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Accel-KKR considers liquidity options for 2008 fund

  • Process would focus on 2008 fund
  • Not clear if it would be a tender or restructuring
  • No adviser hired yet

Accel-KKR is considering running a liquidity process on its 2008 third fund, which has three remaining companies, sources told Buyouts.

The firm, if it brings a process to market, would be one of numerous high-profile private equity shops turning to the secondary market to deliver liquidity to investors in older funds and find ways to hold investments longer.

Nothing is finalized and the firm has not hired an adviser to run a process, sources said. Still, the firm would like to bring something to market in the spring, sources said.

Whether the firm would run a fund restructuring or simply allow existing limited partners in the pool to cash out of their stakes is unclear.

Accel-KKR Fund III closed on $600 million in 2008. The fund was generating a 3.4x gross multiple and a 30 percent internal rate of return as of Dec. 31, 2018, sources said.

Across its funds, the firm has reported an annualized 32 percent return over 18 years. Fund III still has about $500 million of remaining net asset value, sources said.

The three remaining companies in Fund III, which Accel-KKR would like to hold longer, are Paymentus, Infinisource and TrueCommerce, each of which has revenues greater than $100 million, sources said.

Accel-KKR invests through its main buyout funds and its growth equity pools. Accel-KKR closed its most recent flagship Fund V on more than $1.3 billion, which closed in 2015. It was targeting $500 million for its third growth equity pool last year.

The firm, led by Tom Barnds and Robert Palumbo, was formed in 2000 as a partnership between Kohlberg Kravis Roberts and Accel Partners. The firm has operated independently over the past 15 years.

In April and October 2017, Goldman Sachs’s Petershill Group acquired a less-than 15 percent stake in Accel-KKR’s management company, according to the firm’s Form ADV.

As of Dec. 31, 2017, Accel-KKR managed about $3.7 billion, the Form ADV said.

GP-led liquidity processes are taking a larger part of the overall secondary market, though traditional LP stake sales still represent the majority of activity.

Of the estimated $72 billion of total activity in 2018, Evercore found that 68 percent were for LP stakes, with 28 percent in GP-led transactions, and the final 4 percent as directs.

Update: This story was updated to provide more clarity around returns and the origins of the firm. 

Action Item: Check out Accel-KKR’s Form ADV here: https://bit.ly/2OMZtPI