown to include more than 300 member
organisations from around the world representing more than
$1trn of private assets globally.
The goal of the ILPA is to continue to evolve the organisation’s
research and education platforms and build best-practice tools
for use by industry professionals. Under the research platform,
the ILPA addresses key issues affecting private equity, including
regulatory reform, risk management, and the amount of capital
circulating in the industry.
The ILPA Institute provides a structured, comprehensive
executive education programme designed from the perspective
of the limited partner. The most recent version of the ILPA
Private Equity Principles was published in January 2011,
together with standardised reporting templates for capital calls
and distribution notices.
In addition to the annual General Partner Summit, the ILPA
hosts member-only conferences and several regional events
throughout the year to allow its members to connect with their
fellow LPs.
Transparency
The result of the Principles has also led to the beginning of
management fee offsets progressing towards 100 per cent,
according to Choi.
While Choi admits the industry is not there yet, in some cases it
has moved from zero per cent to around 60 per cent to 80 per cent
offset for certain fees charged to portfolio companies.
“The net effect of the Principles has been an evolution towards
a much healthier and more open and informed dialogue between
LPs and GPs, largely down to the expansion beyond the prism of
the bilateral discussion taking place between a single LP and a
single GP.
“The GPs were also quick to realise that the critical mass of
LPs asking for the same thing mandated a change in approach.
And the majority of GPs have been responsive to these collective
‘asks’ from the LP community.”
The issue of transparency within the private equity industry
came to a head in the second half of last year, with pressure
coming from all sides to provide more information about what was
needed and required from LP-GP agreements.
Amid widespread reporting of huge fee payments to buyout
firms over the past 15 years, California’s state treasurer John
Chiang urged the country’s big pension funds to work together to
force private equity firms to disclose all fees charged.
Choi says, “Transparency is an evergreen issue, not a ‘problem’
that flares, is resolved and then subsides.
“Transparency between LPs and GPs is a necessary and
persistent facet of the relationship. We are encouraged by the
uptake amongst both LPs and GPs.
www.LimitedPartnerMag.com
“The LPs are embracing a single approach, as opposed to
dozens or hundreds of bespoke reporting formats. At the same
time, GPs are welcoming this shift and understanding why the LPs
would be asking for more information about fees and expenses.”
January’s fee-reporting template included support and input
from more than 120 individuals and organisations, including
nearly 50 global LP groups and 25 GPs, as well as numerous
industry trade bodies and a number of leading consultants,
advisors, fund administrators and accountants.
“Hopefully we’ve achieved a material and indelible
improvement in the state of transparency compared to a year or
two years ago,” Choi says.
“We believe there is progress being made and the gap is
narrowing, but transparency should be a fundamental and everimproving aspect of the relationship between LPs and GPs.”
Given the administrative and expense burden of managing a
large number of GP relationships, some of the bigger LPs have
been reducing, or looking to reduce, the number they maintain.
GPs who are either too small to make a meaningful contribution
to overall LP returns, or who have not performed in the top
quartile, have been eliminated from portfolios by some LPs in a
bid to cut costs.
When asked whether this was something the ILPA is
increasingly seeing, Choi says, “Certain institutions are beginning
13
LP PROFILE
CV
“Allocations to private
equity are still rising with
new institutions coming
into the asset class. We
don’t see a drop-off in
participation in PE”
As managing director of industry affairs for the Institutional
Limited Partners Association (ILPA), Jennifer Choi directs the
association’s engagement with external industry stakeholders.
She also leads the implementation of ILPA’s responses to
emerging issues affecting the asset class, including efforts to
establish and promote industry best practices.
Before joining ILPA in June 2014, Choi worked at the
Emerging Markets Private Equity Association (EMPEA), serving
as vice-president of industry and external affairs. During her
eight-year stint at EMPEA she led the association’s member
and industry engagement activities, including its efforts to
encourage policy frameworks that support the growth of the
asset class.
As EMPEA’s research director she built the industry’s first
global database of private equity activity in the emerging
markets. Choi also oversaw the association’s media
communications and global institutional partnerships.
Prior to joining EMPEA, she was a consultant with Bostonbased Stax, where she led due diligence engagements and
provided advisory services and portfolio company strategic
planning support to US buyout and middle-market private
equity teams.
Choi holds a Masters in Law and Diplomacy from the Fletcher
School at Tufts University and a BA summa cum laude in
Economics and Political Science from Augustana College.
to reduce the number of external managers, and there are some
well-known examples where they have been quite public about
their needs to reduce volatility, or to reduce the overall costs and
complexity of the programme.”
A Dow Jones LP Source report last year says LPs were actually
increasing allocations to private equity – but writing fewer
investments and spreading their capital across fewer managers.
Private equity firms closed on a total of $143.3bn for the first
half of the year across strategies including buyout, venture capital,
mezzanine, secondary and funds of funds, up 10 per cent from the
$130.3bn raised in the previous 12 months.
increasingly obvious in the recovery of the PE industry postfinancial crash – that changing LP investment strategies had led
to fewer, larger PE funds raising quickly, and smaller or first-time
vehicles struggling to hit targets.
Despite this, Choi doesn’t think the reduction is having a big
impact on GPs, with the IPLA continuing to see new entrants to
the asset class, and allocations to private equity on the up.
Choi says, “Allocations to private equity are still rising, and in
fact this is one source of the ILPA’s membership growth, with new
institutions coming into the asset class. We don’t observe a dropoff in participation in private equity in terms of allocations for any
segment of the institutional investor universe.”
In terms of geography, the fastest growing segment of the
ILPA’s membership has been Europe, although Choi stressed it is
still seeing new members joining from all corners of the globe.
“We’re also seeing increased interest in the ILPA and in private
equity generally among family offices.
“While many family offices may have begun doing private
equity as direct private equity, investing directly into companies
as a strategic investor – perhaps in an adjacent space to that of the
founding family – some are beginning to move into funds or to
move away from a strictly fund-of-funds approach.
“We are also seeing new entrants in terms of public plans
and even corporate plans that are moving away from a fully
Impact of GPs
Even though there was an increase in the total, only about 378 US
private equity funds held interim or final closings for the first six
months of the year, down from 426 funds the previous year.
Choi says she was unsure whether that could be classed as
a trend, but does believe LPs are looking more closely at their
relationships.
“In general, I think where we have LPs that have seen
significant expansion of their private equity manager relationships
over the past five to ten years, they are understandably looking to
see whether those relationships have been optimised – whether
their concentrations are appropriate to their broader portfolio
goals, and whether they feel like they have a really solid handle on
each of those relationships, given the resources at hand.
“It is not clear whether there has been a wholesale downshift,
or if that is really down to a handful of high profile examples.”
The LP Source report also reaffirmed what has been
14
Q2 2016
ILPA
outsourced model, where all decisions were delegated to a fundof-funds relationship or a consultant. Instead they are bringing
those decisions and activities in-house.”
In cases where an LP is downsizing their relationships, GPs who
have a very healthy relationship and strong alignment with those
institutions, and have been strong performers and produced high
quality reporting, should have nothing to worry about, according
to Choi.
“The GPs that are really great at creating value for their
investors and their investees, and whose strategies align well with
the LPs that invest with them, have nothing to fear. Those GPs
within a niche or pursuing a more specialised strategy may find it
more challenging should their LPs look to streamline,” she says.
Even in those cases Choi stressed it is important to remember
that it may not always be performance-related.
“It may be the case that a manager’s strategy is not directly
correlated to the overarching goals of programme or of the larger
plan portfolio.
“You will see some of those non-core managers fall away
over time as LPs really try to drill down to what their investment
thesis is, or to a more perfect expression of how private equity
complements what they doing in the balance of the plan.”
Portfolio level
A GP’s worth to institutional investors has historically been ranked
by the performance of their fund. However, with LPs increasingly
looking to optimise their relationships there has been more interest
in portfolio-level data in the past few years, according to Choi.
“LPs seek to better understand the nature of the positions in
the fund, the relative health and performance of those underlying
companies, and how their sector and other exposure and
concentrations might roll up across the programme or across the
entire plan portfolio.
“More than just performance at fund level, LPs are seeking a
more granular understanding of how the companies are doing, and
how the GP is adding to the performance of those companies.
“The GPs that can provide that sense of look-through, who can
really engage LPs in demonstrating how they are creating value,
will certainly rise up the ranks.”
LPs are attempting to get a better handle of this, not just because
they want to ensure their private equity programme is running
as expected, but because they are becoming more interested in
how private equity is performing, the risks, the exposure, sector
concentration and currency issues, Choi adds.
“That is one important piece of the larger puzzle that LPs
are trying to work through. LPs want to optimise that type of
information from GPs, and the GPs are trying to respond to that.
“But it is challenging – a fund can have dozens or even
hundreds of individual LPs, each of which might have specific
needs relative to their own portfolio management goals and
institutional priorities.
“The starting point for our members is that private equity
www.LimitedPartnerMag.com
Jennifer Choi: private equity should be built on partnership
is built on a partnership, and LPs approach it as such. The
relationship is not by its nature an adversarial one.”
That dynamic between the LPs and GPs is often described as a
swinging pendulum, a reflection of market supply versus demand.
Choi says, “At the time the ILPA Principles were released,
LPs were in a privileged negotiating position. In the wake of
the crisis and bottoming public markets, they found themselves
overexposed to private equity.
“This denominator effect constrained their ability to commit to
new funds, so LP capital became a scarce commodity and there
was a so called flight to quality, propelling GPs to compete on
the basis of not only strong returns but also more LP-favourable
terms.”
However post-crisis the dynamic has shifted, with the
emergence of a bifurcated market, the haves and the have-nots.
“Certain GPs, sometimes for very clear and rational reasons,
and sometimes for no reason at all, become very much in demand
while other GPs may struggle to raise follow-on funds,” says
Choi.
“GPs in that rarefied air are presumably in a better place to
dictate terms, at which point it is really up to the investor to decide
if those terms are acceptable.”
15
FEATURE
Investing in people
Private equity player Adveq puts its focus fairly and squarely on building quality
relationships with clients. Having access to capital and funds is not enough in today’s
world – as the old saying goes, you don’t buy products, you buy people
P
sought-after sector to work in. We spend a lot of time finding the
right staff for our business and have gathered a lot of experience in
doing that over the years. We have expanded our team every year
without fail and we expect that to continue.
“Nowadays capital is relatively readily available, and so the way
we contribute to our relationships is by adding value.”
He adds, “We put high value in the person-to-person
relationships and focus on recruiting the right type of talent, as
well as making sure we keep those skilled employees at the firm
in the long run – because they are the ones building up sustainable
relationships with GPs.”
laying the private equity field for close to 20 years
has taught fund-of-funds major Adveq the power of
relationships – something more important than ever as a
rising torrent of capital washes through the industry.
The firm has grown from a small starter office in Zurich to
employing close to 100 professionals across Europe, North America
and the Asia-Pacific region, and finding the right people to foster
trust with LPs has been a key tenet of the firm’s expansion.
Tim Creed, executive director in charge of European
investments, told Limited Partner magazine, “Recruitment is one
of the biggest challenges in the private equity space, as it is a very
16
Q2 2016
ADVEQ
About Adveq
Adveq invests globally in venture and growth capital, buyouts
and turnarounds, and provides institutional investors access to
private equity segments through primaries, secondaries and
co-investments.
Responsible and fundamental value creation is the key driver
of the firm’s work, which aims to put clients first, and the team
before the individual, in everything.
Founded in 1997, the firm has offices in Zurich, Frankfurt,
London, Jersey, New York, Beijing, Shanghai and Hong Kong,
and assets under management (all commitments) as of 31
December, 2015 stood at $6bn.
Adveq’s average investments range between $10m and
$40m, and the firm is currently managing seven investment
programmes, including Adveq Europe, Adveq Secondaries,
Adveq Europe Co-Investments, Adveq Specialised Investments,
Adveq Technology, Adveq Opportunity and Adveq Asia.
demonstrates our ability for a long-term commitment to our GPs.
Our experience with backing first-time players has been very
positive and it is something that we feel is very important.”
Riding Europe’s choppy investment waters has seen plenty
of firms, large and small, struggle under the weight of poor
investment choices over the past two decades.
Adveq’s plan to combat uncertainty in the markets has been to
implant dedicated teams in key European locations, with the UK
riding high in the firm’s sights.
The country takes up a good chunk of the firm’s investment
portfolio as one of the markets offering the best and most varied
opportunities in Europe, Creed explained.
He says, “If you look across Adveq’s portfolio, we are
overweight in the UK and happy to be so, as we have had very
successful fund managers and co-investments in the country. We
believe it is an essential part of the investment landscape.
Tim Creed: ‘You have to choose the right relationships in the first place’
But ensuring the strength of internal relationship-builders is only
half of the battle. Apart from cherry-picking its own people, Adveq
is also regularly assessing and re-assessing its business partners,
and has a long-term track record of supporting new GPs.
Creed says, “You have got to choose the right relationships in
the first place, and have to be on the lookout for the best in the
business.
“But then, when you are working with high-calibre groups
already, there is a combination of the reputation of your
organisation, as well as the individual relationships between
your team and the people working for the firms you are working
alongside.
“What we aim to do at all times is have both parts of the puzzle
nicely filled in. We show that we are dedicated entirely to private
equity, have always invested in that space and will continue to do so.
“Demonstrating such long-term continuity is very important for
building up and maintaining strong relationships with GPs. We’ve
also demonstrated that we commit capital throughout the cycles,
not drifting out of individual funds in the long run.
“While most of our co-investments are done together with
long-term GP partners, we sometimes collaborate with new and
emerging fund managers, where we hope to make new fund
investments in the future.
“[Picking first-time funds] requires a complex skill-set which we
have built up over time. Moreover, we have continued to support
many of those groups on their second and third fund, which
www.LimitedPartnerMag.com
Bottom-up approach
“We have a very bottom-up approach, looking at each individual
investment, and are not comparing markets or sectors in
general. Looking at one country versus another country does not
necessarily result in the best underlying investment.
“What we have found throughout the cycles is that the UK is a
good market to invest in, because it is very deep and always offers
a wide range of opportunities. This to a large extent also goes for
the whole European market.”
The UK’s depth and sophistication make it stand out from other
mature European markets, Creed says – something that naturally
leads to high competition for assets.
“To me, one of the biggest differentiators between the UK and
the rest of Europe is that Britain is the biggest, arguably the most
sophisticated, well-established and the deepest market in the
region,” he says.
17
FEATURE
CVs
“The UK pensions merger
has the potential to be
truly transformational…
there will be six or seven
multi-billion pound funds
looking to invest across the
board – including in PE”
Tim Creed
Adveq’s managing director Tim Creed has been with the
company since 2004, initially working on the firm’s European
fund-of-funds programme. He was promoted to executive
director at the beginning of 2009, and in June 2012 became
managing director. In the first eight years on Adveq’s
investment team he was a key enforcer of the firm’s European
strategy. Creed currently leads the firm’s European investment
programme.
He is also a member of Adveq’s management committee and
sits on the advisory boards of several leading European buyout
and turnaround fund managers.
Creed started his career as a research chemist at Astra Zeneca.
He holds a bachelor’s degree in chemistry from the University of
Edinburgh and an MBA from Oxford.
Farah Buckley
Farah Buckley was promoted to executive director at Adveq in
January 2016, four years after she joined the firm in 2012. She is
head of the UK office and is responsible for the development of
client relationships.
Previously, Buckley held a directorship at London-based
alternative investment advisory firm MVision where she
spearheaded numerous fundraises for Europe-based GPs.
Before MVision she was an associate director at UK private
equity placement agent Almeida Capital for nearly four years.
Buckley spent three years at Deloitte where she qualified as
a chartered accountant (ACA) with the Institute of Chartered
Accountants in England and Wales.
“As a consequence of that, the UK offers the broadest range of
opportunities, types of investments and management teams. That
wide range of possibilities has its advantages as well as its pitfalls.
On the one hand there is a lot more choice than in other markets,
but on the other there is a lot more competition.
“From an investing perspective, the large buyouts segment is
very competitive, as there are not that many large buyout groups
to choose from and not that many large buyout deals that happen
per year.
“Furthermore the large deals are very visible, so it is a challenge
to invest in such transactions.
“On the flip-side, there are some very high-quality teams, with
long-term experience and deep expertise, in the large buyout space.
“At the smaller end of the spectrum, there are a large number of
different types of GPs with a variety of strategies and priorities, and
focused on different parts of the market. So the challenge for LPs is
to find the right group of funds to invest in.”
or seven big, multi-billion pound investors that will be looking
to invest across the board – including in PE, infrastructure, and
direct deals.
“I would say that’s the most transformational thing we are
seeing in the investor community in the UK at the moment.”
Maintaining strong bonds and a tight network with LPs is one
thing, but content matters as much as accessibility according to
Buckley, with new ideas and the right access to the investment
team lying at the heart of successful relationships with clients.
She says, “One key aspect is ‘thought leadership’ and
innovation. It’s about being able to tell an LP something they
have not heard before, to show them your expertise and in-depth
knowledge by demonstrating that you know what is truly going on
in the market and you have the best strategies to provide alpha.
“In essence, we are educating investors about the types of deals
we are doing and about the trends we are seeing in the market.
These are the kinds of things that make investors want to meet
with you.”
“[Another] point is responsiveness to clients,” she adds,
“which seems pretty obvious, but in fact treating every client as a
Pension fund mergers
Farah Buckley, Adveq’s executive director and head of the UK
office, adds, “From an investor point of view, we’re seeing quite an
exciting and interesting development in the UK, with the Chancellor
requesting that the 89 local government pension schemes merge or
consolidate into six or seven super pension funds.
“This whole dynamic has the potential to be truly
transformational for the industry – it will mean there will be six
18
Q2 2016
ADVEQ
priority and providing high-quality client service is not just taking
someone for a coffee every six months.
“It’s about nurturing and developing that relationship with the
client and fully understanding their needs and concerns, which is
sometimes easier says than done.
“Developing such an understanding of the client is dependent on
in-depth, quality interactions with the client built up over time.”
Buckley who has been with Adveq since 2010, says the past five
years have seen LPs increasingly interested in pressing for more
details before they commit to a GP – and also a rise in keenness to
get more hands-on themselves.
She says, “Investors are now asking a lot more questions, which
I see as a positive development. Specifically, they’re asking more
questions about GPs, fees, and about portfolio companies.
“In terms of trends, you are seeing certain groups of investors
who increasingly want to do more themselves in-house.
“In order for LPs to do that effectively, they need to have a big
enough team and find the right talent, as well as be able to execute
deals and have the right internal infrastructure. Whether investors
can successfully execute deals on their own with the right team in
place internally is another matter. It’s a difficult strategy.”
She adds, “What we’ve seen in the market is that investors have
a much greater focus on transparency, wanting to know exactly
what they are investing in down to a portfolio company level, and
also on a fee level. The industry as a whole needs to make sure that
investors have full clarity of pricing, including from GPs.
Farah Buckley: Understanding clients’ needs is vital
Regulatory change
“As an M&A banker working on the investment side, this
experience was invaluable as I was able to develop the financial
rigour and skill-set needed to really understand private equity
transactions.
“This previous experience in M&A and chartered accountancy
allows me to fully understand the dynamics of deals, as I have
worked on the investment side doing financial due diligence on
companies. I then went onto work at Almeida Capital and MVision,
which was integral for developing my private equity knowledge,
building relationships with LPs globally, and also seeing how
fundraising has evolved over the years.
“Having a robust financial background is very important
nowadays for IR professionals. It’s not enough to have good client
relationship skills and to have industry contacts, you also need to
have an in-depth knowledge of transactions, capital structures and
portfolio companies, as well as having an understanding of GPs and
the broader private equity industry.”
Commenting on diversity at the firm, Buckley says, “Adveq
believes in retaining and rewarding talent regardless of gender.
“We are seeing increased dialogue within private equity around
supporting women, and this is now perceived as a key topic by
professionals. I do think that having women in senior positions is
becoming a top priority for many private equity firms, and I am
pleased to see that.”
“More generally, regulatory change is another key concern.
Different types of LPs are subject to different regulations, and that’s
something, again, which is continuing to be important for investors,
bearing in mind the pace of regulatory change.
“The fundamental point is that investors are looking for
innovative private equity solutions that create value over and
above what they would get investing in something they could do
themselves, for example, at the large buyout end of the market.
“This is why we have seen a rise in both customised and separate
accounts. From our side, we work on specialised strategies that are
at the more work-intensive end of the spectrum, such as specialist
managers, first-time funds, co-investments and smaller specialised
secondaries, and that’s how we create value for our LPs.”
Buckley herself can be taken as an example of the careful and
sophisticated recruitment process at Adveq, and the firm’s aim of
putting the right person in the right place regardless of who they are
and how they acquired the necessary skills.
Buckley says, “I am a little bit unusual for an investor relations
professional considering I have a background as an M&A banker.
“I’ve also worked on different sides of the private equity industry
over the past 14 years. I started work at Deloitte back in 2002 where
I had a number of private equity clients. Then I went into M&A,
working at McQueen, a specialist corporate finance boutique which
was recently acquired by Houlihan Lokey.
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19
FUNDS
Global PE, VC fundraising stays stable in 2015
Global private equity and venture capital
fundraising remained steady last year in
total dollars collected, despite sharp drops
in capital closed for several key asset
classes, new research suggests.
Secondaries and growth capital vehicles
recorded overall drops in closed fund capital of 32 per cent and 30 per cent respectively, according to the latest Global Private
Equity Report from Bain & Company.
Infrastructure and buyout funds also fell
in dollars closed, by 16 per cent and 11 per
cent, although overall capital raised across all
asset classes globally still reached $527bn.
That was relatively consistent with the
$555bn and $547bn recorded in 2014 and
2013, the report showed.
The big winner last year looked to be
mezzanine vehicles, which saw capital
closed soar by 118 per cent compared with
2014, while natural resources vehicles
closed 44 per cent more capital across the
same time periods.
Bain’s report said, “GPs setting out to
raise new funds in 2015 encountered some
of the best conditions in years.
“With cash distributions from exits
continuing to run well ahead of calls on
previous commitments, abundant fresh
capital enabled most GPs to hit or exceed
Fundraising remained fairly stable in 2015 in terms of total dollars collected, at $527bn
their fundraising targets. Funds are also
raising capital more quickly, on average,
than in any year since the height of the last
PE cycle nearly a decade ago.
“Indeed, with memories of the global
financial crisis still fresh in the minds of
GPs and LPs alike, it is remarkable how far
fundraising has rebounded.
“With all exit channels blocked in the
period immediately following the crisis as
GPs gradually nursed their troubled holdings back to health – and because LPs were
Permira picks €6.5bn
target for new fund
European buyout major Permira has launched
fundraising for its sixth fund targeting €6.5bn,
Limited Partner can reveal.
Rumours about Permira planning to return to
market in the first quarter of 2016 emerged last
autumn. A PEHub report from November last
year, citing information from LPs, claimed the
fund would target €6bn with a €7bn hard cap.
Permira held the final close for its Fund V on
€5.3bn in June 2014. The vehicle closed after
34 months of fundraising on a reduced hard cap,
which was lowered from the initial €6.5bn.
Fund V was launched in early 2011, but had
collected just €2bn 18 months later according to a
letter to investors at the time.
overweighted in PE as the value of non-PE
assets tumbled – most shelved new fundraising plans, and many looked as if they
might never be able to raise another fund.
“As economies and markets around the
world slowly recovered, PE fundraising
began to climb out of its trough.”
Funds based in North America posted
a down year, according to the research,
but funds headquartered in Asia-Pacific
increased modestly in 2015. Europe also
proved surprisingly strong.
Leonard Green raises target for
seventh buyout fund to $8.5bn
Los Angeles-based Leonard Green &
Partners has reportedly raised the target
for its seventh buyout fund from $7.5bn
to $8.5bn.
The firm has also set the vehicle’s
hard cap at $9.1bn according to Buyouts,
which cited three people with knowledge
of the fundraising.
Leonard Green has sent an email to
limited partners recently and has demand
well over the cap, the sources added.
Back in August it was reported that the
firm was looking to launch the fund in
September or October.
20
The firm’s last buyout fund closed at
its hard cap of $6.25bn, with $6bn coming from LPs commitments and $250m
from affiliates of LGP.
Investors in Fund VI included a diverse group of domestic and international
pension funds, sovereign wealth funds,
insurance companies, foundations and
family offices.
The firm has invested in 76 companies
in the form of traditional buyouts, growth
capital investments, corporate carve-outs
and public equity and debt positions, according to its website.
Q2 2016
FUNDS
Advent takes just 6 months
to close fund at $13bn cap
Advent was able to hard-close Fund VIII at a massive $13bn in just six months
Advent International has closed its
eighth global private equity fund at its
$13bn hard cap after just six months on
the road.
Advent International GPE VIII,
which exceeded its $12bn target,
received commitments from a diverse
base of institutional investors across the
globe, with around 90 per cent coming
from previous investors.
The vehicle will follow the same
strategy as Advent’s previous funds by
investing in buyouts, recapitalisations
and growth equity transactions, the firm
said.
It will primarily target opportunities
in Europe and North America, as well
as selectively in other regions such as
Asia and Latin America, according to
the firm.
GPE VIII will focus on five sectors – business and financial services,
healthcare, industrial, retail, consumer
and leisure, and technology, media and
telecoms.
Managing partner David Mussafer
said, “We are pleased with the strong
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support we received from both existing
and new investors.
“We believe that our success is a result of our long-established sector focus,
global footprint and network, private
partnership model, and the significant
operational resources and expertise we
apply to our investments. This solid
foundation positions us well to continue
to find and build successful businesses
around the world.”
The fund is significantly larger than
its predecessor, GPE VII, which closed
on $10.8bn in 2012.
Fund VII generated a 22.84 per cent
net internal rate of return and a 1.3-times
multiple as of December 31, according to
the Washington State Investment Board.
Advent has spent the past year gearing up for the fundraise by making a
number of exits, including the sale of
healthcare business Quality Care India
to emerging market-focused private
equity firm, the Abraaj Group.
In October, the firm also floated payments processing business Worldpay in
the biggest London IPO of the year.
21
Thoma Bravo aims
for $7bn target
with Fund XII
US private equity firm Thoma Bravo has
confirmed it is looking to raise up to $7bn for
its latest buyout fund.
The firm is believed to have been marketing Fund XII since at least November, and has
officially registered the fund through a pair of
filings with the US securities regulator.
Fund XII could potentially be double the
size of its predecessor, which closed in May
2014 on $3.66bn. Prior to that, its 10th fund
closed on $1.25bn in February 2012.
According to California State Teachers’
Retirement System (CalSTRS), one of Thoma
Bravo’s investors, Fund X generated an
internal IRR of 34.3 per cent as of the end of
March 2015.
Thoma Bravo seeks to invest in established
companies with a history of profitability and
EBITDA greater than $20m. It looks to make
equity commitment of at least $100m but can
be as large as $750m or more.
The firm reently revealed it had held a final
close for its specialist mid-market software
fund on more than $1bn.
The firm collected $1.07bn for the Thoma
Bravo Discover Fund, which will provide
capital for businesses that require less equity
than provided by its flagship vehicles.
CVC nears $5bn
close for PE vehicle
CVC Capital has followed the closure of
its tech-focused growth fund by reportedly
nearing a $5bn final close for its new
strategic opportunities fund.
Singapore sovereign wealth fund GIC is
among backers of the vehicle, according to
Bloomberg, which cited unnamed people
familiar with the matter.
It said the longer-term, 15-year private
equity fund is targeting annual returns of 12
to 14 per cent. The firm has already tapped
the fund to invest in UK motor recovery
business RAC and service station operator
Moto Hospitality.
FUNDS
Carlyle raises $2.4bn for North American fund
Global private equity major the Carlyle
Group has closed its second North
American mid-market buyout fund at its
$2.4bn hard cap.
Carlyle Equity Opportunity Fund II
(CEOF II) is more than twice the size of
its predecessor, which focused on smaller
buyouts, raising $1.1bn in 2012.
The firm will tap the new vehicle to
make control investments in middle-market
companies requiring equity capital of $20m
to $200m per transaction.
Carlyle is also believed to have passed
the $3bn mark for a new longer-term private equity fund.
Carlyle Global Partners will invest in
companies for up to twice as long as a
conventional fund, according to Bloomberg,
with a lifespan of up to 20 years.
Rodney Cohen, managing director and
co-head of the US middle market investment team, said, “We are pleased with
investor receptivity during this [CEOF II]
fundraise and are humbled that our investors have entrusted us with more than twice
the capital we raised for our predecessor
fund three years ago.
“The strong opportunities we see should
enable us to build on Carlyle’s heritage in
Apollo targets $750m
for special sits fund
Apollo Global Management is looking
to raise up to $750m for its latest private
equity fund.
Apollo Special Situations Fund is yet to
receive any commitments and is being raised
without a placement agent, according to a
filing with the US Securities and Exchange
Commission.
The filing indicates a total offering amount
of $750m, although it is unclear if this a
target or a hard cap. Apollo’s private equity
business had assets under management of
approximately $38bn as of December 31,
2015 according to its website.
Its previous flagship vehicle, Fund VIII,
closed in 2013 at more than $18bn.
Carlyle’s second North American mid-market buyout fund has hit its $2.4bn hard cap
the middle-market space, as demonstrated
by the 20 investments we have made since
2011.”
Back in July, the firm bolstered its team
ahead of the fundraise with the hire of Jill
Wight, who joined the Carlyle Group as a
principal in the its US middle-market team.
In nearly three decades of investing,
Carlyle claims to have deployed $7.3bn in
91 transactions in mid-market buyouts.
Companies include automotive components manufacturer AxleTech International
Holdings, refinery Philadelphia Energy
Solutions, cyber-risk and compliance services provider Coalfire and collision repair
multi-shop operator Service King.
Tenex closes Fund II at $814m hard
cap just five months after launch
New York-based Tenex Capital Manage­
ment has closed its second fund at its
$814m hard cap, just five months after
launching the process.
Tenex Capital Partners II secured commitments from endowments, foundations,
public and corporate pension plans, family
offices, insurance companies and global
financial institutions.
It also included a three per cent general
partner commitment, according to a statement from Tenex.
Tenex began marketing the fund to a
small group of LPs in October and held an
initial close in January.
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The new fund is nearly double the size
of its predecessor, dubbed Tenex Capital
Partners, which raised $453m in 2011.
Tenex CEO Mike Green said, “We are
very appreciative of the confidence demonstrated by our existing client base, which
we retained at an extremely high rate from
our initial fund.
“The limited partner market was extremely receptive to our hands-on approach
to value creation and uniquely operational
mandate and experience.”
The firm invests in a range of diverse
industries, including industrials, manufacturing, health, and business services.
Q2 2016
FUNDS
Software-focused Vista hits
$5.8bn first close for Fund V
Vista has closed its latest buyout fund on almost $5.8bn
Software-focused private equity firm
Vista Equity Partners has hit a first
close of more than $5.7bn for its latest
buyout fund.
AltAssets has revealed plenty of
commitments to the $8bn-targeting
Fund VI over the past few months, and
those have pushed the vehicle past the
$5.78bn it collected for its last flagship
fund in 2014, Dow Jones said.
It cited unnamed sources, who
confirmed the fund had set a maximum
limit of $10bn for the vehicle.
Commitments to the vehicle so far
have come from LP majors including the New Mexico State Investment
Council, Kentucky Retirement System
and Illinois Retirement System.
Vista has already received demand
over and above the $10bn limit, the
sources added.
Vista Equity Partners is also reportedly targeting up to $2.5bn for its latest
smaller-cap fund.
AltAssets previously revealed this
year that the firm was raising Foundation Fund III, having already received
a $100m commitment from the Illinois
Teachers’ Retirement System.
Earlier this year Vista also agreed a
$2.35bn deal to sell payment-processing
provider TransFirst. The deal came just
14 month after Vista tapped its fifth
fund to buy the company.
Vista closed Fund V, its biggest-ever
fund, at $5.8bn, just above its hard cap,
two years ago following heavy oversubscription from LPs.
BC Partners eyes €7bn for tenth fund
London-headquartered private equity
firm BC Partners has launched its
tenth fund with a €7bn target, Limited
Partner understands.
The firm has sent a PPM to investors
for its latest vehicle, which launched
this month with no hard cap, according
to a source.
A spokesperson for BC Partners
declined to comment.
Fund X comes almost four years after
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the closing of its predecessor, which hit
its €6.5bn hard cap in February 2012.
According a statement by the firm,
37 per cent of Fund IX came from pension funds, 25 per cent from sovereign
wealth funds, 12 per cent from funds of
funds and other major institutions such
as banks and endowment.
Founded in 1986, BC Partners has
offices in London, Paris, Hamburg and
New York.
23
Blackstone makes
good headway on
Tactical Opps II
Private equity heavyweight Blackstone has
reeled in “considerably over $3.7bn” for its
second Tactical Opportunities fund, Limited
Partner can reveal.
The second fund, which is targeting up
to $8bn, had $3.69bn in registered commitments at the end of 2015, according to an
SEC filing.
Sources with knowledge of the matter have
now revealed that the raised capital is well
above that amount, with extra funds held in
several side vehicles.
AltAssets reported last year that Californian pension fund CalPERS had agreed
to commit $100m to the Tactical Opps
programme.
The Florida State Board of Administration
has also been said to have taken part in the
fundraising.
The Blackstone Tactical Opportunities
group’s assets under management currently
stand at more than $13bn, Limited Partner
understands.
Oak Hill eyes $2bn
for second debt fund
US investment major Oak Hill Advisors is
reportedly targeting up to $2bn for its second
distressed debt vehicle.
The firm plans to target developed markets
in the US and Europe through OHA Strategic Credit Fund II, according to Bloomberg,
which cited two sources with knowledge of
the fundraise.
If it hits target, Fund II will be significantly
bigger than the firm’s debut distressed debt
vehicle, which closed on $1.12bn in 2009.
The latest fund will feature a 1.5 per cent
management fee, eight per cent preferred
return and 20 per cent carried interest, one of
the Bloomberg sources added.
The alternative investment house, which
specialises in credit-related deals, has about
$27bn under management across performing
and distressed-related strategies.
FUNDS
Family offices fuelling developed PE market
Family offices are fuelling continued
robustness of private equity fundraising in
developed markets, new research shows.
Of the 62 per cent of respondents to the
latest BDO Perspective Private Equity Study,
more than 40 per cent said they were receiving the majority of financial commitments
from family offices, followed by pension
funds at 24 per cent and international investors at 21 per cent.
Fund managers with assets under management of $251m to $500m, as well as those
with AUM of more than $1bn, showed particularly strong interest from pension funds,
according to BDO.
About half of the respondents from each
bracket cited them as the primary source of
financial commitments.
The report said that overall, experience
and results remain the most important
criteria for LPs when they evaluate potential
general partners. Fifty-eight per cent of fund
managers say LPs prioritise track record, and
27 per cent rank the management team as the
second most critical factor.
The findings are from the seventh annual
BDO Perspective PE study, which examined
the opinions of 147 senior executives at
private equity firms throughout the US and
western Europe.
BDO said that uneven portfolio company
Oaktree to carry on
fundraising for Fund X
Global asset manager Oaktree Capital has
raised $10.5bn for its latest distressed debt
Fund X and will continue to accept more
capital, CEO Jay Wintrob has announced.
Last year, Wintrob had referred to a
potential target of $10bn for the distressed
debt fundraise, but this has apparently
changed due to the favourable market
environment.
Wintrob said the firm sees growing
investment opportunities for both parallel
funds Oaktree Opportunities Xa and Xb.
Fund Xa has been targeting $3bn while
Fund Xb has been eyeing up to $7bn.
Family offices are bolstering private equity investing, according to the latest report from BDO
performance could be driving private equity
fund managers’ modest expectations in 2016.
Twenty-two percent of fund managers reported that 16 to 20 per cent of their portfolio
companies are performing below forecast,
while another 20 per cent of respondents said
that more than 20 per cent of their portfolio
companies are underperforming.
The majority of respondents, however,
revealed that 15 per cent or less of their portfolio companies are missing the mark, and
17 per cent said that none of their portfolio
companies are underperforming, the highest
proportion since 2011.
BDO private equity practice leader Lee
Duran said, “2015 was a year of mixed
blessings for private equity funds. Though
the US saw solid signs of economic recovery, not all industries felt relief.
“Companies in struggling sectors such as
natural resources and certain retail segments
are still hurting, and PE firms may be less inclined to invest in those industries until they
begin to demonstrate signs of recovery.”
Alliance confirms $210m final close
for third Consumer Growth fund
Consumer products-focused private equity
firm Alliance Consumer Growth has
officially announced the final close of its
third fund, confirming an AltAssets scoop.
The firm has closed Alliance Consumer
Growth Fund III on $210m, more than
double the $90m ACG gathered for Fund II
in 2014.
AltAssets previously revealed the firm
had registered $211m for the fund.
ACG Growth Fund I was tapped to invest
in ‘rising star’ brands including Baby­
ganics, The Honest Kitchen, Kriser’s Pets,
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KRAVE Jerky, Shake Shack, Suja Juice and
EVOL Foods. Fund I was launched in 2011
with $44m of capital.
The second fund has been used to make
investments including emerging snack food
brand, barkTHINS.
ACG is currently targeting deals for companies with revenues of between $5m and
$50-plus, and typically provides capital of
between $5m and $25 per investment.
Firm co-founder Josh Goldin said,
“We’re very proud of what our Fund I and
II partner companies have accomplished.”
Q2 2016
FUNDS
EM fundraising drops as
Western Europe increases
Western Europe gained at the expense of emerging markets during 2015
Private equity, credit, real asset and
infrastructure fundraising for emerging
markets declined 17 per cent in 2015
compared with the previous year, as
investors looked for greater stability
in Western European, new research
suggests.
A total of $44bn was raised for emerging markets across the asset classes last
year, according to the latest report by
industry body EMPEA.
It said that outside the emerging
markets, fundraising also declined in the
US and developed Asia year on year, but
increased in Western Europe.
Overall, the emerging market share
of global fundraising dipped from
14 per cent in 2014 to 12 per cent last
year, while the proportion of capital
invested in emerging markets fell from
nine to seven per cent.
EMPEA said: “Reduced EM private
capital fundraising and investment
totals for 2015 were nevertheless in line
with annual totals for 2012 and 2013,
suggesting that private fund managers
remained resilient in the face of what, for
many emerging markets investors, was a
difficult year.
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“The impact of current macroeconomic challenges proved to be highly differentiated from one market to another. Yet
there were a few common themes that
investors faced to varying degrees across
emerging markets, including currency
volatility, capital outflows and declines
in commodity prices.
“Furthermore, slowing economic
growth in China reverberated in one way
or another across many markets.
“Indeed, declines in fundraising and
investment in China in part contributed
to lower 2015 EM private capital totals
overall, since the market typically accounts for a large share of EM activity
(around 20 per cent of annual EM fundraising and 40 per cent of annual EM
investment totals).
“What these aggregate totals mask,
however, is an increased diversification
across fund strategies for EM-focused
general partners.
“In 2015, growth capital and buyout
strategies combined for less than 60 per
cent of total annual capital raised for
emerging markets, in contrast to their
share of more than 70 per cent in each
year since 2010.”
25
Birch Hill closes
oversubscribed
Fund V on $1.3bn
Canadian private equity firm Birch Hill
Equity Partners has closed its oversubscribed
fifth fund on $1.3bn.
The fund surpassed its target by 30 per
cent with commitments coming from both
existing and new investors, including a mix
of institutions and family offices primarily
from Canada, Europe and the US.
In March last year AltAssets reported that
Birch Hill had launched its fifth fund with a
target of $1bn, with Shannon Advisors acting
as the placement agent.
Birch Hill’s fifth fund is significantly
larger than the $1.04bn raised by Fund IV in
2011.
Like its predecessors, Fund V will invest
in leading Canadian mid-sized companies in
a variety of market segments, according to
firm.
Birch Hill added that, together with coinvestors, it expects to use the vehicle to
make investments ranging from $30m to
$600m across 10 to 12 companies.
Mason Wells closes
fourth flagship fund
US mid-market private equity firm Mason
Wells has closed its fourth flagship fund on
$615m, exceeding the initial target of $550m.
Mason Wells Buyout Fund IV was backed
by existing as well as new LPs, including corporate pension plans, foundations,
university endowments, family offices, funds
of funds and insurance companies, Forum
Capital Partners has announced.
Forum was advisor and placement agent
for Mason Wells’ newest fund. Fund IV will
continue the investment strategy from Fund
II and Fund III and target lower mid-market
businesses in the US Midwest with revenues
in the range of $25m to $300m.
Typically those companies operate in
sectors including packaging, engineered
products and services, and outsourced business services.
FUNDS
Investindustrial hits €2bn hard cap for Fund VI
Southern Europe-focused private equity firm
Investindustrial has held the final close of its
latest fund on its €2bn hard cap.
The capital was raised within three
months, with strong support from existing
LPs as well as newcomers to the investor
base, including endowments, foundations,
sovereign wealth funds, public pensions and
insurance companies, the firm said.
As many as 47 long-term investors backed
the new vehicle. Europe-based LPs account
for 54 per cent of the raised capital, while
41 per cent comes from the US, with the
remaining 5 per cent covered by other international investors.
Investindustrial claims its Fund VI is in
the top five mid-market European funds
raised last year.
The firm sees the pool as a dominant
player on the regional market. According
to Investindustrial data, it is the first fund
of €2bn or more dedicated especially to
southern Europe and is of almost an equal
amount with the €2.3bn aggregate capital in
the other 12 funds raised in the region since
the start of 2014.
Investindustrial also said it was the
manager of three of the four southern
Europe-focused funds, with commitments
of €1bn or more which were raised in the
past decade.
Fund V is next step
in Kreos’ evolution
Kreos Capital’s latest and largest fund so far
is a testament to the firm’s evolution over
the years, general partner Mårten Vading
told Limited Partner.
The London-based growth debt provider
closed its heavily-oversubscribed fifth fund
on its €400m hard cap. Kreos Capital V is
almost twice the size of its €240m predecessor, closed in September 2013.
Vading said, “The main reason for having
such a successful fundraise is our track
record. We have been raising capital for 18
years now, and our team has stuck through
thick and thin for a very long time.”
Investindustrial has raised €2bn for its latest southern Europe-focused fund
Andrea Bonomi, managing principal at the
firm, said “For premier, value-added firms
such as Investindustrial, the opportunity
set to invest in the European mid-market is
vibrant.
“With the new programme, we will
continue to invest in our team with the
objective of reinforcing our position as one
of Europe’s most complete private equity
groups and the dominant regional player in
southern Europe.”
Fund VI is the successor of Investindustrial V, which closed in April 2013 on its
€1.25bn hard cap after around 18 months on
the road. The new pool will carry on with
investments in quality European mid-market
companies in the target markets of Italy,
Spain, Portugal and Switzerland.
Paua looks to close debut fund
German early-stage investment firm Paua
Ventures is looking to close its debut fund at
€60m before the end of Q3, Limited Partner
can reveal.
The firm has scheduled to close the fund
before the end of September, according to a
source with knowledge of the fundraise.
However, the fundraising could take longer and spill over into Q4, the source added.
Three months ago, AltAssets reported that
the fund, Paua’s first attempt at raising a
closed-ended vehicle since it was founded in
2010, had held a €43m first close.
The European Investment Fund backed the
fund, along with a number of high net worth
26
individuals, including several “renowned
entrepreneurs”, and major global industrial
groups such as Klöckner.
Paua is still talking to institutional investors and is looking to increase its investor
base, according to the source.
At the first close, Paua I already had a
portfolio of seven active companies and had
deployed around $9m. The firm added that it
planned to use the fund to invest in another
20 startups within the next three years.
Deals typically begin at the seed or Series
A stage, investing amounts from $200,000
to $2m – with the ability to follow up to a
maximum of $6m.
Q2 2016
FUNDS
Stronger Italian market
sees Wise notch up €215m
Italian PE manager Wise has raised its fourth fund, hitting the €215m hard cap in six months
Italy’s private equity fund manager
Wise has raised its fourth fund in a less
challenging environment.
Wisequity IV hit its €215m hard cap
after less than six months of fundraising.
While the market in Italy has not yet
fully recovered, there are significant improvements compared with 2011, when
Wise closed its third fund on €180m.
Semenzato commented, “At the time
of our last fundraise a lot of LPs were
hesitant to invest in Italy because there
were doubts about the country remaining
in the eurozone.
“Things have improved since then, but
it is fair to say there will not be a rush of
investors coming into the country. There
are still some concerns, for example,
about the economic situation here.
“At the same time, however, investors
that know the market can see the situation is better and are more ready to invest
in funds with a good track record.
“The macro situation at the moment
is also very interesting for Italy, which
is typically an export-orientated country
and a large energy importer.
“The export industry benefits from
the weaker euro, while the currently low
price of oil allows for cheaper energy
imports.
“From this point of view, now is a
good time for Italy’s competitive position in the global market.
“There has been a slight re-balancing
of power in the international markets
since the start of 2016 with developing
economies slowing down and the Italian
and European economies recovering a
little bit.”
Poland’s AVIA in first fund launch
Polish private equity firm AVIA Capital
has launched its maiden fund with a
target of PLN200m (€50m).
Founding partner Jakub Leonkiewicz
told Limited Partner that the hard cap
for the fund, which held its first close at
the end of January, is around €75m.
www.LimitedPartnerMag.com
The vehicle has so far been backed
entirely by Polish LPs, but AVIA has
had talks with international investors as
well, Leonkiewicz said.
The new fund will invest between
€5m and €10m in small and mediumsized businesses.
27
Danish Blue
set to launch
second vehicle
Danish SME-focused private equity firm
SE Blue Equity has announced the launch of
its second fund, seeking to raise DDK 600m
($88.6m).
The Danish firm, which was formed by
utility group SE and PFA, a Danish pension
fund, said it would rename to Blue Equity
with the new fundraise.
SE and PFA, which are lead investors in
the firm as well as other existing LPs, plan to
re-up in Fund II, according to Blue Equity’s
statement.
The firm is backed also by Bitten & Mads
Clausen Foundation (Danfoss) and Lind
Invest (Danske Commodities).
SE Blue Equity I, which has DKK625m
in total capital, has made 11 investments in
small and medium-sized enterprises (SMEs)
in Denmark since 2013.
Danish LPs account for more than 95 per
cent of the committed capital in Fund I, and
the rest comes from European investors.
There is an even distribution between pension funds, industrial investors and funds.
Blue Equity’s primary investment target
is businesses that are developing solutions
for improving energy and environmental
efficiency.
Panakes Partners
unveils debut fund
Italian venture capital investor Panakès
Partners is targeting €100m for its maiden
fund, focused on the medical technology
sector in the country.
The fund, which has a €120m hard cap,
held a second closing in January. It has been
backed by leading financial institutions such
as the European Investment Fund and Fondo
Italiano d’Investimento.
Panakès I will target investments primarily
in startup and commercial-stage businesses.
Managing Partner, Fabrizio Landi, said,
“Panakès is focused on funding companies
with innovation.”
FUNDS
Rising appetite helps Main Post reach $400m
Main Post Partners saw its maiden fund
hit its $400m hard cap thanks to increasing
demand in the growth equity space, among
others, managing partner Sean Honey told
Limited Partner.
He said, “Over the last couple of years
there has been more focus on the lower
mid-market and growth equity as investors
are looking to get higher net returns.
“Furthermore, there is interest in the LP
community in first-time funds and emerging managers because of all benefits which
could come with that, such as very motivated, experienced teams that hang out their
own shingle investing heavily in the fund.”
Main Post itself has committed $10m to
their inaugural fund.
The firm has also something to offer on
top of just operating in an attractive segment of growth equity in the lower middle
market.
Honey says, “We have a strong and easily
attributable track record and a lot of continuity in the partnership, as we have been
working together for over ten years.”
Main Post was launched in 2014 by a
former team from the San Francisco-based
office of private equity investor Weston
Presidio.
The firm has not only inherited its wellestablished team and investment strategy,
Kainos looks
to raise $750m
Texas-based private equity firm Kainos
Capital is looking to raise up to $750m for
its second mid-market fund.
The fund, dubbed Kainos Capital Partners II, is yet to receive any capital from
investors according to a filing with the US
Securities and Exchange Commission.
It is unclear whether the $750m total offering is a target or a hard cap, but the filing
does show that Lazard Freres & Co has
been hired to push the vehicle out to LPs.
In late 2013 Kainos had reportedly raised
around $450m for its debut fund, though it
is unclear on what amount it finally closed.
San Francisco-based Main Post has seen its maiden fund hit its $400m hard cap
but has also successfully maintained
relations with former Weston Presidio
investors.
Honey told Limited Partner, “We were
very fortunate to receive some support from
LPs we worked with in the past.
“Less than a third of the capital raised for
the new fund came from investors that had
backed Weston Presidio pools.”
Honey and Main Post managing partner
Jeff Mills plans to continue the investment
strategy from previous years.
Mills said, “We are a sector-focused fund
targeting three areas we have been investing
in successfully for more than a decade at
Weston Presidio. A little over half of the
new fund’s investments would likely come
out of the consumer value chain.”
Rebranded Alpina closes new fund
Alpina Partners, formerly WHEB Partners,
has held the final closing of its latest private
equity fund on €140m.
The fund received 70 per cent backing
from institutional investors and a few family
offices based primarily in Europe, with some
LPs from the US, Joerg Sperling, a partner at
Alpina’s Munich-based office told AltAssets.
“Based on the amount of capital committed, 80 per cent of it was provided by
existing investors, and based on geography 90 per cent of the capital comes from
Europe,” Sperling said.
In addition to anchor investors, including the European Investment Fund, British
28
Business Bank, Hermes GPE and investors
managed by RobecoSAM, Alpina has named
a few of its new investors. They include
Access Capital, Akina, BMO Global Asset
Management, M&G Private Funds Investment and SWEN.
Commenting on how Alpina was able
to get so many of its investors to return,
Sperling said, “Good performance and being
open and up-front with LPs are the key to
maintaining a strong, long-term relationship
with your investors.
“You have to be up-front in your reporting
and about planned changes, like for example
changes to the team.”
Q2 2016
FUNDS
Existing LPs help to close
Fund IV at more than $1bn
Lower mid-market firm Waud Capital
Partners has closed its oversubscribed
fourth private equity fund at $1.1bn,
smashing its initial $750m target in just
12 weeks.
Waud Capital Partners IV received
commitments from a diverse group
of domestic and international pension
funds, endowments, foundations, sovereign wealth funds, insurance companies, asset managers, family offices and
individuals.
Founder and managing partner Reeve
Waud told Limited Partner, “Fundraising is never easy. We were fortunate to
have almost every institutional investor
from the last fund return. The only one
that didn’t was capital constrained.
“In essence, we had all of our institutional investors with capital return for
Waud Capital Partners IV. Given we had
more than $2bn of interest for WCP IV,
we were fortunate to be able to strategically build our investor base with those
we felt provided the best long-term fit.”
The new fund is larger than all three
of its predecessors put together, with
Waud Capital raising its first fund of
$115m in 1999, WCP II closing at
$272m in 2005, and WCP III at $487m
in 2011.
WCP IV raised the amount in just 12
Reeve Waud: Rewards for success
weeks from the formal launch, and will
partner with “exceptional management
teams” to acquire or create platforms in
lower middle-market services businesses, focusing on healthcare services and
business and technology services.
Waud said, “There is a bifurcation in
the fundraising market between funds
that have consistently generated strong
risk-adjusted returns with a disciplined,
process-driven strategy, and those that
can’t demonstrate consistent success.
There is no capital for the latter.
“People are smart and investors figure
out which are the best firms and that all
returns are not created equal.”
Merchant bank BDT raises $6.2bn
Secretive merchant bank BDT Capital
Partners, led by former Goldman
Sachs investment banker Byron Trott,
has raised just over $6.2bn for its
second fund.
BDT Capital Partners Fund II has
collected investment from 200 LPs, according to multiple filings with the US
Securities and Exchange Commission.
The capital has been raised via seven
different parallel vehicles.
Earlier in the year AltAssets reported
www.LimitedPartnerMag.com
that the fund had hit the $5.7bn mark.
The latest filing shows that it has hit the
total offering amount of $6.2bn, though
it is unclear whether this a target or a
hard cap.
Byron Trott, former vice-chairman of
investment banking at Goldman Sachs,
launched BDT in 2009. Two years later
the firm gathered $2bn for its debut
vehicle, which was used to back businesses including City Beverage, Pilot
Flying J and Colfax Corp.
29
Fort Washington
targets $300m
for ninth FoF
Private equity firm Fort Washington Capital
Partners is looking to raise up to $300m for
its ninth fund-of-funds vehicle.
Fort Washington Private Equity Investors
(FWPEI) IX is yet to receive any commitment, according to a filing with the US
Securities and Exchange Commission.
Part of the fund is being raised by a parallel vehicle, dubbed Fort Washington Private
Equity Investors IX-B, which is targeting up
to $100m of the total $300m, according to a
separate filing.
In January 2015, Fort Washington Private
Equity Investors VIII closed at $300m, putting it significantly above the fund’s original
target of $200m.
Ohio-based Fort Washington Capital
Partners Group is the institutional private
equity division of Fort Washington Investment Advisors.
Arch Venture back
in market with
$400m fundraise
Chicago-based early-stage investment firm
Arch Venture Partners is back in the market,
targeting up to $400m for its ninth fund.
The firm is yet to register any capital for
Arch Venture Fund IX according to a document filed with the US securities regulator,
but one section of the form says the fundraise
is not expected to go on for longer than 12
months.
The new vehicle mirrors the $400m Arch
raised via its eighth fund in the summer of
2014, as well as its seventh fund, which
closed in 2007.
Arch focuses on investments in early-stage
technologies in the healthcare, energy and
materials sectors. It has targeted businesses
in the US, as well as countries where it has
extensive scientific and business relationships, including Canada, Ireland, Iceland,
South Korea, China, and Japan.
FUNDS
Solid LP re-ups bring MML VI to €438m close
London-based MML Capital has held the final close of its sixth fund on €438m, well in excess of its initial target of €350m
MML VI has already invested more than
20 per cent of the raised capital for five
investments and has made a further six acquisitions to those businesses, the firm said.
The fund will make 15 to 20 investments in
its life cycle.
Like its predecessor, MML VI will
target initial investment sizes ranging from
€10m-€50m in growing businesses across the
UK, US and France.
UK private equity firm MML Capital has
held the final close of its sixth fund on
€438m, considerably exceeding the initial
target of €350m.
MML said this was due to the strong
support from existing investors, as well as a
number of new LPs backing the fund.
Commenting on the fundraise, Parag
Gandesha, managing partner and COO at
MML, said “This successful fundraise is due
to our differentiated strategy, consistently
delivering strong returns through a number
of economic cycles over the past 27 years.
“As a result, we received tremendous support from both our existing investor base and
a number of new investors.
“There are many funds in the market looking for capital at the moment and the bar is
set very high, so we are extremely pleased to
have final closed well in excess of our target.”
Phoenix holds first
close for Fund IV
LGT closes third fund on €500m
UK-based Phoenix Equity Partners has hit
the halfway mark for its fourth fund after
holding a first close at £250m, Limited
Partner has learned.
The vehicle, which launched towards the
end of last year with a £500m target, has
already collected commitments totalling
£250m, according to a source.
The first close comes shortly after the
firm completed two initial successful exits
from its 2010 fund. Last year, Phoenix
nabbed a 2.6-times return through the IPO
of the Gym Group.
Swiss alternative asset manager LGT Capital
Partners has held the final close of its third
fund of funds on its hard cap of €500m.
The LP base of the Crown Europe Middle
Market III (CEM III), which is focused on
European mid-market buyouts, includes
34 institutional investors. Among them are
pension funds and insurance companies from
Australia, Belgium, Japan, Korea, the Middle
East, the Netherlands, Spain, Sweden and
Switzerland, the firm said.
The vehicle is a little larger than its predecessor, CEM II, which closed on €429m in
the summer of 2010.
30
The third fund has already started investing, and nearly half of the raised capital,
€237m, has been committed to nine private
equity funds on a primary basis, seven secondary transactions and five co-investments.
Tycho Sneyers, managing partner at LGT,
said, “Institutional investors have shown
continued interest in the European middle
market buyout segment.
“LGT Capital Partners’ ability to select
and access attractive opportunities in this
segment, as well as the strong performance
of the predecessor programme, have made
CEM III a compelling proposition.”
Q2 2016
FUNDS
BlackFin closes Fund II on
€400m cap as LPs re-up
BlackFin Capital Partners’ Fund II has had a high re-up rate from existing LPs
BlackFin Capital Partners’ Fund II has
been closed on its €400m hard cap with a
very high re-up rate from existing LPs.
The second financial services fund,
which is almost double the size of
its €220m predecessor from 2011,
welcomed back 60 per cent of Fund I
investors.
Managing director Paul Mizrahi told
Limited Partner that half the commitments were made by funds of funds,
with another 40 per cent from banks and
insurance companies, and the remaining
10 per cent from family offices.
French investment bank Bpifinance
and alternative investment management
group Unigestion were among returning
backers from Fund I, while the Europe-
an Investment Fund was one of the new
LPs attracted for Fund II, according to a
BlackFin statement from last year.
Fund II had two previous closings, on
€160m in January 2015 and more than
€300m last July.
The vehicle has already begun investing. It has acquired RBS Luxembourg,
a subsidiary of the Royal Bank of Scotland, and after the transaction closed at
the end of last year BlackFin renamed
the business FundRock.
There are two more investments from
Fund II to date – French health and
protection insurance broker Santiane,
acquired last September, and Swiss financial software developer New Access
Banking Software, acquired in October.
Clessidra freezes fund as founder dies
Italian private equity firm Clessidra
is said to have suspended fundraising
for Fund III because of the death of its
founder Claudio Sposito in February.
Sposito’s death amid the €1bn fundraise has triggered a key-man clause,
which requires the LPs permission for
continuation of dealmaking, Dow Jones
reported citing sources.
www.LimitedPartnerMag.com
Clessidra’s founder, who launched
the firm in 2003, died from leukaemia
in January at the age of 60.
The company was halfway to Fund
III’s target last April, having closed its
second fund on €1.4bn in 2007.
Clessidra is a backer of famous
Italian brands such as fashion company
Roberto Cavalli and tyre firm Pirelli.
31
Oakley gearing up for
new €750m raise
UK-based Oakley Capital Private Equity
is believed to be getting ready for its next
fundraise, targeting €750m for its third
vehicle.
The firm declined to comment on the
information.
Oakley Capital Investments, a listed
subsidiary of Oakley, announced in a trading
update that it would put €250m towards a
new fund.
Oakley’s Fund II closed on £524m in the
summer of 2014. The firm used capital from
that second pool to back the acquisition of
German company Elitemedianet, owner of
Hamburg-headquartered online dating business ElitePartner. The investment is said to
have been in the region of €20m.
Oakley’s debut fund is already fully
invested. The last exit from Fund I was
made in June last year, when the firm scored
a 15-times return on the sale of German
online price comparison business Verivox for
€200m.
Following the Verivox disposal, Fund I’s
gross money multiple stands at 2.3-times,
and the IRR is 39 per cent.
Other investments made using Fund II
include picking up a majority stake in Italian
car insurance broker Facile.it, which provides price comparison services.
JZ closes third
fund on €400m
London-listed private equity firm JZ Capital
Partners has closed its latest European fund
at €400m, surpassing its initial €350m target.
JZI Fund III received commitments from
institutional investors and family offices
from across Europe and North America, as
well as existing investors.
JZCP has committed €75m to the vehicle,
while co-founders David Zalaznick and Jay
Jordan and the rest of the European management team have contributed €25m.
Four months ago, AltAssets reported the
fund had raised €237m. The vehicle will
target investments in lower middle-market
companies in Western Europe.
PEOPLE
AVCA hires CIO of NY state
retirement fund as adviser
The African Private Equity and Venture Capital Association has
appointed Vicki Fuller, chief investment officer of the New York
State Common Retirement Fund, as its new advisory council
member.
In her capacity as the pension fund’s CIO, Fuller is responsible for
developing and implementing investment strategies.
She is also a certified public accountant and has been with Alliance
Bernstein for nearly 30 years, most recently as a managing director.
The AVCA announced a further appointment to its board of directors, naming Sev Vettivetpillai as new member.
Vettivetpillai is a partner at Middle-East private equity major the
Abraaj Group, where he is responsible for the funds focused on
healthcare, real estate and infrastructure investments.
He has more than 20 years’ private equity experience, and has specialist knowledge of strategic investment management, fundraising,
deal structuring, valuation, due diligence and portfolio management.
The AVCA board of directors is currently chaired by Hurley
Doddy of Emerging Capital Partners.
Michelle Kathryn Essomé, chief executive of AVCA, said, “We are
delighted to welcome Vicki to our advisory council, and Sev to our
board.
“We look forward to their guidance and counsel as we continue to
champion private investment in Africa.”
Two years ago, AVCA appointed former Coller Capital and EY
employee Dorothy Kelso as a director and head of strategy and
research.
Vicki Fuller: Joining AVCA as an advisory council member
Goldman PE founder
Sanjeev Mehra to retire
Experienced Bain Capital exec
Kalvelage joins Charlesbank
Sanjeev Mehra, one of the founding members of
Goldman Sachs Private Equity Group and current
vice-chairman of the unit, is set to retire.
Mehra’s departure from the US investment bank
was included in an internal memo, which was
obtained by Bloomberg.
The news agency reported that the contents of
the document were confirmed by a Goldman Sachs
spokeswoman.
Mehra has been with Goldman Sachs since
1986, and was named partner in 1998. He has held
various senior level positions at the bank including
co-heading its Americas private equity business.
Among his major achievements in the private equity space are the $7bn buyout of business services
group Aramark in 2007, and the $3.3bn takeover of
private jet-maker Hawker Beechcraft.
The Bain Capital exec who recently
built the firm’s Melbourne, Australia
team has joined Charlesbank Capital
Partners as an operating partner.
Prior to Bain Capital Neil Kalvelage
was senior director of portfolio strategy
for the Hershey Company and a director of corporate strategy for PepsiCo,
and held an operating role at PPG
Industries.
Earlier in his career, he spent nearly
five years as a manager at Bain & Company. Kalvelage partnered with a number of portfolio company management
teams to set the strategic agenda, drive
initiatives and deliver improved results.
Charlesbank managing director Josh
32
Klevens said, “Given the growth in our
portfolio, we have been evaluating the
addition of an operating partner to our
team for some time now.
“Neil is a skilled leader with an
established track record of working
with management teams to achieve sustained growth for portfolio companies.
“He brings deep experience, integrity
and an ability to balance strategy with
execution. We are thrilled to have him
on our team.”
Mid-market US buyout house
Charlesbank currently manages more
than $3.5bn of capital, and targets
companies with enterprise values of
$150m to $1bn.
Q2 2016
PEOPLE
KKR moves Asia Pacific COO
Bookmyer to Australia office
Global private equity investor KKR
has announced that Scott Bookmyer,
currently COO of KKR Asia based
in Hong Kong, will head the firm’s
Australian operations from July 1.
Bookmyer, who joined KKR in
2002, will move to KKR’s base in
Sydney but keep his post as head of
operations for Asia Pacific, as well as
the chairman’s seat at the Asia portfolio management committee. He will
also remain a member of KKR’s Asia
private equity investment committee.
Bookmyer moved to Hong Kong in
2010 first at his capacity as head of
KKR Capstone Asia and four years
later was named COO of KKR Asia.
Commenting on his new appointment and the move to Australia, he
said, “I’m excited to join the KKR
team in this vibrant market where we
have successfully built many investment platforms.
“Building upon the more than
A$3bn already invested by KKR in
Australia, I look forward to working
closely with our talented and experienced group of local executives as we
build enduring value with our partners
and investors.”
Prior to joining KKR Capstone,
Scott Bookmyer – heading for Australia
which is the firm’s team dedicated to
supporting deal teams and portfolio
companies of KKR, Bookmyer worked
in brand management at Procter
& Gamble and was a management
consultant for the Boston Consulting
Group in the US and Europe.
At the beginning of February KKR
announced its head of energy, Marc
Lipschultz, was leaving the firm after
more than two decades to start his own
credit fund with ex-Blackstone exec
Doug Ostrover.
Ex-Boeing CEO McNerney to advise CD&R
US buyout house Clayton Dubilier &
Rice (CD&R) has appointed James
McNerney, former chairman and CEO
of Boeing, as a new senior advisor.
McNerney will help CD&R funds
identify and assess new investment opportunities, as well as help enhance the
value of portfolio companies.
Prior to his time as chairman and
CEO at Boeing from 2005 to 2015,
McNerney spent five years as chairman
and CEO at 3M. Before that he served
in senior roles at General Electric between 1982 and 2000.
www.LimitedPartnerMag.com
Donald Gogel, chairman and chief
executive of CD&R, said, “Jim’s
exceptional record is one grounded in
strengthening the foundations of the
companies he has led, not only through
productivity measures, but by inspiring new thinking, sharpening customer
focus, driving profitable growth initiatives, fostering financial discipline and
maintaining an unswerving commitment
to integrity in all business dealings.”
Last March, CD&R hired PricewaterhouseCoopers veteran Jillian Griffiths
as chief operating officer.
33
HarbourVest
hires former CVC
MD Janish Patel
Global fund-of-funds manager HarbourVest
Partners has hired former CVC Capital
Partners managing director Janish Patel.
Patel will join the HarbourVest clientrelations team and will be based in the firm’s
London office, according to its website.
In his new role, Patel will focus on coordinating, monitoring, and enhancing relationships with new and existing Middle East and
UK investors and consultants.
Three months ago, HarbourVest bolstered
its global footprint by announcing new offices in Seoul, South Korea and Tel Aviv,
Israel.
Patel joins the firm after spending 14 years
with CVC Capital Partners, where he was a
managing director on the investor relations
team.
At CVC he was primarily responsible for
Middle East investors as well as investors
in Europe and the US. Prior to CVC Capital
Partners, he held roles at CDC Capital Partners and Cazenove Fund Management.
Coller CEO Tim Jones
resigns, Johansen quits
Secondaries major Coller Capital saw CEO
Tim Jones resign and fundraising partner
Ashley Johansen step down within a week.
CEO Tim Jones unexpectedly resigned
from the firm, where he has been for 16
years. Jones has begun winding down his
responsibilities, but will retain non-executive
involvement in the firm as a special adviser.
Jones said, “I am grateful to Jeremy and
the firm for respecting my reasons, and for
the graciousness they have shown to me at a
difficult time.”
Coller will be undertaking a review of its
fundraising needs following Johansen’s departure, but does not expect to be fundraising
again for a few years, a spokesperson told
Limited Partner. Her most recent work was
helping the firm close Coller International
Partners VII in December.
PEOPLE
PEGCC appoints
ex-Speaker staff
chief as president
Mike Sommers, ex chief of staff to former Speaker
of the US House of Representatives John Boehner,
will head the Private Equity Growth Capital
Council (PEGCC).
Sommers has been named as president and CEO
of the PEGCC by the council’s committee, it said in
an official statement.
The 40-year-old has been working with Boehner
for a long time. Prior to taking the position of his
chief of staff he was Boehner’s deputy chief of
staff, policy director, legislative director and press
secretary.
Sommers also served as special assistant to
President George W. Bush at the National Economic Council at the White House, during which
time he advised the president on agriculture, trade
and food policy.
During his time on Capitol Hill he has been successful in negotiating bipartisan compromises on
various legislation.
Commenting on Sommers’ appointment, Ken
Mehlman, PEGCC chairman of the board and
member and global head of public affairs at private
equity major KKR, said, “We are thrilled that Mike
has agreed to lead the PEGCC. His deep understanding of the policy process, bipartisan respect,
management experience and creative approach will
serve the PEGCC and our members well.”
FoF manager Adams Street
promotes seven to partner
Chicago-headquartered fund-of-funds
manager Adams Street Partners has
made a string of promotions globally,
with seven senior staff making partner.
Investment professionals Thomas
Bremner, Joseph Goldrick, Doris Guo,
Ross Morrison, Tobias True, Morgan
Webber, and Michael Zappert have
been promoted from principals to
partners.
Bremmer joined the firm in 2013
and invests in venture and growthorientated companies, with a focus on
the healthcare space.
Like Bremmer, Goldrick and True
are also based in the firm’s Chicago
office.
Goldrick is responsible for all aspects of the North American and Latin
American secondary business, including strategy, investments, fundraising
and portfolio construction.
True is tasked with applying his
advanced analytical capabilities to
support activities related to performance attribution and portfolio risk
management.
Guo, Webber, Morrison are all
focused on primary investments, working from the firm’s Beijing, London
and Boston offices. Webber focuses
on the US portfolio, covering small to
mid-market managers with a focus on
healthcare and consumer funds.
Morrison is responsible for the
European Primary portfolio including
the UK, the Nordic Region and Israel.
He also covers Venture Capital as well
as Emerging Europe and Africa, while
Guo focuses on the Greater China
region.
Based in Menlo Park, Zappert is
responsible for sourcing and leading
expansion and late-stage venture capital investments in the big data, cloud,
SaaS and mobile sectors.
Adams Street managing partner
Jeff Diehl said, “We are an employeeowned partnership that values integrity,
intelligence, initiative and accountability. These characteristics produce
results for our investors and they have
been a hallmark of our firm throughout
our 43-year history.
“Our seven new partners have
demonstrated these characteristics
and I would like to congratulate them
on their well-deserved promotions to
partner.”
TPG hires Goldman
partner Jack Daly
New duo to co-head Warburg
in China after David Li resigns
San Francisco-headquartered TPG Capital has
reportedly hired Goldman Sachs partner Jack Daly.
Daly will lead the private equity firm’s dealmaking in the industrials industry when he joins the
firm in the coming months, according to Bloomberg, citing a source.
Before joining TPG, Daly spent 17 years working at Goldman Sachs. Currently a partner and
managing director at the firm, Daly leads industrial
deals in the merchant banking group.
Prior to Goldman he taught aerospace engineering at Case Western Reserve University.
Global private equity group Warburg
Pincus has appointed Julian Cheng
and Frank Wei co-heads of its Chinese
operations after David Li left the firm
to form his own company.
A spokesperson for the firm told
Limited Partner Li would continue to
support Warburg in various portfolio
company matters and said the firm was
thankful for his contribution and wishes him success in the new endeavour.
Li joined Warburg’s Beijing office
34
in February 2002 after a short period
at Goldman Sachs, where he was an
executive director for a year. In the six
and a half years before that, he was
working for Morgan Stanley.
Warburg Pincus was one of the first
private equity players in China having
invested more than $5.5bn since 1994.
Cheng, who is based in Hong Kong,
joined Warburg in 2000. Wei, who
is based in Shanghai, has been with
Warburg since 2002.
Q2 2016
PEOPLE
Search is on for new CalPERS
CEO as Stausboll steps down
Anne Stausboll, the CalPERS CEO
who successfully led the LP through the
fallout of the global financial crash and
a corruption scandal, will step down this
summer.
CalPERS board president Rob
Fleckner said “CalPERS is a better
organisation because of Anne.
“She led us through a difficult period,
and we have emerged as a more accountable, transparent, and smarter
institution. We will miss her and we
wish her the very best in her future
endeavours.”
Stausboll took the helm at CalPERS
in January 2009, and saw assets under
management shoot up from $170bn to
$276bn in that time.
As well as navigating the postfinancial crash environment, Stausboll
had to deal with her predecessor Fred
Buenrostro pleading guilty to pocketing kickbacks in exchange for ensuring
certain private equity firms received
CalPERS investment capital.
Stausboll has also strengthened ethics and transparency under her watch,
including sweeping reforms and laws
related to placement agents and integrating ESG factors into the CalPERS
portfolio.
In addition to her role as CEO,
Stausboll: Stepping down
Stausboll served as CalPERS chief
investment operating officer from 2004
during a time she was twice tapped to
be interim chief investment officer.
She also worked in the pension fund’s
legal office for six years as a staff attorney and deputy general counsel.
Stausboll said, “It has been an honour
and privilege to serve CalPERS, our
board and staff, and the public employees who serve California.
“Together we have made CalPERS a
stronger organisation, one that is well
positioned to provide retirement and
health security for future generations.”
CVC brings in Colpitts to head TMT
Global private equity firm CVC Capital
Partners has bought in Chris Colpitts
to head up its TMT team, just a month
after closing its latest technologyfocused growth fund.
Colpitts will be based in the firm’s
San Francisco office, taking on the role
of senior managing director and head
of telecommunications, media and
technology.
Prior to CVC, he spent three years
working as the global co-head of TMT
investment banking at Deutsche Bank.
www.LimitedPartnerMag.com
Before joining Deutsche Bank in
2006, Colpitts worked as a managing
director and global head of electronics
investment banking at Lehman Brothers.
Colpitts said, “I am very excited to
be joining CVC, a company with such
an impressive track record, truly global
network and expertise.
“The TMT sector is rapidly changing, affected by structural and cyclical
changes that create opportunities and
CVC is perfectly positioned to seize
these future investment opportunities.”
35
Andreesen
Horowitz hires
Casado as GP
Venture capital major Andreessen Horowitz
has hired software networking company
founder Martin Casado as a general partner.
Casado co-founded Nicira, which was
bought by VMware in a $1.26bn deal in
2012. Andreessen Horowitz was Nicira’s first
institutional investor.
Marc Andreessen said, “Martin brings a
very special set of skills.
“He’s worked on large-scale simulations
of nuclear weapons at Lawrence Livermore
National Laboratory.
“After the September 11 attacks, Martin
shifted his research focus to the intelligence
community, determining the vulnerability
to remote attack of networks through which
flowed incredibly classified operations.”
Last November Andreessen Horowitz
raised $200m for a new fund targeting biocomputing led by former Stanford University
professor Vijay Pande.
Pande joined AH in 2014 as the firm’s first
‘professor in residence’ from Stanford, where
he was professor of chemistry, computer
science and structural biology. The new fund
will look to make advances by combining
technologies in life sciences and computing.
Wind Point’s Converse
joins Sutton Hill
Rebecca Converse has been appointed
managing director at Sutton Hill, a Texasbased provider of outsourced IR for lower
mid-market PE firms.
Converse was most recently director of
investor relations, marketing and communications at Chicago-based private equity firm
Wind Point Partners.
Commenting on her appointment she
said, “The need for private equity investor
relations has increased dramatically in recent
years.
“Sutton Hill is a great solution for small
and mid-sized managers who cannot support
full-time investor-relations staff.”
SECTOR PERSPECTIVES
SECONDARIES 36
INFRASTRUCTURE 40
REAL ESTATE 46
BUYOUT 52
VENTURE 62
CLEANTECH 66
Evolution ‘has altered LP-GP relationships’
The transformation of the secondaries market
from a last resort to an important component
in portfolio management has changed the
way LPs look at their relationships with
GPs, according to Investec executive Gregg
Kantor.
Kantor, who is part of the fund finance
team at Investec, told Limited Partner, “The
secondaries market is fundamentally different. It’s a market rather than a source of
liquidity now.
“Before people would go to the secondaries market when there was no other option
left open to them and they would have to
take huge discount to NAVs. Now people are
looking at the secondary market and are using it as part of the day-to-day management
of a portfolio of alternative assets.”
The secondaries market provides liquidity
to private equity investors, allowing them
to sell positions in private equity funds and
liquidate equity stakes in private companies.
In recent years, secondary sales have
been driven by investors’ increasingly active
approach to managing their private equity
portfolios.
According to AltAssets’ 2015 Secondaries
Survey & Pricing survey, more than 60 per
cent of respondents cited portfolio rebalancing as the main reason for selling, with only
22 per cent citing poor performance.
Kantor added, “Until the last couple of
years, there wasn’t something which people
Ardian closes largestever secondaries fund
Paris-headquartered Ardian has raised the
largest-ever fund in the secondaries market
by collecting $14bn for its latest vehicles.
The capital is comprised of $10.8bn from
Ardian’s seventh generation secondary
platform and $3.2bn of primary investments
according to the firm.
Ardian collected commitments from 180
investors from 26 different countries, with
major institutional investors coming from
North America, Europe, the Middle East,
Asia and South America.
Evolution has had a natural effect on the Secondaries market, just as Darwin (above) might have predicted
could use to maximise and manage their
portfolio; they went in day one and made
their decisions about who they were backing.
“We will see the market continue to
grow and develop, and it has cemented
itself as an active marketplace where you
can start tweaking your portfolios, your exposure and your preferred managers, rather
than a place you go to for liquidity when
all other avenues are shut off.”
The adoption and confidence in the
secondaries market has had a knock-on
effect to fundraising according to Kantor,
though he admits all the ramifications are
yet to be felt.
“Certainly in terms of how people are
looking at relationships with fund managers, it has had an effect,” he said.
“You see it from the big pension fund
side, where they are consolidating a lot of
their relationships into a smaller group of
managers to manage the administrative
burden. In attempt to keep the cost down
and trying to keep on top of your portfolio,
the only option for larger pension funds is
to bring down the number of relationships.”
Strategic buys stake in Bridgepoint
Strategic Partners, Blackstone Group’s
dedicated private equity secondaries
division, has bought a stake in a Europeanfocused fund managed by Bridgepoint.
The firm purchased the stake from Hannover Euro Private Equity Partners III,
according to a UK regulatory filing.
Strategic Partners bought the stake in a
side vehicle of Bridgepoint’s third fund,
dubbed Bridgepoint Europe III ‘D’.
Bridgepoint closed its third mid-market
buyout fund at €2.5bn in 2005.
The UK-based group, which split from
36
National Westminster Bank in 2000, typically, makes equity investments between
€75m and €400m in companies capitalised
between €200m and €1bn.
It targets companies in a range of sectors
including business services, consumer,
financial services, healthcare and media.
Strategic Partners tapped its sixth fund,
which closed in October 2014 at its $4.4bn
hard cap, to buy the interest in the fund.
Earlier this year, the firm used the same
fund to buy stakes in two funds managed
by Charterhouse Capital.
Q2 2016
SECTOR PERSPECTIVES: SECONDARIES
Partners buys stakes from Keva
Prestige Italian motorcycle manufacturer Ducati was among the firms backed by IPEF IV
Global investment manager Partners
Group has purchased €20m worth of
stakes in an Italian buyout fund.
Partners has purchased the stakes
in the Italian Private Equity Fund IV
(IPEF IV) from Finnish pension fund
Keva, according to a UK regulatory
filing.
The firm tapped Partners Group
Falcon Access, Private Equity (Master
Fund) and Barrier Reef Access 7 vehicles to buy the stakes.
IPEF IV, which is managed by Milanbased private equity firm Synergo, had
eight portfolio companies, according
to its website. Among others, the fund
backed prestige motorcycle manufacturer Ducati, exiting in 2012.
Coller closes oversubscribed
fund on $7bn as majors re-up
UK-based secondaries major Coller
Capital has closed its oversubscribed
seventh fund at $7.15bn.
Coller International Partners VII,
which launched with a $5.5bn target and
a $6.5bn hard cap, hit a $3.1bn first close
in July last year.
According to the firm, CIP VII had an
LP re-up rate of 82 per cent and around
170 investors from 27 countries.
Pension plans accounted for 62 per
cent of the fund’s committed capital,
with sovereign wealth funds/government
entities making up 15 per cent and
11 per cent from insurance companies.
Last year, AltAssets reported that the
State of Michigan Retirement Systems
www.LimitedPartnerMag.com
re-upped into the vehicle with a $150m
commitment, along with the School
Employees Retirement System of Ohio,
which made a $60m investment.
The Pennsylvania Public School
Employees’ Retirement System also
provided $100m and the Louisiana State
Employees’ Retirement System $75m.
Coller chief investment officer Jeremy
Coller said, “We were delighted with
investor demand for our seventh fund
– the large majority of its capital was
raised in about six months, and the fund
was oversubscribed.”
He added that the Coller has already
committed around £1bn of the new
fund’s capital.
37
Industry Ventures
Fund VIII looks
to raise $425m
San Francisco-based venture capital firm
Industry Ventures is looking to raise up
to $425m for its eighth secondaries fund,
Limited Partner can reveal.
Industry Ventures Secondary VIII is yet to
close any commitments, according to a filing
with the US regulator.
The fund comes just over two years after
the firm closed its oversubscribed predecessor, Industry Ventures Secondary VII, on
$425m.
Secondary VII’s investor base included
30 institutions representing government and
corporate pension funds, insurance companies, endowments and foundations.
Like its predecessor, the new fund is likely
to continue investing in leading private companies and VC funds, providing liquidity
alternatives for VC investments.
The firm’s portfolio includes the likes of
Twitter, Pandora, Alibaba.com, Uber and
Ancestry, while its venture funds include
SoftTech VC, True Ventures, Foundry
Group and Costanoa Venture Capital,
among others.
StepStone pulls in
$94m for new vehicle
Global private equity firm StepStone
Group has reeled in close to $94m for its
third secondaries fund, Limited Partner
understands.
To date the fund has received commitments from 25 LPs, according to filings with
the US regulator.
StepStone Secondary Opportunities Fund
III has collected $78.5m, while its affiliated
offshore vehicle has raised $15.3m.
StepStone closed its previous secondary
fund at its $450m hard cap in April 2013,
exceeding its original target of $350m.
Limited partners in Fund II consisted of US
and international investors, including pension
funds, insurance companies, endowments and
foundations.
SECTOR PERSPECTIVES: SECONDARIES
Volatile markets ‘limiting secondary deals’
Despite the growing comfort towards
secondaries and an influx of capital, the
volatility in the public market has limited
the number of completed deals, according
to a Hamilton Lane executive.
Tom Kerr, managing director on the Secondary Team, told Limited Partner, “2015
was another robust year for the secondary
market in terms of transaction volume.
“The statistics are still being gathered at
this point by various sources, but the sentiment is that, while activity levels increased
over 2015, actual deals that closed were
probably around the same level as 2014.
What you saw in the latter part of the year
was a slight increase in the bid-ask spread.”
According to Setter Capital Volume
Report released last August, the global secondaries market stuttered in the first half of
2015, with completed transactions dropping
more than five per cent year on year.
Despite that overall fall, private equity
secondaries grew 1.9 percent in the same
period, while real estate secondaries fell
1.8 per cent.
Kerr added, “The increase in the bid-ask
Carlyle set to shutter
hedge FoF manager
Global alternative asset manager the
Carlyle Group is set to wind down its hedge
fund-of-funds manager to focus on private
market secondaries and co-investment.
The firm said it would shut down Diversified Global Asset Management (DGAM)
as it had struggled to grow the alternative
manager since buying it two years ago.
Carlyle spokesperson Chris Ullman said,
“Unfortunately, the challenging market environment made it difficult to scale in fundof-hedge funds and liquid alternatives.
“By refocusing the investment solutions
segment, we are concentrating our efforts
on areas where we see real momentum –
private market secondaries, co-investment,
and managed account activities through
AlpInvest and Metropolitan.”
Hamilton Lane’s Tom Kerr
spread coincides with the volatility seen in
the overall markets over the second half of
2015, and continuing into the first half of
2016.
“There is a tremendous amount of volatility in the global markets and I don’t think
any particular market is immune to that at
this point in time.
“Fortunately, from a private equity perspective, we are one step removed from the
public markets, but that volatility still does
creep through.”
Although Kerr expects the activity levels
to remain very high, he is unsure whether
that will translate into volume at the same
sort of level seen over the past couple
of years, as that will largely depend on
pricing.
“From a buyer’s perspective, the market
volatility will likely result in reduced pricing, or larger discounts,” he said.
“So the question becomes, is there a
capitulation on the sell side to generate
liquidity to bridge the bid-ask spread, or is
there continued momentum from the buyers to keep paying up?”
With more than $239bn in assets under
management, Hamilton Lane has been investing in private equity for more than two
decades and currently has 250 employees
in offices throughout the US, Europe, Asia,
Latin America and the Middle East.
The firm recently announced the opening
of its 12th office, in Seoul, South Korea.
The move represents an expansion of the
firm’s presence in the Asia-Pacific region.
Pantheon nabs $1.7bn for Fund V
San Francisco-based private equity firm
Pantheon has hit the $1.7bn mark for its
latest secondaries fund, Limited Partner
understands.
Pantheon Global Secondary Fund V is
more than two-thirds of the way to reaching
its $2.5bn target, having raised commitments
from 37 LPs, according to a filing with the
US Securities and Exchange Commission.
In January last year, AltAssets reported the
fund had reached the $1.1bn mark.
Two months later, Ventura County Employees Retirement Association, which has
committed $50m to the fund, announced that
Pantheon had deployed its fifth secondaries
fund in 11 deals.
Fund V has a one per cent management fee
and 10 per cent carried interest, according to
a memorandum prepared for Ventura.
Other investors in the fund include Suffolk
38
County Council Pension Fund and the London Borough of Haringey Pension Fund.
The filing also reveals that Pantheon has
brought in Further Capital Partners, Nevasa,
Korea Asset Investment, MVision Private
Equity Advisers and Trinity Group to market
the fund to LPs.
Pantheon’s previous secondaries vehicle
closed on $3bn in 2010, falling short of its
initial $3.5bn target.
Fund IV was still significantly larger than
its predecessor, Pantheon Global Secondary
Fund III, which brought in $2bn in 2006.
That was $500m over its target and more
than double that of Fund II.
Late last year Pantheon promoted Ralph
Guenther, Graeme Keenan and Alex Scott
to partner. It also promoted five investment
professionals to principal and four to vicepresident.
Q2 2016
SECTOR PERSPECTIVES: SECONDARIES
Israel Fund II nears $100m
The Israel Secondary Fund is closing in on the $100m mark
Israel Secondary Fund is closing in on
the $100m mark for its second fund,
having already raised the majority of
the amount in the first closing.
ISF II has raised commitments from
institutional investors, family offices, and
private investors.
ISF managing partner Dror Glass told
Limited Partner, “The majority of the
money for the first close is from Israeli
institutions, and some private investors.
The main investor that we had in our
first fund has substantially increased its
investment in the second fund.
“The reasons for the first closing is
because of the opportunities we see in the
market, and discussions with foreign institutions from both Europe and the US.”
Despite the fund still being short of
its $100m target, it is already larger than
its predecessor fund, ISF I, which was
founded in 2009 and has $50m under
management.
ISF’s inaugural fund held direct and
indirect stakes in more than 100 private
companies, and has already realised 30
exits, according to the firm.
Glass added, “Obviously when you
start raising your first fund without a
track record it is not easy. When I started
raising the first fund in 2008, it was right
in the middle of one of the worst periods
for raising secondary funds.
“It was only when the market crashed
that people understood why liquidity
was needed.”
Adams Street buys Charterhouse stake
Chicago-headquartered Adams Street
Partners has bought a stake in a
European buyout fund managed by
Charterhouse Capital Partners.
Adams Street bought William Marsh
Rice University’s interest in Charterhouse Capital Partners IX, according to
a UK regulatory filing.
The firm tapped several funds to buy
the interest, including Adams Street
www.LimitedPartnerMag.com
2014 and 2015 US funds, the 2015
Non-US Fund, Global Secondary Fund
5, VGV Secondary Target Mandate
Fund, and SCERS Fund.
London-based private equity firm
Charterhouse closed Fund IX on its
€4bn target in March 2009.
The fund looks to buy European
headquartered companies in most industrial and commercial sectors.
39
Compass buys
portfolio from
Bridgepoint
London-headquartered private equity firm
Compass Partners has bought a portfolio of
assets from Bridgepoint.
Compass Partners said it has acquired
interests in Bridgepoint Europe III, including
Infinitas Learning, Rodenstock and CTL.
It added that the total equity commitment
is in excess of €360m with an aggregate
enterprise value in excess of €2bn.
Despite Compass’ investment, it will continue to be managed and advised by Bridgepoint, which will also retain an equity interest in certain investments in the portfolio.
Funding for the transaction will be primarily provided by HarbourVest Partners, and
cash proceeds will be used to provide liquidity to investors in Bridgepoint Europe III.
HarbourVest managing director David
Atterbury said, “We have spent a long time
cultivating the opportunity and are excited to
be working with both Compass Partners and
Bridgepoint on this portfolio.”
Vesey Street sells Euro
fund stake to Hollyport
Global private equity firm Hollyport Capital
has tapped its fifth secondaries fund to buy a
stake in a European buyout fund managed by
Bridgepoint.
Hollyport purchased Vesey Street’s and
Arthur Street’s portfolio interest in the fund,
according to a UK regulatory filing.
The fund, dubbed Bridgepoint Europe II
‘G’, is a parallel vehicle to Bridgepoint’s
second buyout fund.
Bridgepoint makes equity investments
between €75m and €400m in companies
capitalised between €200m and €1bn, according to its website.
To buy the fund interests, Hollyport Capital tapped Hollyport Secondary Opportunities
V – A (HSO V), according to the filing.
Four months ago, Hollyport closed its fifth
secondaries-focused fund at its £187.5m hard
cap, just five months after launching.
SECTOR PERSPECTIVES: INFRASTRUCTURE
‘Best time for infra deals since financial crisis’
The oil price drop coinciding with a highyield market correction has created the most
interesting environment for infra investments
since the financial crisis, Michael Dorrell of
Stonepeak has told Limited Partner.
New York-based infrastructure private
equity investor Stonepeak recently closed its
second fund on its $3.5bn hard cap after six
months on the road.
Dorrell, a senior managing director and
co-founder of the firm, said, “For the first time
since the global financial crisis we have some
turmoil in financial markets due to what has
happened with the price of oil.
“All the energy markets have been affected
very negatively. Furthermore, the high-yield
market has gone through a major correction
recently.
“This has left a lot of high-quality
infrastructure companies without as good
access to capital as they had six months or 12
months ago.”
Dorrell believes now is probably the best
time for infrastructure investment since the
crisis, and that there are a several interesting
opportunities at the moment.
“In the near term the most interesting
sectors are energy, power and transportation.
That is where we have seen some dislocation.
Over the course of the fund, though, we are
Global Infra Partners
collects $7.7bn
Private equity investor Global Infra­
structure Partners has so far registered
more than $7.7bn in commitments for its
infra Fund III, according to a filing with the
US SEC.
The amount is close to the size of Fund
II, which closed on $8.25bn in 2012 and
was the largest infrastructure vehicle raised
by a private equity firm at the time.
Global Infrastructure Partners II was
focused on investing in mature brownfield
projects in the energy, transport, water and
waste management sectors.
Global Infra­structure Partners Fund I
closed on $5.6bn in 2008.
Stonepeak co-founder Michael Dorrell believes there is a good pipeline of opportunities for infra deals
certainly going to invest in other sectors. We
will be looking looking to get some money
into water, communications and in renewable
energy, as we want to be diversified.
“But in the very near term, within the next
six to 12 months, energy, power and transport
would be the most interesting sectors.”
Dorrell added: “Our latest investment was
the acquisition of convertible preferred equity
of Sanchez Production Partners, a high-quality
energy pipeline company in the US. They
were facing a situation where capital markets
were closed and they wanted to make sure
their capital programme was well funded, so
we made the investment.
“For Fund II we are looking into more
deals today than ever before. There is a really
good pipeline of opportunities out there at the
moment. I would say Fund II would be able to
make between 10 and 15 investments.”
Ardian closes first infra fund since
2013 spinout from Axa on €2.65bn
French private equity firm Ardian has held a
€2.65bn final close for its Infrastructure Fund
IV, its first infra vehicle since its spinout
from insurance group Axa in 2013.
Around €1bn of the fund has already been
invested through four acquisitions Ardian
made last year, including Italian 2i Aeroporti
in April; a joint venture with Portuguese
toll-road network operator Ascendi in July;
a stake in CLH, a Spanish and UK oil and
storage transportation company in September; and French strategic oil storage business
Géosel, also in September.
Fund IV was backed by pension funds,
40
insurance companies and sovereign wealth
funds from Europe, Asia and a considerable
number of US LPs whose interest in European infra investments seems to have grown.
The existing LP base in the new vehicle
exceeded the Fund III size, while new investors accounted for more than €900m. Ardian,
then Axa Private Equity, raised €1.75bn for
its third fund in March 2013.
Dominique Senequier, president of Ardian,
said: “Closing a fund which surpasses the
size of its predecessor by 50 per cent is a
huge achievement for the Ardian Infrastructure team.”
Q2 2016
SECTOR PERSPECTIVES: INFRASTRUCTURE
Morgan Stanley holds $3.6bn
close with $2.2bn on standby
Morgan Stanley has potentially $5.8bn of LP capital available for infrastructure investments
Morgan Stanley has closed its North
Haven Infrastructure Partners II fund on
$3.6bn, securing up to a further $2.2bn
in commitments from the fund’s LPs.
A spokesperson for the US investment bank told Limited Partner this was
the final close for NHIP II.
Morgan Stanley Infrastructure has
also set up a co-investment club, including some investors that backed its second global infra pool. The club is ready
to provide additional capital that would
raise investment capability to $5.8bn.
Dan Simkowitz, head of Morgan
Stanley Investment Management, said,
“With $4.9bn of gross capital invested
and committed across 22 investments
to date, and investment professionals
and operational specialists located in six
countries, the Morgan Stanley Infrastructure team is among the largest and
most experienced in the industry.
“We believe that the opportunity set
in infrastructure will be very attractive in the coming years and we are
confident in our ability to continue to
generate superior risk-adjusted returns.”
www.LimitedPartnerMag.com
NHIP II will continue the investment
strategy of its predecessor, targeting value-add opportunities in highquality assets in the energy, utilities and
transport sectors in global developed
markets.
Morgan Stanley closed its first global
infrastructure fund on $4bn, far exceeding its $2.2bn target, in May 2008.
Investors in Fund I included major
pension funds, insurance companies and
high net worth individuals, as well as
Morgan Stanley and its employees.
Commenting on the latest fundraise,
Markus Hottenrott, CIO of Morgan
Stanley Infrastructure, said, “Our
proven ability to source proprietary investment opportunities will, in our view,
be a key driver of value for NHIP II.
“We believe long-term trends in the
infrastructure sector in North America,
Europe and Asia-Pacific, coupled with
current market dislocations, are supportive of our strategy to acquire assets
at attractive valuations and employ our
operational expertise to de-risk them
and increase profitability.”
41
AMP nears final
close for $2bn
infra platform
Australian investment manager AMP Capital
has more than $1bn in LP commitments for its
global infrastructure platform and is looking
to hold a final close soon.
AMP held a first close on $540m in May
last year, attracting investors from Japan, Australia, the US, Canada, Ireland and Belgium.
The fund raised over $400m in total on its
second and third close. This combined with
the global infrastructure platform’s existing
portfolio of diversified European infra equity
assets, is bringing the platform more than
three-quarters of the way towards meeting its
target, AMP said.
The fund will focus on mature, brownfield
assets that hold monopolies or long-term contracted revenues in sectors that the firm deems
to be offering the best relative value.
Boe Pahari, managing partner of AMP’s
Global Infrastructure Fund, said, “Investors
have come to understand the many benefits
that infrastructure provides to a portfolio such
as low volatility, high yield, GDP and inflation
linkage, and low correlation with equities,
and we continue to be encouraged by the
increasing demand for AMP Capital’s global
infrastructure platform.
“We believe this serves as a fantastic endorsement of AMP Capital’s capabilities, the
existing portfolio and our compelling global
offering.”
CPPIB, GIP consortium
wins race for Asciano
Australian rail-and-port operator Asciano will
be taken over for $6.8bn by consortia led by
Canadian infra investor Brookfield and Qube
Holdings.
Asciano agreed to sell its freight rail business to a consortium of Qube, China Investment Corp, CPPIB, British Columbia Investment Management Corp (bcMIC), and GIP.
The port operations will be sold to a consortium including Brookfield Infrastructure
Partners, GIC Private, bcIMC and the Qatar
Investment Authority.
SECTOR PERSPECTIVES: INFRASTRUCTURE
GIP, Highstar sell London City Airport for £2bn
Global Infrastructure Partners (GIP) and
Highstar Capital will sell their stakes in
London City Airport to a private equity
consortium for around £2bn, Limited
Partner understands.
The buyers are Canadian institutional
heavyweights AIMCo, OMERS and Ontario
Teachers’ Pension Plan, as well as UKbased infra investor Wren House Infrastructure Management.
The consortium has committed to support
and develop the London City Airport in the
long term.
A spokesperson for the buyers said,
“Our investment and support will foster a
mutually beneficial relationship between the
airport and its airlines, passengers and employees, while ensuring a positive economic
impact for all of London and the local community, in particular.”
GIP is exiting a 75 per cent stake in the
airport, which was acquired in two successive transactions in 2006 and 2008. Highstar is selling the remaining 25 per cent.
Since the time of GIP’s first investment in
the business, passenger traffic at the London
City Airport has nearly doubled from 2.4
million in 2006 to 4.3 million in 2015. The
Access holds €130m
first close for FoF
European private equity fund manager
Access Capital Partners has hit a €130m
first close for its dedicated infrastructure
fund of funds.
The firm is hoping to gather up to €250m
for Access Capital Fund Infrastructure, and
said the commitments to date had come
from existing insurance and pension fund
backers of its vehicles.
Access said the fund would primarily
focus on core infrastructure and brownfield
strategies, combining primary and secondary fund positions.
Access also revealed it had completed
its first direct co-investment alongside an
infrastructure fund in the energy sector in
Finland.
A Canadian-led private equity consortium has bought London City Airport for a figure of around £2bn
airport is currently serving 12 airlines and
46 destinations across the UK, Europe and
the US.
Commenting on the transaction, Adebayo
Ogunlesi, chairman and managing partner
of GIP said, “GIP’s focus on operational improvements, on-time performance and airline
partnerships has made London City Airport
very popular with passengers. We congratulate the new owners and are sure London
City Airport will continue to flourish.”
GIP is also invested in London Gatwick
and Edinburgh Airport in Scotland. The
£1.5bn acquisition of Gatwick was carried
out in 2009 and Edinburgh was bought
three years later in 2012.
Ex-JPM infra specialist-led Argo
to buy US energy firm Black Hills
New York-based Argo Infrastructure
Partners, led by former JP Morgan infra
specialist Jason Zibarras, has announced the
acquisition of US gas and power provider
Black Hills.
Argo will take over 49.9 per cent in the
Black Hills Colorado IPP, a subsidiary of the
South Dakota-based energy company.
The deal, still pending regulatory approval,
includes Black Hills Colorado IPP’s 200MW
natural gas-fired power plant in Pueblo.
Aaron Gold, managing director at Argo,
said, “As a long-term capital provider to the
utility and energy sector, we look forward
to working with Black Hills in supporting
the stewardship of this critical facility and
42
providing service to Black Hills Colorado
Electric and, in turn, its customers, for many
years to come.”
The transaction will be carried out via
Argo’s flagship infrastructure platform, AIA
Energy North America.
Argo made its first acquisition in August
2015, taking over Cross-Sound Cable, an
electrical transmission company which
provides supply and capacity interconnection
between the New England and Long Island,
New York power grids.
Zibarras, who was CIO of JP Morgan’s
global infrastructure fund, launched the firm
last year and it currently manages assets of
more than $500m.
Q2 2016
SECTOR PERSPECTIVES: INFRASTRUCTURE
Borealis buys 24% holding
in owner of UK gas network
OMERS has bought a stake in Spain’s CLH, which owns the UK gas pipeline and storage network
Borealis, the infrastructure investment
arm of the Ontario Municipal
Employees Retirement System
(OMERS), has bought a 24.1 per cent
stake in Spanish oil business CLH.
It is Borealis Infrastructure’s first
investment in Spain, complementing the
firm’s European portfolio of assets based
in the UK, Germany, Sweden, Finland
and the Czech Republic.
Compañía Logística de Hidrocarburos,
which offers transportation and storage
of refined oil products, was acquired
from Cepsa and Global Infrastructure
Partners for an undisclosed amount.
The Spanish company owns and operates the main fuel pipeline and storage
network in the UK, with more than 1,200
miles of pipe and 16 storage facilities,
Borealis said in a statement.
Ralph Berg, global head of infrastructure at OMERS Private Markets,
commented, “We are very pleased to
announce our investment in CLH, a
high-quality, core infrastructure business
that we expect will generate stable and
consistent returns for the pension plan.”
Borealis was advised by BNP Paribas on financial matters regarding the
transaction, and Clifford Chance acted as
legal advisor to the private equity firm.
In September last year, Borealis completed the acquisition of Autobahn Tank
& Rast, Germany’s largest and leading
owner and concessionaire of a network
of motorway service areas.
Yorktown raising $1.7bn energy fund
US private equity and venture capital
investor Yorktown Partners is back in
the market with a new energy fund,
seeking $1.7bn in commitments.
The firm expects to raise the vehicle
within a year, a filing with the US securities regulator shows.
Yorktown closed its 10th energy-dedicated fund on $1.6bn in May 2013.
www.LimitedPartnerMag.com
The firm typically makes equity
investments of $10m to $70m in lower
mid-market targeting oil and gas companies with enterprise values in the range
of $10m to $400m.
The main focus for Yorktown is the
exploration, production and transportation of oil and gas, and midstream and
manufacturing segments.
43
Partners set to
close latest infra
fund this year
Switzerland-based alternative asset manager
Partners Group is to hold the final close for
its newest direct infrastructure fund later this
year, Limited Partner can reveal.
There has been a first closing with commitments from Partners Group’s typical LP
base, including pension funds, foreign wealth
funds and large endowments, according to a
source with knowledge of the matter.
The firm has not officially stated a target
or registered any capital for Partners Group
Direct Infrastructure 2015 so far, according
to a couple of SEC filings.
The current vehicle is Partners Group’s
second direct infra fund. The predecessor
vehicle, Partners Group Direct Infrastructure
2011, was launched six years ago.
In January 2014, Partners Group closed its
largest ever dedicated infrastructure vehicle
on €1bn.
Partners Group Global Infrastructure 2012
was the firm’s second such fund and was
twice the size of the debut vehicle, which
closed on €500m in 2009.
First Reserve to buy
Crompton Greaves arm
US infra investor First Reserve is to buy the
global power transmission and distribution
operations of Mumbai-based Crompton
Greaves at €115m enterprise value.
The Indian power and industrial equipment manufacturer said in a filing with the
National Stock Exchange in India that it is
selling its businesses based in Europe, North
America and Indonesia to the US private
equity firm.
First Reserve recently announced the
acquisition of the Mariah North Wind power
project in the Texas Panhandle from Mariah
Acquisition.
The energy-focused private equity firm
closed its second infrastructure fund on its
$2.5bn hard cap in the summer of 2014 after
just eight months in the fundraising market.
SECTOR PERSPECTIVES: INFRASTRUCTURE
UK’s PiP targets £1bn for multi-strategy fund
The Pensions Infrastructure Platform (PiP),
a UK P2P investment business for pension
funds, is seeking to raise £1bn for a new
multi-strategy fund.
The vehicle will make direct investments
in UK infrastructure and will aim to include
smaller as well as larger-sized institutional
investors.
The new PiP pool will have a co-investment programme targeted at larger LPs, and
the participation of smaller pension funds
will be facilitated by setting a minimum
investment amount that would allow them
to share the same terms as other investors.
Mike Weston, chief executive of PiP,
said, “With the support of our founding
investors we’ve already mobilised £1bn
for investment in UK infrastructure, and
with this fund we are achieving our key
objective of providing pension schemes
of all sizes with an efficient route to direct
ownership of infrastructure assets.”
Chris Hitchen, CEO of PiP’s founding
investor RPMI Railpen, commented, “We
helped establish PiP because we share its
vision of providing pension funds with
access to great infrastructure investment opportunities, tailored to their requirements.
EQT in €1.4bn EEW
exit to Chinese buyer
European private equity house EQT has
agreed the €1.4bn sale of German energyfrom-waste business EEW to Beijing
Enterprises.
EQT bought a 51 per cent stake in EEW
in March 2013, and developed the business
in partnership with European energy major
E.ON. The firm bought the remaining 49
per cent from E.ON last April through its
EQT Infrastructure II fund.
EQT said the deal represented the biggest Chinese direct investment in a German
company to date. EEW, which is also
active in Luxembourg and the Netherlands,
operates 18 energy-from-waste plants and
produces electricity, district heating and
steam for industrial use.
UK pensions investment business PiP is raising £1bn for a new multi-strategy infrastructure fund
“It’s designed to give schemes more influence and control as investors in infrastructure than has traditionally been the case, and
puts the pension funds back in control.”
Alan Rubenstein, CEO of Pension Protection Fund, a PiP founding investor, said,
“Pension funds have long been attracted
by the long-term, low-risk, inflation-linked
cash flows that infrastructure can offer. PiP
provides an opportunity to invest in a way
specifically designed for pension funds, and
being effectively owned by its investors’
means success will be shared success.”
The new fund will invest across the
board, targeting transport, energy, renewables, utilities, communications and housing.
Tailwater helps TopSail Energy
launch with $100m investment
Energy-focused private equity firm Tailwater
Capital is investing $100m in newlylaunched portfolio company TopSail Energy.
A trio of former executives of Texas-based
natural gas and refined petroleum pipeline
operator Kinder Morgan will take over management of the new business.
Jim Lelio, a 15-year Kinder Morgan
veteran, will be TopSail’s CEO. He has more
than 21 years’ experience in midstream and
downstream oil and gas projects.
Derrick Bockius, another ex-executive of
Kinder Morgan, will be chief of operations
for the new company.
Jason Aguirre will take on the role of
director of business development at TopSail.
44
He has held a similar role at Kinder Morgan
and brings more than eight years’ experience
in oil and gas finance.
David Cecere, principal at Tailwater, said:
“Jim and the TopSail team bring a wealth of
experience and relationships in the downstream and refined products sub-sectors, a key
area of focus for Tailwater.
“We see tremendous opportunity in the
current energy landscape for TopSail’s strategy, and we are thrilled to partner with such
highly respected individuals.”
Tailwater raised its Energy Fund II, which
was its third vehicle overall, at its hard cap
of $650m in December 2014, significantly
exceeding the initial target of $400m.
Q2 2016
SECTOR PERSPECTIVES: INFRASTRUCTURE
InstarAGF halfway to target
for first close of infra fund
Canada’s InstarAGF is now roughly halfway to the C$75m target for its infrastructure fund
Canada’s InstarAGF Asset Management
has held a first closing of its Essential
Infrastructure Fund on C$372m
($277m), around halfway to its C$750m
target.
The new fund has received commitments from institutional and high net
worth investors from Canada, Europe,
the UK and the US, the firm has
announced.
InstarAGF cornerstone investors may
raise their commitments to as much as
C$422m before the final close, expected
at the end of 2016.
The essential infrastructure fund has
already made two investments for a total of some C$135m, buying a stake in
the passenger terminal at Billy Bishop
Toronto City Airport and a 30MW wind
power development project in British
Columbia, slated to come on stream
in 2017.
Energy, utilities, civil and social
infrastructure assets will be the focus of
the new fund, which will seek to invest
in mid-sized assets based in North
America.
Gregory Smith, president and CEO
of InstarAGF, said, “Infrastructure is
an increasingly important component
of most institutional portfolios, which
reflects growing demand for real assets
that are more resilient to economic cycles… and that deliver current income
while providing inflation protection.”
InstarAGF was launched in 2014 as
a joint venture between Instar Group,
owned by Gregory J. Smith, and AGF
Management, one of Canada’s largest
independent investment firms.
NGP, Pearl invest $75m in Colgate Energy
Private equity firms Natural Gas
Partners (NGP) and Pearl Energy
Investments have provided $75m of
financing for new oil and gas business
Colgate Energy.
Colgate is focused on the acquisition
and development of oil and gas properties in the Permian Basin in Texas.
NGP used capital from its NGP
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Natural Resources XI fund for the new
investment.
Billy Quinn, managing partner and
co-founder of Pearl, said, “With the
Colgate team’s prior experience and
strong relationships in their focus area,
we believe the company is well positioned to capitalise on the current market
environment.”
45
Carlyle buys power
portfolio from
IFM Investors
The Carlyle Group has tapped its Power
Partners Fund II to acquire a US powergeneration portfolio from global fund
manager IFM Investors.
The portfolio, with a total combined capacity of 1,767MW, is a mixed bag of assets,
including natural gas-fired, petroleum-fired
and hydroelectric power stations located
across the eastern seaboard.
Matt O’Connor, managing director at Carlyle and co-head of Carlyle Power Partners,
said, “We are excited to add this diversified
portfolio to our power-generation holdings.
“Collectively, Essential Power’s assets are
well positioned in markets characterised by
strong demand, transparency and reliability.”
With the close of the acquisition, the total
power-generation portfolio of Carlyle Power
Partners will grow to roughly 5,800MW.
Julio Garcia from IFM said, “Being
predominantly gas-fired and including
hydroelectric generation, the plants are well
positioned to continue serving the communities that rely upon them.”
Second fund launch
for Grey Rock Energy
Energy-focused private equity firm Grey
Rock Energy Partners has launched
fundraising for its second vehicle with a
preliminary sales amount set at $150m.
The first sale is yet to occur, according to a
recently filed document with the US securities regulator. There is no minimum amount
registered for single investments and the
filing states fundraising is expected to close
within a year.
Grey Rock launched its debut energy fund
in January 2014, targeting $200m. The first
closing of the fund was held later that month
at a little over $40m. The final amount
raised, according to SEC filings, is $187m.
The Dallas-based company is focused on
acquiring non-operated oil and gas assets in
the US.
SECTOR PERSPECTIVES: REAL ESTATE
CPPIB is Hammerson JV partner in UK mall deal
The Canada Pension Plan Investment Board
is the 50-50 joint venture partner of UK
Reit Hammerson in the £335m acquisition
of the Grand Central shopping centre in
Birmingham.
Hammerson announced at the end of
January that Birmingham City Council had
approved the sale of the New Street Stationbased shopping mall, which opened doors in
September last year.
The property investor said it would form
a joint venture to buy Grand Central but did
not disclose the name of its partner, saying
merely it was in talks with an existing joint
venture collaborator.
CPPIB has now been named as the second
side in that deal in a report by Private Equity
International.
Network Rail and Birmingham City
Council developed the 435,000 sq ft property
as part of a £750m regeneration project.
The council is said to have bought the old
Pallasades centre, where Grand Central is
now based, in 2008 for £90m.
Network Rail is the freeholder of the
shopping centre for which Hammerson has
acquired a 150-year headlease. The transaction also included the purchase of Ladywood
House, a 95,000 sq ft vacant office building
next to Grand Central valued at £10m.
Farallon holds first
close of RE Fund II
Farallon Capital Management’s second
real estate fund has held its initial close on
$340m, AltAssets understands.
The firm declined to comment on the
fundraise activity.
Farallon has registered at least $222.6m
in commitments from 20 LPs for Farallon
Real Estate Partners II and Farallon Real
Estate Institutional Partners II, with the remaining amount sold coming from parallel
vehicles, two SEC filings show.
No target has been given for the new
fundraise. Farallon closed its first RE fund,
Farallon Real Estate Partners (FREP), on
375m in February 2014.
CPPIB has joined Hammerson in a joint venture to develop the Grand Central shopping centre in Birmingham
David Atkins, CEO of Hammerson, said,
“The acquisition of Grand Central, a highlyprized trophy asset in the UK’s second city,
is fully aligned with Hammerson’s strategy
of owning top-performing retail destinations
in prime locations, as demonstrated by our
recent transactions in Ireland and growing
exposure to European premium outlets.”
The centre’s retail space, with John Lewis
as the keystone store, is close to fully let,
with 96 per cent occupancy, and annual net
rental income is £13.9m, Hammerson said.
The firm sees the Grand Central investment as building on its existing success with
the acquisition of the Birmingham Bullring
shopping centre in 2003.
Westbrook closes real estate
fund on $2.8bn with 103 LPs
Private equity real estate investor
Westbrook Partners looks to have closed
its latest real estate fund after collecting the
total registration offering of $2.85bn for the
vehicle.
Westbrook Real Estate Fund X, which
has now been on the road for more than
a year, has received commitments from
103 LPs, according to a filing with the US
securities regulator.
In October last year, AltAssets reported
that the Illinois Teachers’ Retirement System made its first investment in Westbrook
46
by committing $100m to Fund X. The new
pool is almost twice the size of its predecessor, which had reached $1.5bn as of
November 2012.
Westbrook has offices across the US
including in New York, Washington and
Palm Beach as well as in London, Munich
and Tokyo.
The firm targets office, multi-family
residential, hotel, retail, industrial and
single-family residential development properties and has invested around $10bn across
$40bn of real estate since its 1994 launch.
Q2 2016
SECTOR PERSPECTIVES: REAL ESTATE
NorthStar to sell RE portfolio
Northstar is selling assets for its share buyback initiative, with stock trading at well below NAV
New York-based NorthStar Realty
Finance is considering options to sell its
real estate fund portfolio as it looks to
repay debt and buy back shares.
NorthStar has hired an advisor to sell
a majority of its remaining portfolios of
real estate private equity fund interests,
which had a carry value of $916m as
of December 31, 2015 and $58m of
expected future funding obligations, according to a statement.
It has already agreed to sell its interest in one of its portfolios of real estate
funds, with the transaction resulting in net
proceeds of $184m, and being relieved of
$243m in deferred purchase-price funding obligations.
NorthStar is also selling its direct real
estate holdings, its commercial real estate
loans, corporate debt investments and real
estate securities.
The proceeds from the sales, along
with capital retained from its revised
dividend policy, will go to buy back
NorthStar Realty stock, which is currently trading at a large discount to its
underlying net asset value (NAV).
It will also tap the proceeds for the
repayment of all or a portion of its corporate borrowing obligations, which total
about $600m.
CEO Jonathan Langer said, “With respect to our asset monetisation initiatives,
we are extremely pleased with the results
thus far and remain focused on selling
additional assets at levels well above the
valuations inherent in our trading price.
“We have historically been very opportunistic in driving shareholder value
and we intend to continue to do so by
taking advantage of current market
conditions.”
Blackstone buys New Zealand portfolio
Blackstone Tactical Opportunities, the
opportunistic investment platform of PE
major Blackstone, has agreed to acquire
a real estate portfolio from Australia’s
Lendlease.
A spokesperson for Blackstone declined to comment on financial details
of the deal.
Blackstone has announced it expects
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to close the transaction, including five
retirement villages in Auckland and
Ocean Shores, New Zealand, over the
next few months.
In November 2014, Blackstone
invested AUD150m in Australia’s
National Lifestyle Villages, a provider
of housing for baby boomers and early
retirees.
47
Carlyle closes
Metropolitan
fund at $550m
Metropolitan Real Estate has closed its
first fund since being acquired by Global
alternative asset manager the Carlyle Group
at $550m.
Metropolitan Real Estate Partners Secondaries & Co-Investments Program (SCIF)
held a final close exceeding its initial target
of $450m.
Carlyle bought the global real estate multimanager in November 2013 and made it part
of its Solutions platform, which also includes
AlpInvest. As part of the deal, Metropolitan’s
management team, led by David Sherman,
remained in place.
In addition to his role as co-chief investment officer, Sherman was also appointed
head of real estate within the Solutions platform. Metropolitan already had plans to raise
a fund with this strategy before the acquisition, began fundraising in 2014 and held a
first close a few months later on $70m.
Sherman said, “I am humbled by the confidence investors have placed in our proven
global team. Under the leadership of Sarah
Schwarzs­child and Andrew Jacobs, Metropolitan’s proactive sourcing of secondary and
co-investment transactions will enable us to
capitalise on current and long-term real estate
investment opportunities.”
Meridia Capital buys
Nestlé’s Spanish HQ
Meridia Capital Partners has completed the
acquisition of two office buildings from
Nestlé, including the Swiss group’s head
office in Barcelona.
The Spanish alternative investment firm
said that as well as the two offices, the portfolio includes a convention centre, a showroom,
and a building with amenities such as a restaurant, cafeteria and a bank branch.
Juan Barba, partner and RE managing
director at Meridia, commented, “With these
new assets in our portfolio, Meridia II is
close to being fully invested.”
SECTOR PERSPECTIVES: REAL ESTATE
Secondaries hit new record as LPs cash out
The global real estate secondaries market
is continuing its strong growth by hitting
seven consecutive years of record transaction
volume.
Closed transactions totalled $8.2bn in 2015,
a 71 per cent increase from 2014’s $4.8bn, according to Landmark Partners’ latest report.
The report found the number of transactions remained stable over the year at
92 deals.
According to Landmark, the growth in
transactions was largely driven by portfolio
sales from US public pension funds.
Geographically, 83 per cent of secondary
sellers were based in the US, while 11 per
cent were located in Europe and 6 per cent
in Asia.
Pension funds were the most active sellers
throughout 2015, contributing around 70 per
cent of transaction volume.
Around 63 per cent of those deals originated from US pension funds, and 7 per cent
from non-US pension funds, with the majority
coming from Europe.
Endowments and foundations remained the
second most active sellers, closing roughly
$1bn of volume in 2015 across 13 transactions, compared with the $1.1bn used across
11 transactions in 2014.
Last May Landmark partner James Sunday
HIG completes
on Norway deal
US private equity investor HIG Capital has
made another step in the expansion of its
real estate portfolio in Europe, wrapping up
the purchase of Norway’s Raufoss.
The asset, which the firm says is among
the largest industrial parks in Norway,
marks HIG’s 26th real estate investment in
Europe.
Riccardo Dallolio, managing director at
HIG in London, said, “This is our second
investment in Norway and the third in the
Nordics in the last 18 months. The Nordics
market represents an important part of our
European strategy.”
LPs are cashing in on high property values by selling their interests on the secondaries market
said that as LPs become more comfortable selling large portfolios, and with GPs
embracing secondary capital to manage their
portfolios, real-estate secondary transactions
were on the up.
Landmark closed its oversubscribed seventh real estate fund on its $1.6bn hard cap
early last year, more than double the size of
its predecessor.
Late last year CalPERS, the giant California Public Employees’ Retirement System,
sold its interest in European Property Investors to Blackstone Group’s dedicated private
equity secondaries division Strategic Partners,
in a deal touted as the largest real estate secondaries sale ever.
Strategic Partners purchased CalPERS’ 100
per cent stake in the fund, according to a UK
regulatory filing.
It tapped its Strategic Partners Real Estate
Special Opportunities I to buy the stake,
although financial details remain undisclosed.
Turkey’s BLG Capital stages a
final close for Fund II on €152m
Turkish real estate-focused private equity
investor BLG Capital has held the final
close for its second fund on €152m, which
has already completed three investments.
More than 70 per cent of LP backing for
BLG Turkish Real Estate Fund II (BLG
TREF II) comes from the US institutions
and the bulk of the remaining investors
are endowments, pension funds, insurance
companies, foundations and funds of funds
from Europe and the Middle East.
The largest deal closed so far is a
co-investment with Doğuş Holding in
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Galataport, the redevelopment of Istanbul’s
longest waterfront site on the Bosphorus.
BLG TREF II has also invested in
Istanbul-based luxury residential development VK 108 and in Bodrum, a mixed-use
hotel and residential development.
Serdar Bilgili, BLG Capital’s chairman, said, “This successful capital raise
highlights how existing and new investors
regard Turkey as an attractive long-term
growth market for real estate investment,
especially with the fund’s exposure to
iconic projects such as Galataport.”
Q2 2016
SECTOR PERSPECTIVES: REAL ESTATE
CEE-focused Revetas holds
an interim close on Fund II
Revetas is focusing on deals in Central and Eastern Europe, which it believes offer better value
Central and Eastern European (CEE)
real estate investment firm Revetas
Capital Advisors has held an interim
closing of its second fund on €120m,
and has already made two deals.
Apart from existing LP backing, Revetas Capital Fund II also received commitments from new investors including
New York-based investment manager
the Church Pension Fund, and Deutsche
Finance Group, a German investment
firm with more than 1,600 global institutional investors.
Eric Assimakopoulos, Revetas’
founder and managing partner, said,
“This is further validation of our strategy to seek compelling long-term gains
in the CEE region, yielding strong cashon-cash returns, in spite of the recent
euro currency crisis.”
Fund II has teamed up with York
Global Fund to acquire an RE portfolio
of assets located across Poland, the
Czech Republic and Slovenia. Revetas
secured €95m of restructured debt to
finance the transaction, the price for
which was €137m.
Fund II has also made an investment
in Bulgarian office and logistics complex Sofia Airport Centre.
Assimakopoulos commented, “The
reality of the CEE regional economies is
that they are geared for rapid recovery,
which is now starting, and we believe
they offer potentially significant returns
and opportunities compared with Western European economies.
“Major global investors are now starting to recognise this and are following
our lead.”
Valstone in market with $300m fund
US private equity investor Valstone
Partners is currently fundraising for
its fourth Opportunities Fund, seeking
$300m in commitments.
The firm, which is targeting opportunities in the real estate and financial
services sectors, has not yet registered
a first sale, according to a pair of filings
www.LimitedPartnerMag.com
with the US Securities and Exchange
Commission. Fundraising is expected to
last more than a year.
ValStone typically invests in seasoned performing, sub-performing
and non-performing loans secured by
real estate or related financial service
companies.
49
Traverse looks
to raise $100m
for debut fund
US-based growth equity firm Traverse
Venture Partners is looking to raise up to
$100m for its debut fund, which will focus
on real estate.
The fund has yet to receive any commitments, according to a filing with the US
Securities and Exchange Commission.
It is unclear whether the firm is using a
placement and whether the $100m offering is
a target or a hard cap.
Traverse Venture Partners is a new, purpose-built investment platform exclusively
focused on accelerating the transition to more
productive, flexible and efficient real estate,
according to its LinkedIn profile.
It claims to act as both an investor and
deployment partner for companies with a
proven solution to improve the economic or
environmental performance of buildings and
the real estate industry.
The team is led by former CCM Energy
managing partner Josh Green. Prior to CCM,
Green worked at Climate Change Capital,
where he was responsible for leading investment activities in Latin America for the
firm’s $1bn carbon fund.
Pramerica collects
$200m for sixth fund
Pramerica Real Estate Investors, the global
real estate investment business of Prudential
Financial, has raised more than $200m for its
sixth real estate fund.
The capital was raised from five investors
with the minimum investment for each set at
more than $14m, a filing with the US Securities and Exchange Commission shows. Fundraising is expected to take more than a year.
Pramerica launched the predecessor fund,
Pramerica Real Estate Capital V (Netherlands), together with Dutch pension fund
Algemene Pensioen Groep (APG) in April
2014. The €265m vehicle is focused on commercial real estate assets in the Netherlands
and Belgium.
GP PROFILE: DVO REAL ESTATE
Bridging the gap in small multi-family deals
D
avid Valger, founder of DVO Real
Estate, believes he has found a
gap in the market for investing in
Class B US real estate – a segment he says is
always in demand.
Valger, who started the firm four years ago,
told Limited Partner magazine how he came
up with a business model that lets him successfully keep pace with a busy market.
Valger says, “I started DVO Real Estate to
build on my vision to continue investing in
multi-family assets, but the key for me has
always been to come up with something differentiated, a structure that few others use so I
can focus less on competing with other
funds and more on the assets.
“This is how I came up with a
structure called gap equity, which is an
equity product unlike mezzanine and
unlike conventional preferred equity,
but it has two distinct and important
features.
“First, our local partner has more
skin in the game, and instead of committing 5-10 per cent of the equity in
each deal they are committing 15-25
per cent.
“Second, our local partner in each
deal has to be willing to subordinate
their return on equity and return of
equity to DVO’s position.
“However, if there is not sufficient
cashflow to pay our preferred hurdle,
which is usually between 9 and 10 per
cent, this does not mean DVO can foreclose
the local partner out. Furthermore, the quid
pro quo for the local partner is that once DVO
achieves its second IRR hurdle, our sponsor
receives a bigger carried interest than they
would normally.
“This structure accomplishes two important
things: it creates a true ‘risk adjustment’ or
‘insurance policy’ for DVO, and second it incentivises prospective local partners to bring
DVO their top quartile of deals.”
The gap equity model is one of three main
differentiators that set DVO apart from all the
other “smart and well-capitalised investors in
the market”, Valger says.
Another important area where DVO strays
from the pack is its focus on smaller-scale
deals. Valger says, “We purposely focus on
investing less than $15m per deal, and mostly
below $10m.
“This allows DVO to remain under the
radar and not to compete for deals directly
with the biggest players in our business –
usually funds that have a lower cost of capital
and may have a greater tolerance for risk than
DVO.
“Not going head to head with bigger funds
improves our risk profile per deal through
structure, and allows us to generate a better
risk-adjusted return for our investors.
“If you start to go head to head with large
David Valger, founder of DVO Real Estate
funds with lots of capital and lower costs of
capital, they reduce your yield opportunity
and increase risk.”
Valger makes the most of relationships he
built during his nine years at US property
investment group RCG Longview, where he
started a long-term association between the
firm and Fannie Mae.
DVO’s third differentiating factor is the
way it gets access to opportunities.
Valger says, “Through our unique point of
access we work hard to identify opportunities
which the market either does not necessarily
see, or where we have the first or last look.
“To be able to do that I’m using the longterm relationships I have built with originators of agency debt, local owners and key
50
intermediaries during and after my tenure
with Fannie Mae.
“The originators, alone depending on timing in the market cycle, control 50-80 per cent
of multi-family debt originations.”
Debt is not something the multi-family segment lacks, improving its risk profile and making it a stable market for long-term investing.
Valger explains, “One of the differentiators of multi-family over other commercial
asset classes in US real estate is that it is less
volatile.
“Its stability stems from the fact that every­
one needs a place to live, and that is much
more important than having office or
retail, or warehouse space.
“The second issue is that historically there has always been debt
available for this market.
“The debt could come at a higher
or lower cost in different periods, but
unlike other asset classes the debt
available to the multi-family sector is
always available.
“The US government has worked
hard to make sure there is always
liquidity in the secondary mortgage
market for residential property – single family, and of course multi-family
included.”
Having chosen Class B multi­
family assets as its focus, DVO
jumps another market hurdle, which
is the lack of demand.
“The trend and projections for new household formations in the US is that demand far
exceeds supply.
“There is some talk about oversupply in the
market, but in reality that excess is coming
primarily in the Class A property sector and
primarily in central business districts in top
markets.
“However, the Class B space, on which we
are focused, is undersupplied and historically
it has been the lowest supplied asset class
where the demand is highest.
“When economy grows the Class C property owners move up to Class B and when it
shrinks, Class A property owners move into
Class B. This is why there is constant demand
and continuous undersupply in Class B.”
Q2 2016
SECTOR PERSPECTIVES: REAL ESTATE
Provenance Hotels launches
new $525m property fund
Provenance Hotel Partners has launched a new property fund
Provenance Hotel Partners, the realestate investment affiliate of lifestyle
hotel operator Provenance Hotels, is
currently fundraising for its $525m
maiden real estate vehicle.
Provenance Hotel Partners Fund I
(PHPF I), with focus on acquisitions
of urban hotels in North America, has
already made a first investment, the firm
has announced.
The fund bought out seven of the nine
hotels currently managed or asset managed by Provenance Hotels. The assets
include the Hotel Max in Seattle; Hotel
Murano in Tacoma; the Westin Portland,
Hotel Lucia and Sentinel in Portland;
and Hotel Preston in Nashville.
In the future, PHPF I will pursue full
ownership, joint ventures, sliver equity
and preferred equity deals that include
the appropriate leverage.
All properties purchased by PHPF I
will be managed by Provenance Hotels,
the firm said.
Provenance Hotel Partners is led by
chairman and CEO Gordon Sondland,
and president Bashar Wali.
Sondland said, “Raising capital will
be increasingly competitive as this
economic cycle churns onward.
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“Launching our first fund now
prepares us to take advantage of the
opportunities for investment that we
anticipate will present themselves.
“Because our fund is discretionary,
sellers and developers will be assured a
quick and certain close – which should
give us a distinct advantage in acquiring the right properties at an attractive
price.”
Wali, commented, “Since Provenance
Hotels and our affiliates began investing in hotel projects in 1985, we have
refined our approach to acquiring and
improving the kind of value-add assets
that fit the investment goals of PHPF I.
“We are looking forward to having
the resources of PHPF I as they will
allow us to apply our proven strategy
even more nimbly, aggressively and
effectively.”
Apart from acquisitions of hotels in
operation, PHPF I will also invest in
the renovation of existing but underperforming hotels and buildings that can
be converted into hotels.
It will follow the strategy of choosing
projects in which the management company, Provenance Hotels, has a proven
track record of success, the firm said.
51
Prime’s new $25m
heathcare RE fund
makes three deals
US real estate investment firm Prime
Property Investors has announced the first
three deals from its recently-launched $25m
debut fund.
The healthcare real estate vehicle, closed
late last year, has acquired First Choice
Emergency Room and Elite Care in Texas,
and UCHealth ER in Colorado for a total of
$25m.
Prime Property plans further healthcarerelated acquisitions of up to $100m by the
end of this year.
Prime Healthcare Investors Fund I is focused on general acute care facilities including physicians’ offices, urgent-care clinics,
ambulatory surgical centres, speciality hospitals and other medical office buildings.
Prime Property’s co-CEO Barbara Gaffen
said, “We are excited to introduce healthcare
real estate properties within our investment
Funds and we see great potential in building
a portfolio in this asset class.
Co-CEO Michael Zaransky added, “Growing demand for medical-use real estate and
our ability to obtain low-cost debt creates a
niche opportunity to build a stable, cashflowing healthcare real-estate portfolio for
our investors.”
Mesa West to hold final
close of income fund
Los Angeles-headquartered real estate debt
firm Mesa West Capital, which is currently
fundraising for its fourth RE vehicle,
is expecting the final close to be before
December.
The fund has held its first close and another interim closing was expected at the end
of the first quarter, a source told AltAssets.
AltAssets revealed that the firm has so far
registered $390m in commitments from 28
LPs for Mesa West Real Estate Income Fund
IV. The target for the fund is $750m and,
according to the source, the firm has set the
hard cap at $900m.
SECTOR PERSPECTIVES: BUYOUT
Global PE volume dips despite rise in capital
Global private equity dealmaking suffered a
volume dip in February despite a huge rise
in invested capital, new research shows.
The number of global PE transactions
declined seven per cent from January to
410 deals, but recorded $36.2bn of capital
changing hands – well up on the $14.7bn
figure from the previous month according to
data from Zephyr published by BvD.
It said the year-on-year figures told a similar story, although the jump in deal value
was nowhere near as high. February 2015
saw 419 transactions worth about $15.8bn.
Zephyr said a few large deals had a
considerable effect on dealmaking for the
month, with six breaking the $1bn barrier
and one worth almost $12bn on its own.
That was the $11.9bn acquisition of fire
alarm and security system services provider
ADT by an affiliate of funds run by Apollo
Global Management (see p58).
Elsewhere a consortium comprising Alberta Investment Management Corporation,
OMERS Private Markets, Ontario Teachers’
Pension Plan and Wren House Infrastructure Management agreed to buy London
City Airport for $2bn, while EQT sealed the
$1.36bn purchase of a 98 per cent stake in
Swiss tour operator Kuoni Reisen.
US firms were targeted in nine of the top
20 deals announced in February, while the
UK, Canada, Switzerland, China and Norway also saw significant transactions.
Towerbrook seals
12-month turnaround
Private equity house Towerbrook Capital
Partners has agreed to exit frozen food
business Van Geloven to trade major
McCain after just 12 months in its portfolio.
The Netherlands and Benelux company’s
brands include Mora – which has shown 34
per cent growth since 2010, artisanal ragout
brand The Bourgondiër, and satay specialist Hebro. It generated sales of €197m last
year.
Towerbrook agreed a deal for Van
Geloven in March last year.
Private equity dealmaking dropped in February despite a big rise in invested capital
The US topped both the volume and
value rankings in February as the country
was targeted in 149 deals worth $19.4bn,
placing it well ahead of its nearest competitor on both fronts.
Second place by volume was taken by
China with 37 deals, while the UK was
runner-up by value with $4.2bn.
All of the top nine countries improved total deal value month-on-month, in keeping
with the overall trend for February, Zephyr
said. The highest country to post a decline
was India, which slipped from $867m to
$587m over the period.
PE investment in the publishing and
printing sector was highest in January as
the industry raised $3.16bn over the four
weeks, a slight increase on the $2.5bn
invested in January and up from $1.16bn in
February 2015.
Permira eyes $1.5bn Intelligrated sale
Europe-headquartered private equity house
Permira is reportedly eyeing a valuation of
$1.5bn for portfolio company Intelligrated
through an auction sale.
The firm has hired Nomura and Centerview Partners to help work on the auction
according to Reuters, which cited unnamed
people familiar with the matter.
Permira picked up Intelligrated four years
ago from Gryphon Investors in a deal worth
more than $500m.
The company designs and manufactures
automated conveyor and sorting systems,
52
primarily for e-commerce. It currently has
an EBITDA of about $120m, the Reuters
sources added.
Permira has begun fundraising for its
sixth fund targeting €6.5bn, AltAssets has
revealed. Rumours about Permira planning
to return to market in the first quarter of
2016 initially emerged last autumn.
Permira held the final close for its Fund V
on €5.3bn in June 2014. The vehicle closed
after 34 months of fundraising on a reduced
hard cap, which was lowered from the initial
€6.5bn.
Q2 2016
SECTOR PERSPECTIVES: BUYOUT
Charterhouse exits drug
firm to CVC for 3x return
Charterhouse is selling Italian drug firm Doc Generici to CVC Capital Partners
London-headquartered private equity firm
Charterhouse is selling Italian drugmaker
Doc Generici to fellow PE investor CVC
Capital Partners with a return of almost
three-times, Limited Partner understands.
The exit from the three-year old investment generated 2.7-times return MOIC
for Charterhouse Capital Partners IX
fund investors, corresponding to around
40 per cent IRR, according to a source
familiar with the matter.
Fund IX invested in the Italian business back in May 2013, and since then
the company has registered significant
growth, being able to reduce its leverage
ratio to 1x from 3.7x.
Since the buyout by Charterhouse, Doc
Generici’s EBITDA has increased from
€44m to €60m in 2015 and its revenue
has grown from €132m to €168m last
year.
Commenting on the deal, Giuseppe
Prestia, partner at Charterhouse, said in a
statement, “In Doc Generici we saw the
chance to invest in a highly cash-generative, well-established business led by a
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best-in-class management team who have
driven ongoing penetration of generics in
the Italian pharmaceutical market.
“We are delighted to have contributed
to the ongoing success of Doc and wish
Gualtiero and his team the best of luck
for the future.”
Giampiero Mazza, partner at CVC,
said, “Doc Generici is a leader in the
Italian generic pharmaceutical industry
with strong positions in a wide range of
therapeutic areas, a fantastic management
team and an excellent brand.
“We believe there are significant
opportunities to continue to grow the
business, and we look forward to deploying CVC’s local resources and global
network to support management and
employees of DOC in achieving their
vision for the future.”
Doc Generici is the eighth exit from
the Charterhouse Capital Partners IX
portfolio of 13 investments. The vehicle’s
average realised return currently stands at
more than three-times MOIC for investors, according to AltAssets.
53
Welsh Carson
buys QuickBase
from Intuit
Tech-focused US buyout house Welsh,
Carson, Anderson & Stowe has agreed to buy
cloud app ‘low-code’ development platform
QuickBase from Intuit.
Low-code software allows users without
strong technical know-how and qualifications
to create custom applications.
WCAS general partner Michael Donovan
said, “QuickBase is led by a strong management team with a highly supportive customer
base and a platform that has been changing the way businesses create and deploy
applications.
“With increased focus and investment,
such as doubling product development funding, the company can even better serve its
customers and capitalise on the multi-billion
dollar opportunity ahead.”
Once the transaction is closed, Intuit will
become one of QuickBase’s largest customers, with more than 10,000 actively used
apps, created without code and used across
all employees and departments.
The deal is expected to close during the
first half of 2016.
Partners set to buy
fibre operator Axia
Global private equity firm Partners Group
is set to buy fibre network operator Axia
NetMedia in a $203.3m deal.
Axia, which is listed on the Toronto Stock
Exchange, designs, installs and operates
‘open access’ fibre-based internet and data
networks in North America and France.
Partners has agreed to buy the company
for C$4.25 a share, which represents a premium of 49 per cent to Axia’s share price.
Partners Group partner Brandon Prater
said, “We are confident that Partners Group’s
experience in the communications sector,
coupled with our global platform, represent
an excellent match for Axia’s growth strategy
and will help the company to continue its
development.”
SECTOR PERSPECTIVES: BUYOUT
Gimv, Capricorn sell auto supplier to Yinyi
European PE firm Gimv and VC investor
Capricorn are exiting the rest of their stakes
in Belgian automotive supplier Punch
Powertrain at an enterprise value of some
€1bn, Limited Partner can reveal.
The Gimv-XL fund originally invested
in Punch Powertrain in March 2010 by
acquiring a 46 per cent stake, which was
subsequently reduced to 32 per cent after a
partial exit to China-focused private equity
fund New Horizon Capital in December
2013.
The fund is now selling the remaining
stake to China’s Yinyi group, which will
also take over the holdings of LRM, Capricorn and Punch Powertrain’s management.
Capricorn also invested in the business
in 2010, taking over a 12 per cent interest,
and participated in the partial exit in 2013,
which left its holding at 8.5 per cent.
Since 2010, the Flemish manufacturer
of fuel-efficient powertrains has raised its
sales nearly five times to €326m. The company’s expected EBITDA in 2016 is almost
€100m on sales of some €500m.
After the current transaction is completed, the Capricorn Cleantech Fund will
JW Childs invest in
biker gear firm
Boston-based private equity firm
JW Childs has made an investment in
Comoto Holdings, a new business launched
by sister companies RevZilla and Cycle
Gear.
The two founding companies are retailers of apparel, accessories and parts for
motorcycle enthusiasts. They will both keep
their independent operations and current
headquarters.
RevZilla is based in Philadelphia and
Cycle Gear’s main office is in Benicia,
California. Founded in 1974, Cycle Gear
currently operates 113 stores across the US
and RevZilla, founded in 2007, is growing
its e-commerce network, generating annual
revenue of some $100m.
Gimv and Capricorn are selling their stake in Punch Powertrain to Chinese firm Yinyi
get around 17 times return on its original
investment and realise a gross IRR of
60 per cent.
Jos Peeters, founder and managing partner
of Capricorn, said he was very excited about
the deal, calling it “one of the most successful exits in the history of Capricorn.”
Gimv recently sold its majority stake in
gearbox and engine component business
VCST, which it acquired back in 2009.
HgCapital taps Mercury Fund to
back French Saas firm Trace One
UK-based private equity firm HgCapital has
made an investment in French software as
a service (SaaS) platform Trace One, using
capital from its £380m Mercury Fund.
Hg Capital is not commenting on the
size of the investment. The firm set up its
Mercury Fund in 2012 with the specific aim
to fund lower mid-market buyouts of up to
£100m in TMT sub-sectors.
Paris-headquartered Trace One is providing SaaS services to the retail and privatelabel goods sectors. The business is a good
fit for Hg Capital’s strategy of investing
in companies with subscription revenues
in regulatory-driven growth segments, the
firm said.
54
Trace One currently serves a blue-chip
customer base of 30 leading retailers, across
Europe and North America, supporting more
than $300bn of private-label sales.
Sebastien Briens, a director at Hg Capital,
commented, “Trace One fulfils an important
role in managing retailer processes with
suppliers and we look forward to supporting
the business to deliver even better service to
its customers in the future.”
As part of the transaction, Hg Capital operating partner Bertrand Sciard will become
executive chairman at the French company.
Hg Capital recently acquired certification
solutions business Citation from fellow UK
private equity house ECI Partners.
Q2 2016
SECTOR PERSPECTIVES: BUYOUT
VSS doubles its money on
sale of Navtech to Airbus
VSS has successfully exited Canadian business Navtech to Airbus
Veronis Suhler Stevenson (VSS)
has scored a two-times return from
the minority stake sale in Canadian
business Navtech to Airbus, Limited
Partner understands.
The global investment firm originally
invested $15m in a minority stake in the
flight operations software developer in
2013, using capital from its VSS Structured Capital II fund.
VSS and co-owners Cambridge Information Group (GIC) and Externalis are
now selling Navtech to Airbus ProSky,
part of European aircraft maker Airbus.
VSS declined to comment on financial details of the sale.
Fund II, which closed on $312m in
2009, now has six portfolio companies
left. The latest net IRR for the vehicle
stood at 29.6 per cent, according to
sources with knowledge of the matter.
After the Navtech exit, there will be
six portfolio companies left in Fund II.
In the last year, VSS successfully
exited structured capital investments
including Trover Solutions, sold to New
Mountain Capital, Cast & Crew Entertainment Services, sold to Silver Lake,
and Strata Decision Technology, which
was sold to Roper Technologies.
Commenting on the current deal,
David Bainbridge, a managing director
at VSS who served on the Navtech’s
board, said “Navtech is representative
of our strong experience providing
flexible debt and equity solutions to
lower middle-market businesses in the
information industry.
“We are pleased to have been a valueadded strategic partner to Navtech and
its shareholders.”
VSS is now back in the market with
its third structured capital fund. The
firm is targeting $300m for VSS Structured Capital III and has already raised
60 per cent of that target.
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For daily breaking news on all the latest fund
activity visit: www.AltAssets.net
www.LimitedPartnerMag.com
55
FTV Capital sees
11x return on
CardConnect
US growth equity investor FTV Capital will
enjoy a double-digit return from the sale of
payment solutions provider CardConnect,
Limited Partner understands.
The firm has been able to multiply its
original investment in the business by 11.1
times. This is based on a total enterprise
value of $437.9m and adjusted EBITDA for
2016 estimated at $39.4m, internal documents obtained by Limited Partner show.
FTV, which first invested in CardConnect
in 2010 and is current majority owner of the
business, has agreed to sell its holding to
Delaware-based company FinTech Acquisition Corp.
The buyer is paying around $180m in cash
and another $170m in own common stock.
After the acquisition, FinTech will merge
with CardConnect and the new business will
be renamed to CardConnect Corp, the parties
have announced.
Chris Winship, partner at FTV said, “We
have been consistently impressed with the
way Jeff [Shanahan] and his team have
executed within the complex payments
landscape to build one of the most successful
payments platforms in the US.”
Altitude triples cash
on Care Division exit
UK private equity investor Altitude Partners
has made 2.9x return from the sale of adult
care service provider The Care Division to
Bridges Ventures-backed Alina Homecare.
This marks the first out of a number of
planned exits from the PE firm’s Fund I,
Altitude said, with three more planned completions in the near future.
Altitude plans to launch fundraising for
its second pool later this year, continuing its
strategy of investing between £500,000 to
£3.5m in growing businesses across the UK.
Altitude acquired The Care Division in
2013 and has seen the business double the
number of service hours per week since then.
SECTOR PERSPECTIVES: BUYOUT
Blackstone exits Strategic Hotels in $6.5bn deal
Global private equity group Blackstone is
to sell Strategic Hotels & Resorts to Chinese insurance group Anbang for $6.5bn,
Limited Partner understands.
The PE investor is exiting the luxury
hotel chain less than six months after
it agreed to buy it and less than three
months after completing the acquisition.
Blackstone took over all outstanding
shares of Strategic and its subsidiary,
Strategic Hotels Funding, through its Real
Estate Partners VIII fund, for $14.25 per
share, plus debt. The deal was valued at
$6bn. The transaction was agreed last
September and closed in December.
The Strategic group currently operates
16 hotels across the United States, including 7,532 rooms and 807,000 square feet of
multi-purpose rental space.
A month after sealing the purchase
of Strategic, Blackstone tapped its RE
Partners VIII fund again to back the $8bn
acquisition of BioMed Realty, an owner of
office buildings for life-science tenants.
NVM scores 2.4x
return through exit
UK-based NVM Private Equity has more
than doubled its initial investment in
Control Risks Group Holdings by exiting
the company.
The private equity firm has scored a
2.4-times return through the exit, according
to a source with knowledge of the deal.
Founded in 1975, Control Risks is a
specialist risk consultancy which helps
organisations understand and manage the
risks and opportunities of operating in complex or hostile environments.
It offers a range of services addressing political risk, business intelligence,
corporate and personal security and crisis
response.
The deal comes five years after NVM
and a syndicate of co-investors acquired a
significant minority stake in Control Risks
from 3i Group.
Blackstone is selling Strategic Hotels & Resorts to Chinese insurance group Anbang for $6.5bn
Apollo seals deal for gourmet
grocer Fresh Market at $1.4bn
Apollo Global Management has agreed
a deal for listed gourmet grocery retailer
Fresh Market which values the business at
$1.36bn.
The $28.50 all-cash offer represents a
premium of about 24 per cent over the
company’s closing share price on March 11,
and 52 per cent above February 10’s price
– the day before press speculation about the
deal began.
Fresh Market’s stock price was as low as
22.06 per share on March 10, but had risen
to 22.98 by the end of March 11 as rumours
of the deal began to emerge.
US supermarket giant Kroger was also
said to be interested in buying the business,
with the speculation helping the company’s
stock climb from $19.16 at the end of
January.
56
The transaction was unanimously approved by Fresh Market’s board of directors, aside from chairman and founder Ray
Berry, who recused himself from all board
discussions related to the review and from
the board vote.
Berry and his son Brett, who collectively own about 9.8 per cent of The Fresh
Market’s outstanding shares, will roll over
the vast majority of their holdings in the
transaction with Apollo.
The transaction will be financed primarily
through $800m of new senior secured notes
and an equity contribution of about $525m
from Apollo funds, in addition to the equity
rollover from the Berrys.
Fresh Market will also enter into a new
$100m revolving credit facility concurrent
with the closing of the merger.
Q2 2016
SECTOR PERSPECTIVES: BUYOUT
Apax inks 5x Auto Trader return
Apax nears 5x overall return following latest Auto Trader sell-down
London-headquartered private equity
house Apax Partners has made a total
return of almost five times from its
investment in Auto Trader by selling
almost all of its remaining stake in the
business, Limited Partner can reveal.
Apax first bought a 49.9 per cent
stake in Auto Trader from Guardian
Media Group in 2007, and took full
control in 2014 for £619m.
The firm has raised £852m selling
more than 233 million shares in an IPO
of the classifieds vehicle ads business.
That total is believed to have upped
Apax’s overall gain from the business to
£1.7bn, representing an overall return of
about 4.9 times.
Apax’s stake in the business now
stands at about 1.8 per cent following
the share sale.
The deal is the latest in a flurry of
exit activity for the private equity house
this year, following the sale of InfoPro
Digital to Towerbrook, parting with the
last of its stake in Tommy Hilfiger to
PVH, and gaining almost £50m from
the IPO of Ascential.
Those successes will go some way
to helping Apax in its latest flagship
fundraise, which is believed to have
launched last month targeting $7.5bn.
AltAssets reported last autumn that
the firm was preparing for a multibillion dollar fundraise.
EQT buys Finnish education firm
European buyout house EQT has
tapped its mid-market fund to buy
Finnish education company Touhula
Varhaiskasvatus.
Current backers Cor Group, Finnish
Industry Investment and Norvestia will
retain minority stakes in the company.
Touhula runs more than 80 preschools and day care centres under the
Touhula and Aarresaari brands.
www.LimitedPartnerMag.com
EQT director Jarkko Murtoaro said,
“EQT is an active and responsible
owner, with a long history of developing companies and adding value to
society by having a sustainable and
long-term approach.
“We believe EQT is well suited to
support the company’s growth in Finland, and add value to society through
high-quality pre-school education.”
57
US Foods lines
up banks ahead
of $1bn IPO
Private equity-backed US Foods Holdings
is reportedly set to hand underwriter roles to
Goldman Sachs, JPMorgan Chase & Co and
Morgan Stanley in its $1bn IPO.
The Illinois-based food distributor is close
to formalising underwriter roles with banks,
with the trio in pole position, according to
Reuters, which cited people familiar with the
matter.
Global buyout houses Clayton, Dubilier &
Rice and KKR bought US Foods from European grocery Royal Ahold NV in 2007, with
the transaction valued at around $7.1bn.
US foods filed for an IPO in February, a
year after Sysco Corp’s $8.2bn takeover bid
fell apart.
The deal would have combined the only
two food distributors big enough to offer
nationwide contracts to deliver food and
other supplies to customers such as hotels,
hospitals and fast-food restaurants.
However in June the US Federal Trade
Commission filed a lawsuit to block Sysco’s
deal, with a federal judge ruling in favour of
the antitrust watchdog.
US Foods reported about $23bn in revenue
and adjusted EBITDA of $860m for fiscal
year 2014, according to its IPO prospectus.
Aurelius in double-digit
return on Fidelis sale
German mid-market private equity investor
Aurelius has exited portfolio company
Fidelis HR to Belgian recruitment company
SD Worx with a double-digit return.
The Munich-based firm said it plans to pay
out part of the proceeds through a dividend.
Aurelius invested in Fidelis, a provider of
HR outsourcing software operating in the
German-speaking market, back in 2013.
Since then the company has managed to
grow its revenue, profits and staff, Aurelius
said. Fidelis currently operates in 13 locations in Germany, Austria and Switzerland,
and posted revenue of €55.3m.
SECTOR PERSPECTIVES: BUYOUT
Apollo seals biggest buyout in $15bn ADT deal
Apollo Global has agreed the biggest
buyout deal of the year so far by picking
up home security business ADT in a deal
valuing its equity at about $7bn.
The buyout price of $42 per share represented a 56 per cent premium on ADT’s
closing share price on February 12.
Apollo plans to combine the business with
existing portfolio company Protection 1,
representing an aggregate transaction value
of about $15bn across the pair.
Apollo senior partner Marc Becker said,
“We are tremendously excited by this
unique opportunity to combine two premier
businesses.
“This transaction provides the opportunity to dramatically enhance our position
in the large, fragmented and growing residential and business electronic-monitoring
industry.
“The newly created company will
generate a combined $318m in recurring
monthly revenue and total annual revenue
in excess of $4.2bn, placing the businesses
in a strong position to drive innovation and
to capitalise on growth opportunities in
the future.”
The ADT board of directors unanimously
Bain bid to wrap
up Brakes sale
Bain Capital Private Equity expects to
close the $3.1bn sale of UK-based catering
industry supplier Brakes Group sometime in
the summer.
The deal would most probably be
wrapped up in July, when the buyer, US
food-service group Sysco Corp, is closing
its financial year, a source with knowledge
of the matter told Limited Partner.
Brakes Group, which was acquired by
Bain Capital PE in 2007, is a very good
geographic fit for Sysco, whose main operations are in North America with very little
European exposure, the source commented.
The price of $3.1bn includes a $2.3bn
repayment of Brakes Group debt.
Apollo will merge ADT with an existing portfolio company, Protection 1, in an aggregate deal value of $15bn
approved the transaction, which is expected
to be completed by June this year.
ADT, which provides electronic security
and fire protection to homes and small
businesses, was part of Tyco International
before it spun off four years ago.
Protection 1 provides installation, maintenance and monitoring of security systems
for residential, commercial and national
accounts customers nationwide.
Apollo closed its most recent flagship
fund on $17.5bn two years ago, making it
the biggest vehicle raised since the financial
crisis. Like its predecessors, Fund VIII will
focus on distressed investments, corporate
carve-outs and opportunistic buyouts.
Searchlight picks out branding firm
Global private equity investor Searchlight
Capital Partners has picked up a majority
stake in branding and creative services
business 160over90.
The deal comes following a successful
year for 160over90 in which it has worked
for brands including Ferrari, Nike, Under
Armour and the Philadelphia Eagles American football team.
Searchlight founding partner Eric Zinterhofer said, “160over90 has built an impressive, diversified portfolio of nationally
recognised brand leaders and distinguished
itself as one of the most innovative branding agencies in North America.
“We are thrilled to partner with the
160over90 team, and see great potential for
building a network around them.”
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Shannon Price Slusher, founding partner
of 160over90 said: Searchlight’s international presence, investment acumen and financial support will accelerate 160over90’s
expansion and global reach and allow us to
continue to recruit the brightest talent.”
Searchlight portfolio companies include
iconic wellington boot maker Hunter, invenue interactive music and entertainment
platform TouchTunes and Canadian retailer
Roots.
The firm is believed to have hit a
$1.9bn final close for its second fund last
December.
AltAssets reported this time last year that
the firm was looking to raise up to $1.5bn
for its second fund, almost double the
$860m it gathered for its 2012 debut.
Q2 2016
SECTOR PERSPECTIVES: BUYOUT
PE dealmaking to rise after
slow 2015, survey says
Private equity dealmaking is set to grow in 2016, according to new research
Private equity dealmaking is set to
expand in 2016 following a relatively
quiet year of firms sitting on capital
amid rising valuations, new research
suggests.
About two-thirds of respondents to
Mergermarket’s latest Venture Capital
Spotlight report said they believed
PE activity would expand somewhat
this year, while 20 per cent said they
expected it to grow significantly.
One managing director at an unnamed investment bank quoted in the
report said, “I think PE firms lay low in
2015 because of unexpected movements
in the market.
“If they do not deploy their capital
for another year, limited partners will
start questioning them.”
The report revealed that a small proportion of respondents believe PE activity will remain the same (12 per cent) or
decrease somewhat (four per cent), due
to the possibility of sector-wide shifts in
the way deals are struck.
Another MD of an investment bank
said, “The industry is going through
change, with investor activism on the
rise about fee levels and carried interest
calculations,” adding that he thought PE
activity would be flat in 2016.
The vast majority of respondents
expect overall M&A dealmaking to
grow this year.
Providence Equity backs Topgolf
Global private equity firm Providence
Equity has backed golfing entertainment
centre and media company Topgolf
Entertainment Group by making a
minority investment.
Topgolf offers golfing games to track
the accuracy and distance of players’
shots. The company said it will look to
engage people through its newly formed
www.LimitedPartnerMag.com
Topgolf Media division, created with
its recent acquisition of web and mobile
golf game World Golf Tour.
Providence managing director Scott
Marimow said, “Topgolf has evolved
not only the way people play golf but
also where they go for entertainment.
“Topgolf has demonstrated expertise
in achieving remarkable growth.”
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Riverside Company
exits French firm
HRA Pharma
Mid-market private equity firm The Riverside
Company is exiting its 2011 investment in
French speciality pharmaceuticals business
HRA Pharma.
A spokesperson for the firm declined comment on financial details when approached
by Limited Partner.
Riverside and HRA’s founders have sold
their stakes in the company to European
private equity firm Astorg and US investment
bank Goldman Sachs, and re-invested a small
minority stake. Goldman Sachs and Astorg
are now majority owners.
During Riverside’s ownership, HRA
expanded its global reach to 80 countries,
boosting its European presence from five to
11 countries. The company’s revenue has
increased by 95 per cent since the time of
Riverside’s investment. Back then the business generated €42m per year.
The private equity firm’s initial investment
in HRA was between €25m and €30m.
Commenting on the current deal, Karsten
Langer, partner at Riverside, said, “We
have been delighted to work closely with
HRA during this time and contribute to its
success.”
Last December, Riverside exited its fouryear investment in marketing-automation
business Brandmuscle to American Capital
Equity for an undisclosed amount.
CVC eyes €564n
from Raet sale
European private equity firm CVC Capital
Partners has agreed the exit of Dutch HR
software company Raet in a deal believed to
value it at up to €564m.
The firm hired Rothschild to work on a
deal,which has seen the business bought by
fellow private equity house HgCapital.
CVC bought Raet from Advent International and Taros Capital in 2011.
Raet has been active in the Netherlands
since 1965.
SECTOR PERSPECTIVES: BUYOUT
Ardian buys stadium sound business d&b
European investment major Ardian has
helped seal the MBO of large-scale
professional amplifier and loudspeaker
business d&b audiotechnik.
Ardian bought the business from fellow private equity investor Odewald &
Compagnie and COBEPA, a pan-European
investment firm. The d&B management
team has also taken a stake in the company.
Ardian said the deal marked its 13th from
its €2.8bn fifth LBO fund, which it closed
in 2013 shortly after its spinout from former
parent business Axa.
Germany-based d&b, founded in 1981,
provides professional premium audio
technology, developing and producing
high-quality sound systems for mobile and
permanently installed applications, ranging
from large stadiums to cruise liners.
The company more than doubled its sales
to €94m following its acquisition by Odewald & Compagnie and COBEPA in 2011.
As part of the internationalisation process
under their ownership, new subsidiaries
were founded in Europe, the USA and Japan, and the company’s production capacity
was more than doubled.
Carlyle bags minority
stake in Digitex
Global private equity major Carlyle
has bought a majority stake in Spanish
and Latin American business-process
outsourcing company Digitex.
Carlyle said it tapped its €3.75bn Europe
Partners IV fund for the deal, which is
expected to close in the second quarter.
Digitex, which has been owned by Altra
Investments since 2009, employs more than
16,000 people across Spain, Colombia,
Mexico, Peru, Chile, Guatemala and El
Salvador.
Carlyle Europe Partners co-head Marco
De Benedetti said, “Carlyle’s investment in
Digitex will help support the company’s expansion ambitions. It is a strong business in
the BPO industry, with well-run operations
in Europe and Latin America.”
Ardian has helped an MBO of commercial sound-systems business d&b audiotechnik
Ardian director Fabian Wagener said,
“Over the past three decades, d&b has become a premium brand in the professional
audio technology sector.
“We are convinced of the company’s
innovative strength, its results-orientated
management team, its dedicated employees
and the resulting growth perspectives.
“Together with management, we will
refine the existing product portfolio and
provide important impulses for the further
international growth of the company.”
Stirling Square picks up plane
component business Mettis
Mid-market European private equity house
Stirling Square Capital has picked up
aerospace component manufacturer Mettis
Aerospace.
Customers of UK-based Mettis, which
was founded more than 75 years ago, include
Airbus, Rolls-Royce and Boeing.
Stirling Square’s Julien Horreard said,
“We are delighted to be supporting this
ambitious management team in the future
development of one of the UK’s leading
manufacturers of forged safety-critical components for the aerospace industry.
“Aerospace is a sector known well to Stirling Square, and together with the management team, we are committed to implement-
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ing an ambitious growth plan for Mettis,
including further sector consolidation.”
Stirling, which was established in 2002,
invests in mid-market companies with enterprise values of between €50m and €500m.
The firm manages three funds and a
number of co-investment positions, totalling
more than €1bn of assets under management.
Stirling Square closed its third fund at its
€600m hard cap last month, making it the
largest vehicle raised by the London-headquartered firm.
Commitments pushed the fund past the
€500m initial target, with existing investors
from Fund II comprising more than 60 per
cent of the total.
Q2 2016
SECTOR PERSPECTIVES: BUYOUT
Dunedin makes close to
3x return on CitySprint
Distribution company CitySprint has been sold by Dunedin, tripling its initial investment
London-based Dunedin has nearly
tripled its investment in CitySprint by
selling the technology-driven, same-day
distribution company.
Mid-market private equity firm LDC
has backed the secondary buyout of
the business in a deal that values it at
£175m, marking the firm’s first investment in 2016.
The deal, which comes just over five
years since Dunedin originally invested
£33.1m in the business, sees the firm
make a 2.8-times return on its initial
investment.
Under Dunedin’s support, CitySprint
has made 21 acquisitions, creating a
network of 40 service centres and more
than 3,000 self-employed couriers.
CitySprint claims that it can reach 88
per cent of the UK in under one hour.
Since Dunedin’s initial investment,
CitySprint has achieved average annual
revenue growth of 19 per cent, producing organic growth of over 60 per cent.
In the year to 31 December 2015,
CitySprint achieved EBITDA of £16.8m
on turnover of £146m, up 14 per cent on
2014, when EBITDA was £13.5m and
turnover was £129m.
The sale will see Dunedin reinvesting into the business to retain an equity
stake. Nicol Fraser, partner at Dunedin,
said, “Dunedin has worked closely
with the management team to drive the
rapid growth of CitySprint over the past
five years.”
Mid-Europa sells Bite after nine years
European private equity firm Mid
Europa Partners has completed the sale
of Baltic mobile operator Bite Finance
International.
Global buyout house Providence Equity Partners has bought the company,
nine years after Mid Europa’s initial
investment.
Mid Europa, together with executives
www.LimitedPartnerMag.com
and directors, acquired 100 per cent of
the mobile operator in 2007.
Bite controls a leading mobile operator in the Baltics, and is number two in
Lithuania and third in Latvia.
The group says it is focused on meeting growing demand in the region for
a high-quality network experience and
providing excellent customer service.
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GTCR to buy US
video firm Lytx
for $500m cash
Chicago-based private equity firm GTCR
has agreed to acquire Lytx, a San Franciscobased developer of video-driver safety
systems, in a $500m all-cash deal.
Founded in 1998, Lytx currently serves
1,400 clients worldwide. The company has
$200m in booked contract value for 2015.
GTCR managing director Phil Canfield
said, “With an unrivalled set of solutions,
services and blue-chip clients, Lytx is already
driving its strong vision of expanding the
video telematics category, and their clear
market leadership is proof the team can continue to record stellar results.”
There will be no executive leadership
changes at Lytx after the transaction closes,
which should happen by the end of the first
quarter of 2016, the company has announced.
Last month, GTCR signed a deal to buy
voice-enabling services provider Onvoy for
an undisclosed amount. The firm currently
has 11 investments listed in the telecoms and
technology portfolio on its website.
Omnes backs $10m
round for Intersec
French private equity firm Omnes Capital
has co-led a new $10m financing round for
Paris-based fast data analytics specialist,
Intersec.
The round was co-led by software group
Cisco Systems and backed by Harbert
European Growth Capital and its banks, with
participation also from Innovacom, Highland Capital Partners Europe and CMC-CIC
Innovation.
Intersec, which has been focused on
servicing clients in Europe and Africa, is
now expanding its business globally. The
company saw 50 per cent growth in its core
market last year.
Telecoms groups such as Telefonica,
Orange, Maroc Telecom Hong Kong’s
PCCW, Egypt’s Mobinil, and Russia’s MTS
use Intersec’s services.
SECTOR PERSPECTIVES: VENTURE
Europe opportunities ‘limitless’: Creandum
There are “limitless” opportunities for
investing in European start-up businesses
over the long run, Staffan Helgesson, GP of
Nordic venture capital firm Creandum, told
Limited Partner.
The firm has just held the first and final
closing of its latest and largest early-stage
fund to date, which hit its €180m hard cap
after just a few months on the road.
Despite the bigger size Creandum is not
changing its strategy, but will target more
investments, planning to support between 30
and 40 entrepreneur teams over the next four
to five years. With Fund III, which closed on
€135m in 2013, Creandum targeted 25 to 30
early-stage investments.
The firm has historically focused on the
Nordic region, but will not hold back from
investments elsewhere in Europe with its
latest fund, said Helgesson.
“From a long-term point of view, it is a
great time to invest in European startups,”
he said. “There is an enormous amount of
talented people in the 600 million European
population and they are eager to take on the
world.
“In the Nordics, particularly in Sweden,
we are seeing what I call the fourth generation of entrepreneurs and it is fantastic.
There are limitless opportunities.”
The latest fund will keep an almost even
split between seed investments and Series A
Edison Fund VIII
hits $250m target
Venture capital firm Edison Partners is making good headway with its latest fundraise
and has already reached the $250m target
for Fund VIII.
Commitments include $2.5m from
the New Jersey Economic Development
Authority.
The fund, which has already had two
closings, is expected to hold a final close in
the second quarter of this year.
Fund VIII, which launched in April last
year, has made four investments already, the
source said. Edison declined to comment.
There is huge investment potential in European startups, according to Creandum’s Staffan Helgesson
rounds, with a potential to provide businesses
with up to €20m over their life-cycle.
Key LPs Skandia and AP6, which have
been supporting the firm since its debut in
2003, returned to back this latest fundraise.
Fund IV received commitments from
pension funds, life-insurance companies,
university endowments, family offices, technology companies and VC funds of funds
from the Nordic region, Europe, Middle
East and North America. Creandum closed
its Fund II in February of 2007 on its hard
cap of SEK750m, which was about €80m
at the time. Fundraising then lasted around
100 days.
Creandum I cornerstone LPs Sixth Swedish National Pension Fund and Skandia Liv
returned to back the firm’s second fund.
Creandum debut vehicle raised SEK300m 13
years ago.
Battery closes new funds on $950m
Boston-based investment firm Battery
Ventures has closed two new funds totalling
$950m.
The main fund, Battery Ventures XI,
closed at its $$650m target, while Battery
Ventures XI Side Fund pulled in a further
$300m.
Battery said it would continue to target
investments at stages ranging from seed to
private equity, deploying capital in increments of a few hundred thousand dollars up
to deals worth $100m.
The firm focuses on application software/
SaaS, and IT infrastructure in areas such as
62
big-data and cyber security, consumer internet and mobile, and industrial technology.
The new funds come three years after its
predecessor fund family, Battery X and Battery X Side Fund, raised a slightly smaller
pool of $900m.
Since then, the firm has bolstered its presence in the US with the opening of an office
in San Francisco, adding to its presence in
Boston, Menlo Park and Israel.
While the firm will continue to make
investments globally, the majority of deals
will be done in North America, Israel and
Europe.
Q2 2016
SECTOR PERSPECTIVES: VENTURE
Shamrock closes growth
fund on $700m hard cap
Shamrock has closed its fourth growth fund at its $700m hard cap
A strong track record and a sectorfocused approach helped Shamrock
Capital Advisors close its fourth growth
fund at its $700m hard cap, according to
the firm’s partner.
Shamrock Capital Growth Fund IV
will focus on providing buyout and
growth capital investments to companies
in the media, entertainment and communications industries.
Partner Steve Royer told AltAssets,
“We have a track record that is consistent over a long period of time. We also
have a strategy that is resonating with
people, which is sector-focused funds in
the lower mid-market.
“Generally speaking, LPs are broadly
interested in that type of opportunity
today. Combine that with a consistent
track record, a consistent team and consistent strategy, and that was probably
key to a relativity quick fundraise.
“The private equity business is evolving – over time it becomes more about
being a good owner of a business and
what you can do with it.
“I would argue that sector-focused
funds probably have a bit of an advantage in that and will probably continue
to be in favour for a while.”
Fund IV received commitments from
existing and new investors, including
pension funds, endowments, family offices and financial institutions.
Royer added, “The fundraise was relatively quick and painless. We had very
good and loyal investors come back and
we had some new investors.”
Spark launches $370m Fund V
US early-stage investment firm Spark
Capital is back in the market with a new
fund targeting up to $370m.
The firm intends to complete the
Fund V raise within the next 12 months,
according to a US SEC filing.
Boston-based Spark held a $450m
final close for Fund IV in 2013, and a
www.LimitedPartnerMag.com
year later held a $375m final close for a
Growth Fund vehicle.
Spark’s investments range from
$500,000 to $25m. The firm says its
“sweet spot is early-stage startups,
generally the first venture round,
with a focus on internet and mobile
investments.”
63
Ex-Formation 8 GP
Lonsdale confirms
solo fund target
Former Formation 8 GP Joe Lonsdale
has confirmed his own debut fund launch
targeting up to $420m.
Formation 8 scotched plans to raise a third
fund in November last year, with reports at
the time suggesting it was losing co-founder
Lonsdale as he sets up his own fund.
That vehicle has now been registered as
Eight Partners VC Fund I, according to a filing made with the US SEC.
No capital has been registered for the vehicle to date, but the fundraise is expected to be
completed within the next 12 months.
Formation 8 was launched by Lonsdale,
former Khosla Ventures general partner Jim
Kim and entrepreneur Brain Koo.
The firm held a $500m final close for its
second fund in December 2014, and followed
that by hiring Lior Susan to head its earlystage hardware investments.
The firm is believed to have since closed a
$125m vehicle called Eclipse Ventures Fund.
Columbia closes latest
VC fund at $500m cap
Virginia-based venture capital firm Columbia
Capital has closed its oversubscribed sixth
fund at the $500m hard cap.
Columbia Capital Equity Partners VI
closed in the fourth quarter of last year,
exceeding its initial $425m target.
The fund, which raised capital from both
returning LPs and a select number of new
LPs, brings the firm’s cumulative committed
capital to nearly $3bn.
Fund IV comes almost six years after its
predecessor, Columbia Capital Equity Partners VI, closed in April 2010 at $441.4m
Founded in 1989, Columbia is a sectorfocused firm specialising in internet
infrastructure, mobility, enterprise cloud,
cyber security and media. It looks to make
investments ranging from $15m to $40m in
companies that can grow to at least $200m,
according to its website.
SECTOR PERSPECTIVES: VENTURE
L Catterton closes latest growth fund at $615m
Consumer-focused private equity firm
L Catterton has closed its oversubscribed
third US growth fund at $615m, putting it
significantly above its initial target of $500m.
L Catterton Growth Partners III received
commitments primarily from existing investors, along with a few new investors around
the globe, according to the firm.
Along with capital from LPs, the fund was
also backed by the GP and strategic partners
of L Catteron.
The firm previously announced a partnership with LVMH and Groupe Arnault to
create L Catterton, dubbed the largest global
consumer-focused investment firm.
LCGP III will target control-orientated
investments in North American high-growth
consumer companies.
It will follow the strategy of L Catterton’s
first two growth funds by seeking investments in consumer-focused companies growing at double- or triple-digit rates and requiring between $10m and $50m of capital.
L Catterton’s previous two North Americafocused growth funds, Catterton Growth
Partners II and Catterton Growth Partners,
closed in September 2013 and April 2008 at
$420m and $316m, respectively.
Mainsail closes
Fund IV on $384m
San Francisco-based growth equity
and buyout firm Mainsail Partners has
announced the final close of its fourth fund
on $384m.
Mainsail Partners IV was raised in just
two months and closed in December last
year, the firm said.
The firm was originally aiming to raise
£325m, according to SEC filings.
Fund IV will continue the investment
strategy of its predecessor, which was
closed on $216m in June 2012, backing
“bootstrapped companies” in software,
technology-enabled services and healthcare.
Mainsail has supported more than 20 bootstrapped companies in the past 13 years.
Consumer-focused L Catterton has closed its oversubscribed third growth fund
L Catterton Growth managing partner Michael Farello said,“We are delighted to close
our third and largest North American growth
fund, and thank our dedicated and loyal
limited partners for their commitment.
“L Catterton is the clear leader in global
consumer investing and our focus remains
on partnering with entrepreneurs and
great executives to develop high-growth
companies.
“Building on our proven track record,
LCGP III will focus on identifying the most
promising consumer growth concepts in the
market today.”
Big guns help Kensington close
VC and tech fund at C$306m
Ontario-based Kensington Capital Partners
has closed its latest fund-of-funds vehicle
at C$306m, exceeding its initial target of
C$300m.
The fund, Kensington Venture Fund, will
invest in Canadian-based VC funds and
technology companies.
Investors in the vehicle include BMO
Financial Group, CIBC, OpenText Corp,
Richardson GMP, Royal Bank of Canada,
Scotiabank, TD Bank Group, Torstar Corp,
and the government of Canada.
Managing director Rick Nathan said,
“This is a great time to be investing in technology in Canada.
64
“Our significant talent pool, vibrant
startup environment, and improved access
to capital – through the Kensington Venture
Fund and other funding sources – make
Canada a great place to build a technology
company and grow it to scale.”
Kensington Venture Fund has already
made investments in more than a dozen
venture capital funds, including iNovia Investment Fund 2015, Georgian Partners II,
Golden Venture Partners and Novacap TMT
VI, among others.
It has also made direct investments in
Blue Ant Media, Brightspark, Hubba, and
TouchBistro.
Q2 2016
SECTOR PERSPECTIVES: VENTURE
NYC-focused Tribeca beats
$100m target for Fund II
General Catalyst
raises biggest
fund in its history
US venture capital firm General Catalyst
Partners has closed its latest fund at $845m,
making it the firm’s largest pool of capital
raised in its 15-year history.
The capital will be split between General
Catalyst Group VIII and General Catalyst
Group VIII Supplemental, with the latter
providing continued investment to existing
portfolio companies.
With the capital from both of the new
funds, the firm said its total capital had
increased to about $3.7bn. The fund’s predecessor, Fund VII, closed at $675m in 2013.
Tribeca’s focus is exclusively on New York-based firms, or those with a presence in the Big Apple
New York based Tribeca Venture
Partners has beaten the target for its
second fund by holding a $107m final
close.
AltAssets revealed last summer that
the firm was in the market targeting
$100m for Tribeca Venture Partners II.
The fund close comes more than four
years after the firm made its debut in
October 2011 with a $100m fund.
Tribeca founders Brian Hirsch and
Chip Meakem said in a blog post that
all its existing LPs returned for Fund II.
They said, “In a broader sense, TVP
II is not about us, it’s about the incredible growth and vitality of the NYC tech
ecosystem as a whole.
“When we launched TVP in 2011
there was real scepticism that an earlystage fund of meaningful scale could be
successful focusing only on NYC.
“We disagreed and set out to prove it.
So far so good.”
Of the 25 companies in TVP I, 21 are
based in New York city with others having a NYC presence.
The pair added, “So now with a larger
fund to support the NYC tech community what kind of companies are we
looking for?
“More of the same. We’ll back
consumer and enterprise businesses. We
prefer not to rigidly define target sectors
as really big winners tend to create their
own sectors.
“Our favourite ‘sector’ is a tight
founding team applying technology to
the confluence of macro tends and underlying tech curves to create or disrupt
a huge market.”
Hirsch was a former managing
director of GSA Venture Partners and
Meakem a former managing partner
at Kodiak Venture Partners. Somak
Chattopadhyay, previously of GSA Venture Partners, also joined as a partner.
MORE SECTOR PERSPECTIVES
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65
DFJ closes venture
fund at $350m cap
Silicon Valley venture capital firm
Draper Fisher Jurvetson has closed its
oversubscribed 12th fund at its $350m
hard cap, making it $25m larger than its
predecessor.
DFJ Venture XII relied on the support of
its long-time LPs, according to the firm, as
well as the addition of a select number of
new institutions. DFJ closed its previous
fund Venture XI at $325m in February 2014,
four years after closing Fund X at $350m.
Drive Capital cruises
towards $250m target
Midwest US-focused venture capital firm
Drive Capital is almost at its target for its
second fund just two years after closing its
maiden vehicle.
The firm has registered more than $202m
for Drive Capital Fund II, according to a new
filing with the US securities regulator, putting it close to its $250m target.
Drive closed its debut fund on $250m in
February 2014, having initially looked at
raising up to $300m for the vehicle.
A total of 27 LPs have committed capital
to the most recent fund, the filing adds.
SECTOR PERSPECTIVES: CLEANTECH
Cleantech PE,VC investment hits six-year high
The value of private equity, venture capital
and development capital investment in
cleantech companies hit a six-year high last
year, despite volume falling to its lowest
level in the same period.
Total investment in the sector from the
asset classes rose 10 per cent to $19.6bn, up
from $17.8bn in 2014, according to the latest
research from Zephyr published by BvD.
The report said the increase in value was
primarily attributed to larger deal valuations
in 2015, with seven of the top 20 PE, VC
and DC transactions worth more than $1bn.
Volume declined to its lowest level
since 2009, when 318 deals were recorded.
Volume decreased year on year to 398 deals,
compared with 412 in 2014.
The two largest PE, VC and DC deals
targeting cleantech companies by value
in 2015 were joint venture investments.
The largest of these was Abengoa and EIG
Global Energy Partners forming Abengoa
Projects Warehouse 1, in a transaction worth
$2.5bn in March.
That was followed by a $1.9bn deal
involving Actis and Mainstream Renewable
Power, creating Netherlands-based renew-
Olympus buys stake
in recycler Li Tong
Buyout house Olympus Capital Asia has
bought a $45m stake in Hong Kong-based
electronics recycler Li Tong Group.
The firm said in a statement that it has invested the capital for an undisclosed stake.
Li Tong recycles mobile phones, game
consoles and other electronic equipment
for technology giants including Apple and
Microsoft.
Founded in 2000, the company has 20
plants worldwide, including China, the US
and Japan.
Olympus said electronic waste from mobile phones, computer hardware and other
devices was expected to grow 18.3 per cent
a year from 2010 to 2017 and reach more
than 40 million tonnes.
Cleantech investment from private equity and venture capital hit a six-year high of $19.6bn in 2015
able wind and solar energy generator Lekela
Power. Third place was taken by Apollo
Global Management’s acquisition of Protection One from GRCR for $1.5bn.
The top three transactions of 2015 were
worth $1.5bn or over and represented a
combined 30 per cent of total PE, VC and
DC value, the report added.
In total, nine of the top 20 deals involved
companies based in the US, while businesses
in the Netherlands, Germany, Spain and
Singapore were also targeted.
KPCB and Matsui in C$58m round
for agro-data firm Farmers Edge
US VC heavyweight Kleiner Perkins
Caufield & Byers (KPCB) and Mitsui are
among investors in a new C$58m round for
Canadian agriculture platform Farmers Edge.
The company, which provides data management solutions for the agriculture sector,
will invest the new funds in the expansion
of the data science team, new product
development, and global growth in South
America, Australia and Eastern Europe.
Kenji Otake, general manager at Mitsui,
who will join the Farmers Edge board of directors, said, “Today, Mitsui is responsible
for the procurement of 17.5 million tons of
food resources each year, including grains,
corn and soybeans, and we are committed
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to increasing those levels, in a sustainable
manner, as global population rises.
“Meeting that global goal is what drove
our first investment in Farmers Edge.
Today, as Farmers Edge demonstrates its
ability to operate in regions like Brazil, that
lack traditional infrastructure to support
technology-enabled agriculture, our strategic alignment deepens.”
Brook Porter, partner at KPCB’s Green
Growth Fund, added, “There is a huge shift
under way in agriculture as technology
continues to enable the digitisation of farming. Reducing costs while also reducing
environmental impact is more important
than ever.”
Q2 2016
SECTOR PERSPECTIVES: CLEANTECH
EIP holds $303m final close for
environment-focused Fund III
EIP has held a $303m close for its third fund, which targets environmental mitigation for wetlands
Environmental land managementfocused private equity firm Ecosystem
Investment Partners has held a $303m
final close for its oversubscribed third
fund.
The firm easily beat its $200m target
for Ecosystem Investment Partners III,
which targets the land-based environmental offset markets established to
mitigate the impact from developments
to wetlands, streams and other natural
resources throughout the US.
EIP said it received strong support
from its existing global investor base,
while adding a new and diverse group
of institutional investors, including pension funds, endowments, foundations,
financial institutions and families.
Monument Group acted as a placement agent for the fund.
EIP managing partner Fred Danforth
said, “We are extremely pleased to be
partnering with such an esteemed group
of new and existing investors, closing
our third fund at a level well above our
target and in such a rapid time frame.
“The entire EIP team is excited at
the prospect of providing strong riskadjusted returns to our investors, while
also being an integral part of restoring
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and conserving critical natural resources
throughout the US.”
EIP’s investment strategy addresses
the demand from sectors to meet the ‘no
net loss’ of natural resources requirements of federal, state and local environmental laws.
The firm seeks to produce strong,
risk-adjusted returns for investors by
servicing this demand through ecological restoration and protection of critical
conservation properties.
EIP managing partner Nick Dilks
added, “EIP is eager to expand our investing activity in this segment, bringing
large-scale, high-quality and cost-effective environmental offset solutions to our
nation’s energy, mining, public works,
industrial and commercial developers.”
The firm said it expects to tap Fund III
to make 10 to 15 investments across the
US in markets, with the largest and most
active need for land-based environmental offsets.
It targets investments of between
$10m and $40m, based on properties between 1,000 to 30,000 acres in size and
deemed conservation priorities by major
conservation organisations or state and
federal natural resource agencies.
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VC vets join Gates
and Zuckerberg in
clean energy fund
Venture capital veterans Vinod Khosla and
John Doerr have joined Facebook founder
Mark Zuckerberg and Microsoft founder Bill
Gates in a new initiative aimed at increasing
private investments in clean energy.
Announcing the launch of the Breakthrough Energy Coalition, Zuckerberg
said he would be joined by high-net-worth
individuals and business people including,
among others, Virgin Group founder Richard
Branson, George Soros, Amazon founder and
CEO Jeff Bezos, and LinkedIn founder Reid
Hoffman.
Also taking part are Chris Hohn, founder
of the Children’s Investment Fund; Jack
Ma, founder of Alibaba; Hasso Plattner, cofounder of SAP; Neil Shen, founding managing partner of Sequoia Capital China; Prelude
Ventures’ co-founders Nat Simons and Laura
Baxter-Simons; and Hewlett Packard CEO
Meg Whitman.
The Breakthrough Energy Coalition will
work with countries participating in the Mission Innovation initiative, launched recently
by US President Barack Obama.
Twenty countries, including the world’s
most populated – China, India, the United
States, Indonesia, and Brazil – have committed to double their investments in clean
energy research and development over the
next five years.
Omnes offloads 55%
stake in SLG Recycling
French private equity firm Omnes Capital has
sold its 55 per cent stake in SLG Recycling, a
French waste management firm.
The business, which had annual revenue of
€85m in 2014, was sold to French company
Derichebourg Environnement, according to
Omnes Capital’s website.
Derichebourg is believed to be taking over
the whole company. In addition to Omnes’
share, it is also buying the remaining 45 per
cent share from SLG’s founders.
REGIONAL PERSPECTIVES
ASIA 68
AFRICA 74
MIDDLE EAST 72
LATIN AMERICA 78
Foreign LPs up exposure to South-East Asia
Pension funds and insurance companies
have increased their exposure to South-East
Asia, with the region quickly becoming the
core private equity market on the continent,
according to Northstar Group co-managing
partner Ashish Shastry.
Traditionally, China and India have been
at the forefront of the Asian private equity
market, but with the likes of Singapore and
Indonesia going from strength to strength,
investors are turning to the sub-continent.
Shastry told Limited Partner, “There appears to be continuing appetite from foreign
LPs for South-East Asia.”
Despite the LP appetite for the region’s
funds being strong, because of the volatility
in the markets they are becoming increasingly focused on GPs with long track records
rather than new GPs, according to Shastry.
The Northstar Group is a Singaporeheadquartered private equity firm, managing
more than $2bn in committed equity capital.
It looks to invest in growth companies in
Indonesia, and to a lesser extent other countries in South-East Asia.
Shastry added, “Overall, emerging markets volatility has generally caused a ‘flight
Pension funds and insurance companies are increasing their exposure to South-East Asia
to quality’ among South-East Asian GPs.
The make-up of LPs continues to evolve,
with pension funds and insurance companies
increasing exposure, focused on the top-tier
GPs. Funds of funds, sovereign wealth funds
and DFIs continue to be active as well.”
According to research by Preqin and the
Singapore Venture Capital and Private Eq-
VIG flips Burger King
to Affinity Equity
Korean private equity investor VIG Partners
has sealed the exit of the country’s Burger
King franchise to Affinity Equity Partners in a
KRW210bn ($170m) deal.
VIG picked up Burger King Korea in 2012,
when the firm was known as Vogo Investment, in a
KRW110bn deal from Doosan Group.
Industry reports placed the buyout amount
at about 11-times the company’s KRW18.4bn
EBITDA from 2015.
Burger King has more than 240 restaurants in
the country thanks to rapid expansion under VIG’s
ownership.
VIG, which has been active in Korea for more
than a decade, targets the mid-market sector and has
backed companies in industries including financial
services, consumer goods and online and mobile.
uity Association, PE funds from the ASEAN
region of South-East Asia saw the average
fund size hit a record $609m in 2014.
The research also showed appetite for
investment opportunities in the ASEAN
region, which includes Indonesia, Singapore, Thailand , Brunei, Laos and Vietnam,
remained substantial.
GGV starts $880m fundraise
for sixth early-stage vehicle
US and China-focused early-stage
investor GGV Capital has launched its
latest venture capital fund, aiming to
raise $880m, an SEC filing shows.
It is not clear if the initial offering
amount is the target for the fund, which
will be larger than its predecessor.
Fund V’s final close on $620m was
in May 2014. The fundraise brought
GGV’s total assets under management to
more than $2.2bn.
No LP commitments have been registered yet, according to the documents
filed with the US securities regulator.
However, Los Angeles County Employees Retirement Association (LAC-
68
ERA) has announced a $100m commitment to three of GGV Capital’s venture
funds, including GGV Capital VI, GGV
Capital VI Plus and GGV Discovery I.
The size of commitments to each individual fund have not been disclosed.
GGV Capital VI will target investments in businesses with significant
track record in the US and China, and
GGV Capital VI Plus will make followon investments in GGV VI’s portfolio
companies. GGV Discovery will seek to
invest in startup businesses.
GGV’s typically targets deals in the
internet and digital media, cloud and
mobile sectors.
Q2 2016
REGIONAL PERSPECTIVES: ASIA
New Japanese-focused fund
launched by CPPIB and GLP
The CPPIB has launched a new Japanese-focused fund with Singapore real estate group GLP
Canada Pension Plan Investment Board
(CPPIB) and Singapore-based logistics
real estate group GLP have launched
their second joint development venture
fund in Japan.
GLP Japan Development Venture II
(GLP GDV II) is a 50-50 joint venture
and is seeking to raise $2bn over three
years. So far the fund has received commitments of JPY100bn ($875m).
GLP JDV II will kick-off with GLP’s
currently largest development project in
Japan – GLP Nagareyama, which is a
3.4 million sq ft logistics park in Greater Tokyo. The project will be developed
in phases, with the total investment cost
estimated at JPY59bn.
GLP and CPPIB launched their first
joint fund, GLP Japan Development
Venture I, in 2011. Fund I has expanded
twice since that time and has invested
92 per cent of its available capital and
currently manages $2.4bn worth of projects in various phases of development.
The partners continue to see strong
demand for logistics infrastructure.
Jimmy Phua, managing director and
head of Asian real estate investments at
CPPIB, said, “The strong fundamentals
in the Japanese logistics market, as well
as GLP’s attractive development pipeline, make GLP JDV II a compelling
investment opportunity for a long-term
investor like CPPIB.”
Matrix inks $500m for China fund
Venture capital firm Matrix Partners
has raised $500m for its latest Chinafocused fund.
Matrix Partners China IV has
received commitments of $500m from
42 LPs, according to a with a filing
with the US Securities and Exchange
Commission.
This matches the total amount registered to be sold, although it is not clear
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from the filing whether this is the target
or hard cap for the fund.
Matrix raised its Fund III in April
2014 on $350m, the same size as the
firm’s second China fund, which was
closed in 2011.
Matrix, which is based in Boston and
has offices in Beijing and Shanghai,
currently has more than $1bn under
management in its China-focused funds.
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IDG back in market
with new $200m
India-focused fund
The Indian arm of global venture capital firm
IDG Ventures has registered its third Indiadedicated pool with the SEC, seeking $200m
in LP commitments.
No capital has yet been registered for IDG
Ventures India Fund III, according to the
filing with the US SEC.
It is not clear from the documents whether
$200m is the target for the fund, but the
sought amount is higher than the $175m the
firm raised for its second fund, targeted at
early-stage technology investments in India.
The Bangalore-based firm launched IDG
Ventures India Fund II in 2013. India Fund I
was closed on $150m in September 2006.
IDG Ventures is a global network of technology venture funds with more than $3.6bn
under management, more than 220 investee
companies and 10 offices across Asia and
North America. Its lead sponsor is the International Data Group, the world’s largest IT
media company.
BlackRock to launch
Asian FoF vehicle
Asset management firm BlackRock is
reportedly looking to launch a new private
equity fund-of-funds pool focused on Asia,
Limited Partner understands.
The new fund will invest in buyout
funds currently being raised, while also
co-investing in underlying companies and
taking stakes in existing pools, according to
Bloomberg, which cited sources with knowledge of the matter.
No target or a hard cap has been revealed,
and it is unclear whether the fund has began
the marketing process.
However it will be the first Asian-focused
fund raised by BlackRock since its acquisition of Swiss Re AG’s private equity
business .
In July 2012, the US investment manager
bought Swiss Re’s Private Equity Partners
AG for an undisclosed amount.
REGIONAL PERSPECTIVES: ASIA
Warburg exits QuEST to Advent, Bain and GIC
Global private equity firm Warburg Pincus has
agreed to sell its 20 per cent stake in QuEST Global
Services to Advent International, Bain Capital and
GIC for some $350m.
This is nearly twice the initial valuation of the
stake in the Asian-based outsourcing company.
Last November reports said three private equity
bidders were close to launch a final offer for the
stake, then valued at $200m.
QuEST, which is headquartered in Singapore but
runs much of its operation from India, works in areas
including aerospace and defence, transportation,
medical devices, power, and oil and gas.
Warburg invested $75m for a minority stake in
QuEST in 2010, although it is not known if it has
altered the size of its holding in the intervening years.
Commenting on the sale, Vishal Mahadevia,
co-head of Warburg Pincus India, said, “The team
at QuEST has built a market-leading engineering
services company in a very short span of time, and
Warburg Pincus has been fortunate to be part of this
journey.
“We are pleased to have partnered with QuEST,
as the business has undergone significant growth
and development, and wish the company continued
success.”
AltAssets reported last October that Warburg
and Silver Lake exited their stakes in Atlanta-based
exchange operator Intercontinental Exchange (ICE)
for $5.4bn, with Silver Lake scoring 2.5x return.
A month later Warburg closed its heavily-oversubscribed 12th global fund significantly above the
$12bn hard cap, having only launched the vehicle
in May.
Qiming looks to raise
$620m for VC fund
Chinese early-stage investment firm Qiming Venture
Partners is looking to raise up to $620m for its fifth
venture capital fund.
Qiming Venture Partners V is yet to receive any
commitments, according to a US filing.
The firm’s previous fund, Qiming Venture Partners
IV, closed at $500m in April 2014. LPs included
Princeton University, Robert Wood Johnson
Foundation, New York University, Pantheon,
Commonfund, Emerald Hill and UTIMCO, though it
is not clear if any will re-up into Fund V.
Warburg has sold its stake in aerospace and defence-focused QuESt for $350m
Sequoia closes fund at $920m
California-based VC firm Sequoia
Capital has reportedly closed its fifth
India-focused fund at $920m, Limited
Partner understands.
The fund, Sequoia Capital India V
has closed after just three months on the
road, according to the Economic Times.
The launch of Fund V came just 18
months after the firm closed its predecessor at $530m, bringing total capital
dedicated to the country to about $2bn.
The fund is likely to be primarily
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used to invest in technology, consumer
and healthcare businesses in India and
South-East Asia.
Its Indian portfolio companies
includes Just Dial, Freecharge, Zomato,
Oyo Rooms, Grofers, RoadRuneeer and
CraftsVilla, among others.
Sequoia targets investments in earlystage rounds in new startups and growth
stages in more mature companies.
The ticket size typically ranges from
$100,000 and $1m in seed stage.
Q2 2016
REGIONAL PERSPECTIVES: ASIA
Apax offloads Tommy Hilfiger
China holding to partner PVH
Apax has sold its 55 per cent stake in the Tommy Hilfiger China joint venture to partner PVH
European private equity major Apax
Partners is selling its 55 per cent stake in
its Tommy Hilfiger joint venture in China
to partner PVH.
The stake in the joint Chinese company, TH Asia, is Apax’s last holding in
Tommy Hilfiger, which the firm invested
in ten years ago.
Apax acquired Tommy Hilfiger
through a $1.6bn take-private deal in
2006, before selling everything except
the China unit stake to PVH in a $3bn
deal four years later.
The current sale was part of the 2010
agreement with PVH and the price for
the stake is around $172m, net of cash of
$100m.
Richard Zhang, equity partner and
head of Apax in Greater China, said, “As
a leading global investor in the fashion
and consumer space, Apax has been
privileged to partner with PVH to build
the Tommy Hilfiger China joint venture
and management team, leading to a significant expansion of the business.
“As a result of these efforts and the
work of the management team, Tommy
Hilfiger has become one of the fastest
growing and most profitable fashion
brands in China.”
Paragon Indian fund hits $50m
Paragon Partners has held a first close
for its India-focused mid-market fund
at $50m.
Indian PE investor Siddharth Parekh
and entrepreneur Sumeet Nindrajog
launched the $200m fund in November.
The fund has won cash from India
Infoline, Edelweiss Group, Infina Finance Private and Fairfax, among others.
Paragon Partners Growth Fund I
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(PPGF-I) will focus on five core sectors,
including consumer discretionary, fin­
ancial services, infrastructure services,
industrials and healthcare services.
It plans to invest in 10 to 15 midmarket companies in India, with an
average deal size of $10m to $20m.
PPGF-I has already invested $10m in
Capacite Infraprojects, a Mumbai-based
construction company.
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Norwest wraps up
fundraising for
Fund XIII on $1.2bn
Global VC investor Norwest Venture Partners
has closed its latest vehicle, Norwest Venture
Partners XIII, on $1.2bn.
This is the third consecutive fund above
$1bn Norwest has raised, and it brings total
assets under management to over $6bn.
Promod Haque, senior managing partner
at Norwest, said, “Norwest has a long track
record of working with the most innovative
companies across geographies, sectors and
stages, and our new fund helps us continue
this tradition.
“As a firm, entrepreneurs have relied on
our team for decades not only as business
partners, but for expertise across every part
of their business.
“With the new fund we’ll be able to reach
even more entrepreneurs and help them on
their paths to building great companies.”
500 Startups launches
$10m Vietnam fund
US venture capital firm 500 Startups has
launched a new regional fund focused on
investing in Vietnam, with a target size of
$10m.
The firm has announced it will seek 100
to 150 investments in Vietnam-based startup
businesses, committing up to $100,000 per
deal, with select deal ticket sizes going as
high as $250,000.
Target sectors will be B2B and enterprise
SaaS, fintech and e-commerce, 500 Startups
partner Eddie Thai said in a blog post.
Thai, a Vietnam-based TMT deal specialist with more than six years of investment
experience, will lead the investments from
the new fund together with Binh Tran.
Tran is based in San Francisco and has
more than 20 years’ experience in technology-related investments.
Targeting Vietnam was based on the fact
that it is seen as a big, fast-growing market
with high technology consumption but underserved in terms of seed-stage venture capital.
REGIONAL PERSPECTIVES: MIDDLE EAST
FIMI raises largest ever Israeli fund at $1.1bn
Israel-based private equity firm FIMI
Opportunity Funds has raised $1.1bn for its
sixth fund, which was targeting $1bn.
The fund, backed by domestic and
international LPs, received about $2bn of
interest and closed after just six months in
the market.
FIMI said it intended to continue with
its strategy of supporting Israeli companies
and aims to make investments of $250m
per year.
The latest vehicle is the largest ever
raised by an Israeli fund manager, according
to the firm, and is considerably larger than
the predecessor fund FIMI V which closed
on $850m in 2012.
The fifth fund is the only one still
investing, with FIMI IV and FIMI III fully
invested and the first two funds realised.
The new fundraise brings the total
amount of capital FIMI has collected from
LPs to date to $3.11bn, of which $2.01bn
was raised for Funds I to V.
Since inception in 1996 the firm has
completed 78 investments and 48 exits, according to its website.
FIMI typically targets mature and profitable Israeli and Israeli-related businesses
Tech security firm wins
heavyweight backers
Singapore sovereign investor Temasek is
among the latest backers of Israel online
security company creator Team8 through a
$23m investment round.
Bessemer VP, Cisco and Alcatel-Lucent
are already investors, while new capital
came from At&T, Accenture and Nokia.
Team8 was co-founded by Nadav Zafrir,
Israel Grimberg and Liran Grinberg, all veterans of Israel’s Unit 8200 – the equivalent
of America’s National Security Agency.
Last year Team8 launched Illusive Networks, which picked up a $22m Series B
round led by New Enterprise Associates.
Temasek and fellow new Team8 investor
Mitsui have come on board to help extend
the company’s reach into Asia.
FMI has raised $1.1bn for its sixth fund, which received $2bn if interest and closed after six months
with high revenue generation and growth
potential. It also has a track record in the
US market, currently holding 17 portfolio
companies that are traded on US stock
markets. As many as 44 of FIMI’s portfolio
companies have bought, created or built
assets in US. FIMI’s assets under management from US investors are around $1bn.
Tel Aviv-based TLV Partners raises
$110m for maiden startups fund
Tel Aviv-based venture capital firm TLV
Partners has collected $110m for its first
fund to focus on investing in A-round
startups.
The maiden pool has received commitments from 23 LPs, bagging its first sale in
July last year, a filing with the US Securities
and Exchange Commission shows.
It is not clear if the total offering amount
of $110m that has been registered is the
target for the new vehicle or its hard cap.
TLV was co-founded by managing partners Rona Segev and Eitan Bek.
Segev, whose speciality is enterprise
software and cyber security, was previously
general partner at Pitango and Evergreen,
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and was head of enterprise software in both
funds. She has a long-term experience in
investing and partnering with businesses in
the software sector.
Bek is focused on mobile, internet of
things (IoT), marketing analytics and fintech investments at TLV.
He has also previously worked for
Pitango Venture Capital as a general partner
and was heading the firm’s Silicon Valleybased operations since 2007.
TLV made its first investment in October
last year, backing a $4m Series A round for
Scalock, a security company for virtual containers. The round was joined also by Israeli
entrepreneur Shlomo Kramer.
Q2 2016
REGIONAL PERSPECTIVES: MIDDLE EAST
Gulf collects $175m for
first close of second fund
Gulf Capital is well on the way to $250m for Fund II, targeting mid-market companies
Middle Eastern private equity major
Gulf Capital has held an AED644m
($175m) first close for its latest credit
fund, putting it well on the way to its
target.
The firm is hoping to gather up to
$250m for Gulf Credit Opportunities II,
with a hard cap set at $300m.
Gulf said the fund would target financing for mid-market companies and
private equity sponsors operating in the
Middle East, North Africa, Turkey and
Sub-Saharan Africa.
Gulf Credit Partners, the managers
of Gulf Capital’s credit funds, will be
investing in companies that generate
revenues of between $25m and $250m.
They must operate in growth sectors
that are non-cyclical in nature, have
experienced management teams, a good
track record of financial performance
and robust cash-flow generation.
Karim El Solh, Chief Executive
Officer of Gulf Capital, said, “I am
particularly delighted by the size of the
first closing of our second credit fund,
as well as by the quality of the regional
and global institutional investors that
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are coming in this first closing. Our first
credit fund has delivered a high cash
yield and attractive returns, and has
positioned Gulf Capital as the leading
credit and mezzanine asset manager in
the Middle East.”
Gulf Credit Partners head Walid
Cherif added, “The mid-market is still
facing financing challenges in a region
where the SME sector plays a critical
role in the growth and stability of the
economy.
“Asset-light companies which operate in non-cyclical growth sectors still
find it difficult to obtain financing from
the traditional debt markets, even when
they have experienced management
teams, a good track record of financial
performance, a robust cash flow generation and strong corporate governance
practices.”
The new fund is expected to make
10 to 12 investments of $15m to $30m
each throughout its 10-year lifespan.
Gulf said its debut credit and mezzanine fund, which closed on about
$221m in 2013, is about 90 per cent
invested.
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Turquoise teams
up with REYL to
launch Iran fund
Iranian financial services group Turquoise
Partners and Switzerland’s REYL Finance
have launched a joint fundraise, targeting
$200m over the first six months of 2016.
Turquoise said the vehicle would be broadly focused on the Iranian market, taking advantage of the increased consumer demand.
Target sectors will be consumer goods,
pharmaceuticals and hospitality.
Rouzbeh Pirouz, chairman of Turquoise
Partners, said, “Iranian companies are in
great need of investment which can drive opportunity and financial restructuring that will
allow them to realise tremendous potential.
“Iranian companies are more often than
not suffering from ineffective management
and are in great need of investment, we hope
this fund will allow this opportunity for
companies to be turned around.”
Pasha Bakhtiar, partner at CEO of REYL
Finance’s Dubai-based arm, said, “We
believe this venture provides an excellent opportunity for international investors looking
to gain exposure to the Iranian growth story.
“Turquoise and REYL together bring a
robust, thorough and diligent understanding on how to invest in Iran under the new
economic environment.”
Bidding stalls on Al-Raya
supermarket chain
A private equity buyout of Saudi Arabian
supermarket chain Al-Raya For Foodstuff
appears to have stalled over differences in
valuation.
Abraaj Group and Fajr Capital have been in
talks about picking up a majority stake in the
business, according to a report by Bloomberg,
which said those negotiations had broken
down amid slowing economic growth and
consumer spending in the country.
A previous report by Reuters said Apollo
was also interested in a potential $460m buyout of Al-Raya, currently backed by Levant
Capital and Rohatyn Group.
REGIONAL PERSPECTIVES: AFRICA
Verod smashes target in $115m Fund II close
Nigeria’s Verod Capital has announced
the final close of its second growth fund
on $115m, exceeding the initial target of
$100m.
AltAssets reported in January about the
expected oversubscription of the vehicle.
LPs committed to Fund II include funds
of funds, asset managers, sovereign wealth
funds, pension funds, family offices and development finance institutions, Verod said.
All the investors have previous experience with funds from West Africa and other
emerging markets.
Danladi Verheijen, co-founder and the
managing partner of Verod, said “We were
able to attract an extremely high-calibre set
of investors and we look forward to working with them to support growth businesses
in our market.”
The new fund will aim at building a
diversified portfolio, targeting businesses
in sectors such as light manufacturing,
consumer goods and services, business services, agriculture, education and financial
services.
A quarter of the raised capital has already
been invested in four companies, including agriculture business Shaldag, custodial
services provider Union Trustees, fruit-juice
and dairy-maker Niyya Food & Drinks,
and stockmarket settlements agent Central
Amadeus backs
insurance startup
UK-based technology investor Amadeus
Capital Partners has backed South African insurance startup Hepstar with $2m in funding.
Hepstar, a Capetown-based digital insurance distributor, said it plans to use the new
investment to expand its global reach and
accelerate technological development.
Amadeus investment partner Andrea
Traversone said: “Amadeus Capital is excited
to be involved in Hepstar. They are solving
a real problem regarding insurance distribution during a time when ancillary revenue
is becoming increasingly important for
e-commerce companies.”
Nigerian-based Verod Capital has announced the final close of its second growth fund on $115m
Securities Clearing Systems (CSCS). The
fund, which started looking for deals in
2014, has also made a commitment for a
fifth investment.
Commenting on investment strategy, Eric
Idiahi, co-founder and partner at Verod, said,
“As evidenced in our previous and current
portfolio, we are generating attractive returns
while also creating substantial co-investment
opportunities for our investors, and developing economic, environmental and social
impact for the local economy.”
Verod was founded in 2008. Businesses
in its portfolio include South African upstream oil and gas exploration company
Sacoil, a 2013 investment.
Previous acquisitions include manufacturing company Rotoprint and media company Spinlet – both based in Nigeria. Verod
had backed both companies in 2011.
Verod invests between $3m and $15m per
deal, targeting IRR of 35 per cent, the firm
says on its website. It typically holds the
assets for between four to seven years.
Enko bags Soros brothers, ADB
in $83m pan-African fund close
Soros Brother Investments and the African
Development Bank were among backers
of Enko Capital Managers as it reached an
$83m final close for its pan-African fund.
Enko Africa Private Equity Fund also
picked up commitments from Proparco and
a collection of European investors managed
by Massena Partners in its second close.
ADB and Soros Brothers had acted as
cornerstone investors, while other capital
came from unnamed institutional, family
office and high net worth investors.
Enko said EAPEF would aim to provide
74
growth capital to late-stage companies, with
a particular focus on those with the potential
to list on local or regional stock exchanges.
The firm expects to complete eight
transactions over the remaining investment
period, building on its first investment in the
financial services sector in Zambia.
It said the fund’s goal was to exit these
companies after three to four years.
Enko managing partner Cyrille
Nkontchou said, “We now have a solid
platform from which to build a portfolio of
attractive private equity assets in Africa.”
Q2 2016
REGIONAL PERSPECTIVES: AFRICA
Actis sells EMP to Warburg
for more than 3x return
Electronic payments firm EMP has been sold to Warburg Pincus-backed Network International
Emerging markets-focused PE firm
Actis has scored a return of more than
three times from the sale of Emerging
Markets Payments (EMP) to Warburg
Pincus-backed Network International.
The deal, which was still pending
regulatory approval as Limited Partner
went to press, values the Africa and
Middle East-focused payments business
at more than $300m, according to a
source familiar with the matter.
The parties involved did not comment
on financial details.
Global private equity firm Warburg
Pincus which has been an investor in
Network International since late last
year, said EMP is a significant acquisition for the company.
Warburg and fellow PE investor General Atlantic joined forces to buy a 49
per cent stake in Network International
from the Abraaj Group in December
2015. The company is said to be one of
the big players in the payment solutions
provider in the Middle East and North
Africa region (MENA).
Commenting on the deal, Dan Zilberman, managing director at Warburg
Pincus said, “This is creating by far
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the largest payments provider in the
Middle East and Africa by combining
the number one player with the number
two player.
“We will integrate the two businesses
and continue growing through acquisitions and organically. We will use their
platform to expand further into Africa.”
Actis set up EMP in 2010 as a response to the growing demand for payments infrastructure in Africa and the
Middle East. The region is considered
among the fastest growing payments
markets globally.
Rick Phillips, partner at Actis commented, “Actis’ on-the-ground presence
in Africa helped us to see how the
economy was shifting from cash to
electronic payments. As a result, in
2010 we set out to create the region’s
leading payments business.
“The market is growing fast but is
fragmented, so we initiated a buy-andbuild strategy, attracting a world-class
management team led by Paul Edwards.
“Together, we successfully acquired
businesses in Egypt, Jordan and South
Africa and merged these three businesses into the rebranded EMP platform.”
75
Siparex holds
€20m first close for
African SME fund
French private equity firm Siparex has held
a first close on €20m for Fonds de CoLocalisation Franco-Tunisien (FCFT), a fund
it co-manages with AfricInvest.
The new fund, focused on investments
in small businesses based in Tunisia and
France, is backed by institutional LPs Bpifrance and Caisse des Dépôts et Consignations (CDC) Tunisie.
The vehicle, which has a 10-year lifespan,
will be aimed at developing stronger economic relations between France and Tunisia.
It will support SMEs with high growth potential and help them expand their operations
in both countries.
The fund will target a variety of sectors including IT and communications, healthcare,
pharmaceuticals, agriculture, manufacturing,
electronics, transportation, logistics, tourism
and renewable energy.
Apart from the FCFT, Siparex manages
two regional investment vehicles focused on
the Rhône-Alpes region and the north-west
region of France.
Abraaj deploys 70%
of Africa Fund II
The Abraaj Group is left with only 30 per
cent undeployed capital in its second North
Africa-focused fund, which closed on $375m
last summer.
The Dubai-based private equity investor
held the final close for the oversubscribed vehicle in August 2015. That fundraise, initially
targeting $250m, brought the firm’s total
investments in Africa last year to $1.37bn.
Now, just six months later, Abraaj North
Africa Fund II (ANAF II) has 70 per cent
deployment of capital, a source told AltAssets.
Abraaj has said the fund is targeting “wellmanaged, mid-market businesses in Egypt,
Morocco, Algeria and Tunisia”.
European and North American LPs accounted for 63 per cent of the capital committed in ANAF II.
REGIONAL PERSPECTIVES: AFRICA
‘Sub-Saharan Africa under-represented in PE’
The Southern African Venture Capital and Private Equity Association is talking up investment in the region
through 2016 on the back of strong ten-year returns.
SAVCA chief executive Erika van der Merwe says
despite good results from the asset class in recent years
it is still under-represented in sub-Saharan Africa, presenting investors with an opportunity to access a region
experiencing strong economic growth and generating
robust returns.
Research by the industry group and RisCura in 2014
said 80 per cent of investors responding expected African private equity to outperform African listed equity
over the coming decade.
Van der Merwe said the South African private equity
industry in particular has delivered healthy returns for
investors. She believes the industry, which has a 30-year
track record of deal-making, exits and fundraising, and
which now has an expanding regional reach, is set to
play an important role in the continued growth of the
asset class in other African markets.
The latest RisCura-SAVCA South African Private
Equity Performance Report showed that by mid-2015
the South African private equity industry delivered a
ten-year IRR of 21.7 per cent, up from 20.5 per cent in
March 2015.
That performance compares with the 17.1 per cent
return from the FTSE/JSE All-Share Total Return
Index (ALSI) over the equivalent 10-year period.
Van der Merwe said the South African private equity
industry, representing more than ZAR170bn ($10bn) in
assets under management, is gradually maturing.
Ethos sells S. African
tech firm CQS for $13m
South Africa-based private equity firm
Ethos has closed the sale of its long-term
investment in CQS Investment Holdings to
Adapt IT for ZAR217m ($13.2m).
Ethos took over the technology business in 2008 in collaboration with the
management and investment firm Kapela.
The investment was made from the firm’s
Technology Fund I.
Kapela and CQS’ management will
receive shares in Adapt IT, while Ethos is
selling its entire interest in the company.
Adapt IT paid ZAR160m in cash and the
rest in shares.
Sub-Saharan Africa is still lagging in terms of private equity investment
Dutch-based EM investor XSML in
first close for African Rivers Fund
Amsterdam-based emerging markets investor XSML has held the first close for its
second fund under management on $45m.
The African Rivers Fund has received
commitments from all three investors that
backed XSML’s maiden fund, including the
IFC, Dutch development bank FMO and
Canada’s Lundin Foundation.
Fund II has also attracted a few new LPs,
including Belgium Investment Company for
Developing Countries (BIO), UK development finance institution CDC Group, the
Dutch Good Growth Fund and the FISEA,
76
an investment fund focused on Sub-Saharan
Africa, held by the French financial institution AFD Group and managed by French
development finance investor Proparco.
XSML said its second fund would continue the strategy of its debut vehicle, Central Africa SME Fund, which is focusing
on small businesses in the central African
region covering Democratic Republic of
Congo, Uganda, Republic of Congo, Burundi and the Central African Republic.
Fund I, which closed on $19m, is fully
invested in 32 SMEs.
Q2 2016
REGIONAL PERSPECTIVES: AFRICA
54 Capital invests $42m in
Ethiopan drug maker Addis
Addis Pharmaceutical has won $42m backing from 54 Capital
Africa-focused private equity firm
54 Capital has backed Ethiopia’s drug
manufacturer Addis Pharmaceutical
Factory with $42m.
The firm has made an initial investment of $30m with an option to provide
further $12m in financing, which Addis
plans to use for improving production
capacity and enhancing its product
portfolio.
With the local government putting
a priority in its future development,
Ethiopia’s pharmaceutical sector is
expected to growth to $1bn by 2018 at
the latest.
Saad Aouad, founder and CIO of 54
Capital, said, “The Ethiopia pharmaceu-
tical sector is one of the most exciting
industries in the country and is poised
to witness a high level of demand in the
coming years.
“Through our investment in APF we
will be both partnering with EFFORT,
an investment group dedicated to transforming the Ethiopian business landscape, and investing in one of the leading companies in the country – marking
our recognition of the importance of the
sector in Ethiopia and our continued
commitment to the country.”
54 Capital was founded in 2013. That
year the firm chose to invest a total of
€5m in Morocco’s largest private university, UPM.
Abraaj buys into Tunisia’s SAH
Middle East-based private equity group
Abraaj is buying a 49 per cent stake
in JM Holding, the parent of Tunisia’s
personal hygiene products maker SAH.
Capital for the investment comes
from Abraaj’s North Africa Fund II,
which closed on $375m last August.
Demand for household and personal
care products in Africa has been on
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the rise in recent years as the growing
population’s need for affordable goods
increases and consumer wealth grows.
Ahmed Badreldin, MENA regional
head at Abraaj, said: “Fuelled by rising
disposable income and market necessity,
the opportunity for household and personal care products in Africa is poised
to grow even further.”
77
Old Mutual grabs
stake in S. African
firm In2food
The private equity arm of South African
investment firm Old Mutual has picked
up a minority stake in convenience food
manufacturing company In2food.
The company, which is also based in South
Africa, provides fresh and prepared produce,
prepared convenience meals, beverages,
snack products and baked goods.
Old Mutual Private Equity investment
principal Mohsin Cajee said, “We are excited
to partner with In2food’s founders, fellow
shareholders and management, who have
built a wonderfully successful business.
“We are pleased to invest in a sector
directly linked to the consumer food market
with relatively defensive characteristics.”
Last December OMPE reportedly acquired
a 70 per cent stake in South African sports
equipment retailer MoreCorp in a deal worth
more than ZAR300m ($20.9m).
Mediterrania grows
Cepro 580% and exits
European private equity firm Mediterrania
Capital Partners has sold its stake in Algerian
nappy and sanitary-pad maker Cepro to the
Abraaj Group.
The deal marks the end of more than six
years of Cepro being in Mediterrania’s portfolio, after buying a minority stake in 2009.
Although financial terms of the deal were
not disclosed, Mediterrania said the business
had grown its annual revenue by 580 per cent
by December last year, from €10m in 2009.
The company’s annual sales of nappies
increased by 400 per cent during the same
period to 600 million sold in 2015.
EBITDA had a compound annual growth
rate of more than 50 per cent between 2009
and 2015, it added.
Mediterrania CEO and managing partner Albert Alsina said, “We are extremely
pleased with the evolution of the company
during the time of our partnership.”
REGIONAL PERSPECTIVES: LATIN AMERICA
Talde to hold final close of LatAm equity fund
Spanish venture capital firm Talde expects
the final close for its new growth fund
targeting Latin American expansion to be
in June this year, general manager Idoia
Bengoa told Limited Partner.
Talde Growth Capital had raised €67m
of the €100m target at the mid-December
first close, and has a hard cap set at €150m,
according to Bengoa.
She said existing investors had committed more than 40 per cent of the new fund.
At the first close, institutional investors
accounted for 62 per cent of the committed
capital, another 13 per cent came from family offices and the ICO Fund has provided
25 per cent of the capital.
Commenting on the fundraising environment, Bengoa said, “We have the advantage
of having a very solid investor base thanks
to our long experience.
“Where we found more difficulty is internationally, since this was the first time that
Talde went out to raise funds. Nevertheless, we have incorporated some renowned
institutions such as ICO and CAF (Andean
Development Corporation).”
The new fund has not yet started
investing but there are “several deals in
an advanced stage of analysis, which will
allow us to start investing the fund soon,”
Bengoa said.
The new fund will invest in seven to
Lexington expands
LatAm presence
Global private equity firm Lexington
Partners has expanded its operations in
Latin America with the opening of an office
in Santiago, Chile.
Lexington said the new office would
serve as Lexington’s regional hub and enhance the firm’s strong investor and sponsor
relationships in Latin America.
The new office will be led by Jose Sosa
del Valle, a principal who has led the firm’s
Latin American activities for seven years.
Brian O’Neill, who was appointed by the
firm in 2010 as a senior advisor focusing on
the region, will continue to support the firm.
Spanish firm Talde is targeting Latin American expansion
12 small and medium-sized businesses at
a ticket price range of €7m to €15m. The
main goal is to support companies operating in sectors with growth potential or with
attractive acquisition opportunities.
According to Bengoa, Talde is looking at
the whole market, but favours food, health,
services, and niche industrial companies.
Bengoa added, “The current management
team of Talde has taken part in the management, value creation and divestment process
of 13 companies. We have made seven
relevant investments in recent years, three
of which have already been divested.”
DGF, Qualcomm back WebRadar
Brazilian big data analytics business Web­
Radar has picked up a BRL40m ($10m)
financing round from DGF Investimentos
and Qualcomm Ventures.
The company provides analytics and
‘internet of things’ services for the telecoms,
energy and transportation sectors, and said it
planned to increase its global expansion with
the funding.
Both investors become minority stakeholders through the deal. WebRadar’s previous
investors include Intel and Citrix.
DGF Investimentos director Frederico
Greve, said, “WebRadar has the attributes
we take into consideration when deciding
78
whether DGF should invest in a new business – entrepreneurs with high technical
capacity, experience and motivations, solutions with world-class technology and a scalable business model that includes recurring
results in the local and international market.
“These characteristics, allied with the
investments from DGF, Qualcomm and Intel,
will allow WebRadar to reach an outstanding
position in a very short time.”
Qualcomm Ventures’ Latin America
vice-president Carlos Kokron added, “Web­
Radar has emerged as a strong company
that helps global operators to improve their
network quality.”
Q2 2016
REGIONAL PERSPECTIVES: LATIN AMERICA
OTPP, PSP-owned Cubico
buys wind farms for $500m
Carlyle wins control
of outsourcing
company Digitex
Global private equity major Carlyle has
bought a majority stake in business-process
outsourcing company Digitex.
Carlyle said it tapped its €3.75bn Europe
Partners IV fund for the deal, which is expected to close in the second quarter.
Digitex, which was owned by Altra Investments, employs more than 16,000 people in
Spain and Latin America.
Carlyle Europe Partners co-head Marco De
Benedetti said, “We see strong potential for
expansion in high-growth markets, including
Brazil and Argentina, and across the US.”
Two wind farms have been bought by Cubico, a joint venture between OTPP, PSP and Santander
Cubico, an infrastructure investment
joint venture of Canada’s largest
pension funds OTPP and PSP and
Spanish bank Santander, has acquired
two wind farms in Brazil for BRL2bn
($497.8m).
The purchase of the 182MW Caetés
plant in Pernambuco state and the
210MW Ventos do Araripe I plant in
Piauí state from local operator Casa dos
Ventos was completed late last year.
This is Cubico’s first investment
in Brazil. Ricardo Díaz, head of the
Americas at Cubico, said, “We will
further analyse opportunities in Brazil
and elsewhere on its own merits.
Besides Brazil, Cubico is currently
focusing its efforts in Latin America on
investments in Mexico, Uruguay, Peru,
Colombia, Panama and Costa Rica.”
In line with this strategy, the Londonbased firm has opened a new office in
Sao Paulo from which it will manage all
its investments in Latin America.
Eduardo Klepacz, head of Cubico’s
business in Brazil, said: “The transaction positions Cubico as an investor that
is committed to Brazil.
“We are able to capitalise on opportunities due to our long-term strategy that
allows us to maintain and manage assets
for a period of between 20 and 40 years.
“We believe in the renewable energy
generation sector in Brazil and with the
new office in São Paulo we are pursuing
investment opportunities not only in
the country, but also in other regions of
Latin America, such as Peru, Colombia,
Uruguay, Panama and Costa Rica.”
Apart from the newly-acquired facilities in Brazil, Cubico operates six other
plants in Latin America. Five are based in
Mexico with a total capacity of 799MW
and there is one 50MW plant in Uruguay.
Cubico was launched in May 2015
amid a rise of infrastructure investments
made by major institutional investors
who were looking for higher yields to
meet future liabilities in an often lowyield marketplace.
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79
Columbian pension
funds to invest in PE
Colombian pension funds will soon be able
to invest up to 20 per cent of their assets in
alternative investments.
In a bid to diversify risk and bolster profit,
rules which only allowed pension funds to
invest in public debt and other low-risk portfolios will be amended, according to Reuters.
The change will allow for about $10bn of
capital to go toward real estate, commodities, private equity, hedge funds, and other
so-called alternative investments.
Patria plans lawsuit
against SunEdison
Blackstone-backed Brazilian private equity
firm Patria Investimentos is one of the
investors said to be planning a lawsuit with
US energy group SunEdison.
Patria and Brazil’s investment bank BTG
Pactual are to launch a $150m legal claim
for compensation against SunEdison over
a failed deal four years ago over the sale of
Latin American Power (LAP) to SunEdison,
Valor Econômico newspaper reported.
The investment was made in 2012 and the
$700m deal was expected to close last year,
but it fell through.
REGIONAL PERSPECTIVES: LATIN AMERICA
Actis offloads stake in Energuate for $554m
Emerging markets-focused private equity
firm Actis has announced the sale of 92 per
cent in Guatemalan electricity company
Energuate to IC Power.
The buyer, which is a company owned by
New York Stock Exchange-listed holding
group Kenon, paid $265m for the stake in
Energuate and assumed another $289m in
corporate debt.
Actis invested in the Guatemalan business in May 2011, and since then has been
able to add 230,000 new customers to its
electricity distribution network.
The current transaction includes two
smaller companies – one power-trading
business and a transmission-line operator.
Mike Till, partner and co-head of energy
at Actis, said: “We are delighted with
what we have achieved over the past four
years, growing the business and supporting
Guatemala’s economic growth by providing
much-needed energy infrastructure.
“Guatemala continues to be attractive to
Actis as an investment destination.
“Favourable demographics are driving
growth and a positive consumer environment in Guatemala – the country boasts
Goldman Sachs eyes
energy and infra deals
Goldman’s merchant banking arm is
said to have entered a partnership with
Mexican consultancy Ainda to make private
equity investments in local energy and
infrastructure projects.
The two parties plan to make joint
investments with a minimum deal value of
$100m, Reuters reported, citing a source
with knowledge of the matter.
Ainda’s commitment will be around
$1.15bn and Goldman will commit at least
half the total equity amount in joint projects.
Investments will range from oil and gas
to power generation, transportation and the
water infrastructure sectors.
Goldman Sachs’ merchant banking division has invested around $10bn in infrastructure projects over the past decade.
Actis has sold a 92 per cent stake in Guatemalan electricity company Energuate to IC Power
a large and fast-growing population, high
GDP per capita growth, rising urbanisation
levels and an expanding middle class.”
Actis’ involvement in the electricity and
distribution sector continues. The company
holds a majority stake (51 per cent) in Cameroon’s national integrated utility, ENEO.
Last summer London-headquartered
Actis opened an office in Mexico City as it
prepared to “capitalise on the many opportunities” it said existed in the region.
The office is Actis’s 12th globally, and its
second in Latin America, after an outpost in
São Paulo, Brazil.
Northgate buys majority share
in Mexican leasing company ABC
Global private equity and venture capital
fund manager Northgate Capital has
bought a majority stake in Mexican leasing
company ABC Leasing.
The firm has completed the investment of
MXP200m ($10.9m) in the company, with
an option to inject additional MXP100m in
the next 18 months.
ABC Leasing focuses on automotive
financing for SMEs and individuals with
professional activities, and also offers leasing of industrial machinery and equipment.
With the support of Northgate, ABC said
it can implement an expansion plan that
includes the opening of regional offices
and developing commercial alliances to
strengthen its position across the country.
80
The investment in the company will also
provide greater financial strength that ABC
Leasing will tap to diversify its funding
sources and optimise financing costs.
Northgate director Gabriel Mizrahi said,
“There is a great opportunity to penetrate
the leasing sector in Mexico. Leasing is a
product that optimises the financial position
of companies and reduces the risk of obsolescence of assets.
“ABC Leasing is in the right market and
at the right time to take a leading position in
the SME segment in Mexico.”
The deal comes five months after Northgate completed a MXP4bn ($210m) quasiequity/mezzanine CKD offering through the
country’s stock exchange.
Q2 2016
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