AEA Investors is running a process for its asset Excelitas Technologies that would give the firm more time and capital to grow the business, sources told Buyouts.
The process is among numerous single-asset deals that continue to drive secondaries market volume, even amid a slowdown in more traditional LP portfolio sales. Single-asset deals have been widely in use by private equity managers to extend their holds over select assets beyond the confines of traditional fund structures.
AEA acquired Excelitas in 2017, likely through its sixth fund, which closed on $3.17 billion in 2015. The company provides photonic products like lasers and services for the lighting, optical and detection requirements of customers.
It reportedly explored options including a sale last year that could have valued the company at more than $3.5 billion, Bloomberg reported at the time.
The deal, like most single-asset secondaries transactions, would allow existing LPs to either cash out of their interests in Excelitas or reinvest in the company through a special purpose vehicle formed to hold the company.
AEA may seek to raise $800 million to $1 billion for the deal, sources said. The status of the deal is not clear. An AEA spokesperson declined to comment.
AEA, led by executive chairman John Garcia and CEO Brian Hoesterey, is in market with its eighth flagship fund targeting $6 billion, Buyouts recently reported. Fund VIII was expected to hold a first close this month. The firm closed its seventh fund on $4.8 billion in 2019.
The firm also raises “small business” funds, the latest of which, AEA SBF IV, closed on $877 million in 2019. AEA also launched a growth strategy last year with ex-Morgan Stanley executive Bobby Bassman and Ravi Sarin, who formerly worked at ROCA Partners.
Even amid a slowdown in LP portfolio sales because of pricing uncertainty, single-asset transaction activity has kept up. One big deal is being run by KKR, which has been exploring the sale of a minority stake in Internet Brands ahead of a process to move the company out of an older fund and into a continuation pool, Buyouts reported in February.
The deal total could range from $2 billion to $3 billion, sources said at the time. It’s not clear how far along that deal has come.