GP-led secondaries transactions – in their many forms – are becoming a common part of the private fund management toolkit. This slideshow gives a rundown of notable deals from the first half of the year, courtesy of Secondaries Investor.
In January, Bahrain’s Investcorp began a restructuring of its mature technology and its European funds, in processes backed by HarbourVest and Coller Capital respectively. The GP-led process led to the formation of the Investcorp Secondary Fund 2018 and the Investcorp European Buyout Fund 2019, the latter containing six prominent assets, including Italian motorcycle gear manufacturer Dainese and Danish luxury brand Georg Jensen.
In February, German mid-market firm Emeram Capital Partners mulled a GP-led secondaries process to provide capital for new investors in its sole, self-titled 2013-vintage fund. A month later, Arcano Capital, Schroder Adveq and Unigestion were among the secondaries firms to buy stakes from exiting LPs in a deal with a total value of €50 million. Emeram’s move echoed other recent German GP-led processes, including LGT Capital and Indinvest’s February 2018 transaction on their 2008-vintage fund.
In March, sister publication Secondaries Investor revealed Los Angeles’ Ares Management had begun to explore the restructuring of Ares Corporate Opportunities Fund III, a 2008-vintage $3.5 billion vehicle that included struggling luxury department store Neiman Marcus. Sources said the deal was intended to provide more runway for the crisis-era fund’s remaining assets, two months after Neiman had agreed with its creditors to extend maturities on its $6.04 billion debt to at least 2023.
Los Angeles-based Oaktree Capital Management undertook a GP-led restructuring process, which offered investors the opportunity to either roll into a new vehicle or sell to secondaries buyers. In March, Secondaries Investor reported that AlpInvest Partners, the Amsterdam-based Carlyle Group unit, were among buyers of the brand-name GP’s 2009-vintage Principal Fund V.
6. PAI Partners
In April, one of Europe’s largest private equity firms considered its second GP-led secondaries process in the space of a year. PAI Partners, which operates out of Paris, began to explore restructuring options on PAI Europe V, a 2008-vintage buyout fund, in a deal with a potential value of €1.8 billion. The fund has two remaining assets, including Froneri, the world’s third-largest ice cream manufacturer.
5. Warburg Pincus
American buyout giant Warburg Pincus prepared to break records in May as it began to consider a GP-led single asset restructuring. The proposed deal would lift $7 billion portfolio company Allied Universal from the 2012-vintage Warburg Pincus Fund XI to be rolled into a separate vehicle funded by secondaries capital. The Lazard-advised process followed a strong 2018 for single-asset restructurings, which saw the deal type account for 9 percent of all complex secondaries deals. In June, AlpInvest emerged as a buyer for the process.
In late May, Central and Eastern Europe-focused buyout firm Mid-Europa began to explore liquidity options on its crisis-era fund. Secondaries Investor reported that Mid-Europa was considering giving investors in its 2008-vintage, €1.5 billion Mid-Europa III fund the opportunity to either sell their holdings to a secondaries buyer or roll them into a continuation vehicle.
In June, Secondaries Investor exclusively revealed that Bridgepoint had begun to explore a potential restructuring of its flagship fund, the 2008-vintage €4.84 billion Bridgepoint Europe IV fund. The fund contains eight assets, including health and social care provider Care UK, foreign exchange firm Moneycorp and sealing product manufacturer Flexitallic. The deal, which could be worth over €1 billion if it goes ahead, would represent Bridgepoint’s fifth secondaries process since 2015.
2. Neuberger Berman
Also in June, Neuberger Berman backed a GP-led restructuring that involved moving several dozen active positions in Bain Capital’s Sankaty Credit Opportunities Funds II and III into a new vehicle in a process worth somewhere between $100 million to $500 million, Secondaries Investor reported.
The world’s largest private equity firm became the latest manager to run a secondaries process, as Blackstone commenced a single-asset restructuring of its $7 billion 2012-vintage Tactical Opportunities Fund. The deal is worth at least $600 million and involves the movement of Phoenix Tower International, a wireless infrastructure operator that Blackstone owns 62 percent of, into a continuation vehicle. Sources told Secondaries Investor that buyers had been selected, but their identity remains undisclosed at this stage.