Madison Dearborn runs single-asset process on Asurion out of 2006 fund

Madison Dearborn Partners is working on a process to cash out investors from their exposure to portfolio company Asurion, while giving itself more time to manage the insurance provider for devices like cellphones, according to three people with knowledge of the deal.

The process is the latest example of a high-profile GP singling out one asset for a secondary-type process. Lime Rock Partners and Hellman & Friedman have also worked on single- or concentrated-asset processes this year.

The Chicago firm holds Asurion in its fifth fund, which closed on $6.5 billion in 2006.

It acquired the company along with Providence Equity and Welsh, Carson, Anderson & Stowe for $4.1 billion in 2007. Asurion merged with N.E.W. Corp in 2008, bringing in other PE backers.

The firm wants to cash LPs out of Asurion and move the investment into a special-purpose vehicle that will enable the firm to hold the company longer. LPs cashed out of the company have the option to reinvest, two of the sources said.

The firm also is said to be giving LPs in its newest fund, its seventh, the ability to invest in Asurion, sources said. Madison Dearborn closed Fund VII on $4.4 billion in 2016.

Moving Asurion out of Fund V is part of a process to close out the fund, sources said.

But Asurion is not the only asset remaining in Fund V. The pool also continues to hold Univision Communications, which Madison Dearborn acquired along with Providence Equity, TPG, Thomas H. Lee Partners and Saban Capital Group for $13.7 billion in 2007.

The firm also used Fund V to invest in Topps Co, along with Michael Eisner’s private investment firm Tornante Co. The firms were considering selling the company earlier this year, Bloomberg reported. The status of that process is not clear.

Madison Dearborn is one in a series of high-profile private equity managers running processes on single or a few assets lodged in older funds. It’s not clear whether the firm is working with an adviser on the process.

Hellman & Friedman was working on a similar process earlier this year for its Fund VI portfolio company Kronos Inc.

The firm was seeking approval from LPs to shift Kronos, a cloud-based human-resources-software provider, out of Fund VI into an SPV. Fund VI closed in 2007 on $8.4 billion. 

Hellman alongside JMI Equity took Kronos private in a $1.8 billion transaction in 2007. An investor group was lined up to buy out LPs that choose to sell interests in Kronos. The group included Blackstone Group and Hellman’s Fund VIII, a $10.9 billion closed in 2014, sources told Buyouts at the time.

The deal required approval from the LP advisory committees of both Hellman funds and included two fairness opinions. The status of the deal is not clear. A spokesman for Hellman & Friedman did not respond to a request for comment.

Lime Rock Partners is working on a concentrated-asset process for its fourth fund, the value of which is mostly in portfolio company Crownrock. Evercore is adviser on the process. The deal is not yet finalized, according to a person with knowledge of the situation. 

Lime Rock had lined up investors in the deal, which would enable existing Fund IV LPs to cash out their stakes in Fund IV or roll into a newly created vehicle to hold remaining assets.

Fund IV closed on about $750 million in 2006 and was generating a 15 percent net internal rate of return and a 2.8x net multiple as of Sept. 30, 2017, performance information from California Public Employees’ Retirement System shows.

Action Item: Check out Madison Dearborn’s Form ADV here: https://bit.ly/2zlZqCT