Investor group buys LP stakes in Palamon funds, commits new capital

Adams Street Partners, Goldman Sachs, Morgan Stanley, PGGM and the Rothschild Merchant Banking Group bought LP stakes in Palamon European Equity Funds I and II as part of a tender offer process. The investor group also committed new capital into a vehicle that will invest alongside Palamon Auxiliary Partnership 2013. Credit Suisse ran the process. The two newer vehicles have committed to the purchase of Currencies Direct in partnership with Corsair Capital.

Press Release

Palamon Capital Partners (“Palamon” or the “Firm”), a pan-European growth investor, today announces the completion of an innovative funding transaction resulting in five top-tier investors purchasing stakes in prior Palamon funds from a number of existing limited partners and committing capital to a new vehicle investing alongside Palamon Auxiliary Partnership 2013, L.P. The investor group includes Adams Street Partners, Goldman Sachs AIMS Private Equity Group, Morgan Stanley Alternative Investment Partners, Dutch pension fund service provider PGGM and the Rothschild Merchant Banking Group.

In the first quarter of 2015, Palamon mandated Credit Suisse Asset Management Limited acting through Credit Suisse Private Funds Group (“Credit Suisse”) to organise a whole-fund liquidity option for limited partners interested in selling their interests in Palamon European Equity LP (“Palamon I”) and Palamon European Equity II LP (“Palamon II”). It was Palamon’s view that organising the sale of limited partnership interests through a GP-led and transparent process, concentrated solely on the Palamon funds themselves, would secure more accretive options at attractive pricing for those investors seeking liquidity as they re-balance their private equity portfolios.

Following a competitive auction process managed by Credit Suisse, an offer book was built for the entirety of the interests in both funds, which resulted in investors who elected to access liquidity being able to do so through an easy, efficient and smooth process at highly attractive pricing – reflecting the structure of the process and the quality of the assets in each of the portfolios. Over one quarter of the aggregate NAV was exchanged, with the structure and terms of Palamon I and II remaining unchanged following the sales.

The investor group has also committed capital to a new vehicle investing alongside Palamon Auxiliary Partnership 2013, L.P., which has made investments recently in the UK legal services provider, Simplify Group, and the Italian artisanal leather accessories brand, Il Bisonte. The two vehicles have already committed to the purchase of Currencies Direct in partnership with Corsair Capital.

Louis Elson, Managing Partner of Palamon Capital Partners said, “We could not be happier with the outcome of this process which has delivered an easy-to-access liquidity option for our existing Limited Partners at highly attractive pricing while serving to introduce a group of toptier investors to Palamon’s on-going investment programme. Recognition should be given to Credit Suisse, who ran a process that will no doubt serve as an industry benchmark for building further alignment and fluidity into the secondary market.”

“We thank those LPs who are exiting our Funds for their support and valuable contributions over the years and extend a warm welcome to our new investors and look forward to working closely with them going forward.”

Jonathan Abecassis, from the Secondary Advisory team at Credit Suisse in London, said “Credit Suisse is delighted to have worked together with our long-standing client Palamon on a highly successful transaction. They deserve credit for their forward thinking approach to providing liquidity to their investors while securing capital from a blue-chip list of new investment partners. We believe this transaction is proof that the rapidly evolving secondary market can be utilised by successful GPs to offer transparent liquidity to their investors through an efficient, fair market process, while also attracting high quality, long-term investors to their platform”.

Since inception, Palamon has invested €1.1 billion directly and a further €800 million through co investments in 35 high-growth companies in ten countries. The Firm targets lower midmarket businesses with a focus on growth as the principal driver of value creation. Palamon’s portfolio of investments has consistently achieved a revenue growth rate of approximately 20% per annum, a key indicator of the Firm’s successful value creation approach. Its portfolio of currently includes Towry, a leading UK wealth manager; SARquavitae, the largest residential elderly care corporate in Spain; OSG, the leading national ophthalmic surgery provider in Germany; Il Bisonte, an Italian artisanal leather accessories brand sold around the world; and Feelunique, a fast growing on-line retailer of premium beauty products based in the UK.