The deal sees the UK private equity firm secure a source of permanent capital to invest in its buyout funds.
Apax was keen to stress that unlike some other private equity management company stake sales, Apax’s senior partners had not taken any cash out as a result of the deal.
GIC Special Investments and Future Fund have bought shares from the firm’s top partners meaning that those partners will forgo some of the future profits which will instead be channelled into a permanent capital vehicle.
“We would like…to be able to say we are the biggest investor in our own fund, which would help the next time we go fundraising,” Martin Halusa, chief executive of Apax told the Financial Times.
Apax partners contributed 2% to Apax’s last buyout fund which closed on €11.2bn last year.
The firm hopes to boost the size of the vehicle by selling a further 2.3% and is believed to be in ongoing negotiations with a Japanese investor about doing so. Last August, it was rumoured that Japanese financial services firm Takefuji was in talks with Apax.
Other private equity firms to have sold parts of themselves include The Blackstone Group, which sold a 10% stake to the China Investment Corporation for US$3bn in May 2007 shortly before listing on the New York Stock Exchange; Apollo Management, in which the Abu Dhabi Investment Authority acquired 10% for US$1.5bn earlier in 2007, one year after paying US$600m for 40% of the shares in a publicly-listed fund managed by Apollo; The Carlyle Group, which sold a 7.5% stkae to another Abu Dhabi investment vehicle, The Mubadala Development Company, for US$1.35bn, having already sold a 5.5% stake for an undisclosed sum in 2000; in 2006, Japanese bank Nomura acquired a 15% stake in alternative asset manager Fortress Investment Group for US$888m.
Many of listed private equity funds are trading at depressed levels due to the current financial crisis. Apax conceded that the price had been negotiated down since it begun talks last year but said that it was not nearly to the same extent as the discount at which many private equity listed stocks are now trading.
Source: Thomson Merger News