GMT restructures boom-era Fund III as firm considers future

GMT Communications Partners wrapped up a liquidity process for Fund III, which allowed investors to sell their interests or recommit to a new vehicle housing three remaining portfolio companies, sources told Buyouts.

Three investors led the deal to buy out stakes from existing LPs in the 342 million euro ($362 million) third fund, a majority of which sold out, according to GMT Partner Ashley Long. One of the three investors was Newbury Partners, a separate source said. It’s not clear who the other two investors were. Newbury Managing Partner Richard Lichter did not respond to a request for comment.

The price offered to selling LPs is not clear. Park Hill Group led the transaction, which was overall valued at about 120 million euros ($127 million).

London-based GMT Communication Partners III closed in 2007. Its fund term ends in July, and the firm decided to give LPs the option to sell out of their interests in the fund or recommit to a new vehicle. The new vehicle has a five-year term.

The deal does not include any fresh capital for new investments, known as a staple, Long said.

GMT felt it was better to offer Fund III investors liquidity rather than asking to extend the fund term, Long said. GMT wanted to “offer investors the opportunity now to take a good price and take liquidity,” he said.

GMT restructured its 368 million euro second fund in 2014 in a deal led by Lexington Partners, according to a report in Dow Jones. Executives at GMT paid back about 10 million euros to LPs in Fund II as part of the deal, the report said. The Fund II process also was led by Park Hill Group.

Now that GMT completed liquidity processes for the two funds, the firm’s partners are considering how to move forward. GMT started a fundraising process for Fund IV in 2013 but stopped fundraising, the Dow Jones report said.

Jeffrey Montgomery, founder and chairman of the firm, has decided to step back from the business, Long said. Montgomery will continue to manage the two remaining portfolio companies from Fund II.

The remaining team, including Managing Partner Timothy Green and partners Long and Vikram Krishna, are pondering the future of the firm.

“We’ll take some time to reflect on taking the firm forward and raising new capital,” Long said.

Action Item: Reach Timothy Green here: tim.green@gmtpartners.com

Timothy Green, GMT managing partner. Photo courtesy of the firm.