British private equity firm Bridgepoint has asked its investors for more time to invest its biggest buyout fund, the latest manager to seek an extension amid a slow recovery in dealmaking, Reuters reported.
(Reuters) – British private equity firm Bridgepoint has asked its investors for more time to invest its biggest buyout fund, the latest manager to seek an extension amid a slow recovery in dealmaking.
Bridgepoint, the owner of sandwich chain Pret a Manger and MotoGP organiser Dorna, has sought a 12-month extension for its 4.8 billion euro ($6.35 billion) Bridgepoint Europe IV fund, which was raised in 2008 and is set to expire in November, so that it is not rushed into spending the less than 30 percent of the fund it is still to use.
On Wednesday Reuters reported that private equity firms across the world are sitting on a record level – about $145 billion – of uninvested capital expiring this year.
But with the market for new deals showing only tentative signs of recovery, many firms face having to ask investors for more time to do deals or not use the money at all.
Investors generally back extensions, especially as many of the funds raised up to 2008 suffered an 18-month freeze when dealmaking collapsed during the financial crisis, and because they do not want buyout houses to make rash investments.
Bridgepoint said its fund had not used as much money financing follow-on acquisitions for the companies it owns as it had envisaged, leaving it with more money to deploy now.
Because of this, Bridgepoint will increase the proportion of the fund spent on new primary deals to between 90 and 95 percent from an original plan of 85 percent.
Bridgepoint said it will only charge management fees on invested capital and not committed capital – money which is pledged by investors but univested – for the extension period.