Clearlake Capital is working on its fourth single-asset fund it’s calling its Icon series of vehicles, running a process for more time and capital for software company DigiCert, sources told PE Hub.
The deal is among a handful in the market helping to drive secondaries volume to levels that are expected to eclipse last year’s roughly $60 billion tally. Such deals give the GP more flexibility not only to hold assets longer out of older funds, but also fresh capital to continue growing the business.
The DigiCert deal is being led by Intermediate Capital Group, which has led or co-led each of Clearlake’s Icon funds. Goldman Sachs Asset Management secondary business is also an investor in the deal, as well as a group of smaller syndicate investors, the sources said.
Total value of the deal could come in at more than $2 billion, which would make it among the largest-ever single asset transactions, sources said. This includes around $1 billion from ICG, sources said.
Evercore is working as secondaries adviser on the transaction. A spokesperson for Clearlake did not return a comment request Wednesday.
The closing of the deal would mean that Clearlake “has successfully done four of these continuation funds on what I would say … is [the firm] kind of cherry-picking some of their best investments they want to hold on to,” one of the sources said.
DigiCert is held in Clearlake’s fourth and fifth funds, and will be moved out of those pools and into a continuation vehicle that will give the firm more time to manage the asset. The deal also will include some portion of capital for add-on investments.
LPs in Funds IV and V have the option of cashing out of their interests in DigiCert, or re-investing in the continuation fund, sources told Buyouts. The terms on the continuation pool are not clear.
The single-asset process is just wrapping up, having already gone to limited partners to decide whether they want to cash out of their interest in the asset or re-invest in the continuation pool, sources said.
Clearlake first invested in DigiCert, a provider of Internet certification and security services, in 2019, taking a stake in the business alongside TA Associates, which first invested in the company in 2012. As part of the single-asset process, TA will take partial liquidity while keeping a stake in the business, one of the sources said.
Clearlake’s structure is unique among GPs, in that it is creating individual special purpose vehicles to hold single assets. In a sense, it has taken a secondaries-type strategy into its own hands to build out more time and a capital base for assets its older funds can no longer support.
The firm’s Icon funds hold its portfolio companies software providers Ivanti and Precisely; and Wheel Pros, which makes aftermarket automotive components. The Icon title refers to the firm’s belief that the assets are deserving of more time and attention.
The Icon funds become “acquisition platforms” for the companies to continue growing, according to a person with knowledge of the firm. “[Clearlake] saw the success of Ivanti and Icon I, and they’re trying to find ways to replicate that as part of an ongoing business,” a secondaries buyer told Buyouts in a previous interview.
Other single asset processes in the market include deals from Novacap, which is working to move its company Syntax Systems out of older funds; Creative Artists Agency, run by TPG; and Waterland Private Equity, which last month closed a deal to move United Petfood out of its sixth fund and into a continuation pool.