Apax Fund Raising Breaks Record at euro 2.1 Billion –

Apax Partners last month successfully concluded fund raising for its first pan-European vehicle, Apax Europe IV, closing the fund at euro 1.8 billion ($1.932 billion).

Simultaneously, the group announced a final close on Apax France V at euro 300 million ($322.5 million). The first euro-denominated private equity vehicle, Apax Europe IV ranks as the largest European fund that will invest in both buyouts and early-stage deals; the euro 600 million Apax has earmarked for early-stage investments over the next three years is larger than Atlas Venture’s latest vehicle, which, at $400 million, is the largest “pure” venture fund raised by a European group so far.

In the past, Apax has raised separate country funds for the U.K., France and Germany that together comprised the earlier Apax Europe programs. Apax said the decision to raise a single large regional vehicle for Western Europe reflected the interest and inclinations of investors, who saw advantages in the combination of a balanced investment strategy with a broad pan-European investment mandate. The France-focused vehicle-the largest fund raised for France to date-was launched because Apax’s French operations were at a slightly different stage of the investment cycle from the U.K. and German offices. Once Apax France V is fully invested, Apax’s French team will continue to invest from the regional fund.

Apax Europe IV follows on the heels of the GBP313 million U.K. VI and DM260 million Germany II vehicles, which were launched in 1997. In view of the speed at which both funds were deployed, Apax began marketing the pan-European fund in the second half of 1998 (BUYOUTS Jan. 11, p. 24).

Investors in existing funds provided approximately 80% of Apax Europe IV, which drew some 60% of its capital from U.S. limited partners and the remainder from European L.P.s.

Approximately three-quarters of the capital provided by investors new to Apax came from European sources. European first-time participants in Fund IV include Abbey National Treasury Services, SEB Investment Management and Unilever’s pension fund, while new U.S. investors included Bell Atlantic Master Pension Trust and San Francisco City & County Employees’ Retirement System.

Apax Europe IV’s remit allows for 80% of its capital to be invested in Western Europe, with the balance available for investments elsewhere, including the U.S., Israel-where Apax is raising the $100 million-targeted Apax Israel II-and Japan-where Apax recently launched a $100 million fund in conjunction with Globis Capital.

Eyeing Larger Deals as Fund Size Grows

Apax anticipates investing approximately half of Fund IV in buyouts, primarily in the information technology, telecommunications, health-care, media and speciality retailing sectors.

The group’s earlier funds have earmarked approximately one-third each for early-stage, buyouts and expansion capital investments. Apax France V will pursue a similarily balanced investment strategy to the regional vehicle.

The conclusion of the fund raising marked Apax’s addition to the ranks of Europe’s mega-fund managers and took the group’s capital under management worldwide to more than euro 5 billion across 28 separate funds. Apax Partners, which operates in the U.S. as Patricof & Co. Ventures, has 12 offices worldwide and a team of 100 investment professionals, 70 of whom are based in Europe.