AlpInvest taps private wealth product as lead investor on Leonard Green secondary

AlpInvest Partners, which deployed around $8 billion across its secondaries platform this year, stepped up as lead investor on Leonard Green’s $2.2 billion, four-asset secondary that has reached final close.

AlpInvest’s investment included capital from Carlyle AlpInvest Private Markets, a closed-end, continually offered wealth management pool. Leonard Green’s deal included investors behind AlpInvest, including Goldman Sachs.

“Private wealth has been a real strategic priority for us,” Garrett Hall, managing director at AlpInvest, said about CAPM. “We’re providing the private wealth channel access to the same investments we’re making in our secondaries and co-investment businesses at AlpInvest.”

CAPM, which investors can access for a minimum of $50,000, was generating a 14.4 percent return year-to-date, according to the product’s website. The pool has $260.6 million of net asset value, the website said. The pool allocates to secondaries, co-investment and primary fund opportunities across the AlpInvest platform.

Leonard Green’s deal moves four companies into a continuation fund: SRS Distribution, a distributor of roof, landscape and pool products; ExamWorks, which provides services around medical examinations and peer reviews; Veritext, which provides pre-trial deposition services; and Troon Golf, a third-party management provider for golf and club-related leisure and hospitality services.

The four assets were held across two pools, Funds VI and VII. Leonard Green closed Fund VI on $6.25 billion in 2012 and Fund VII on $9.6 billion in 2016.

Around 90 percent of existing LPs chose to cash out in the process, sources told Buyouts. Pricing was priced at par as of the reference date, a source said. “Effectively, these are some of the highest performing deals at Leonard Green,” said one of the sources with knowledge of the deal.

Existing LPs had the option to roll into the continuation fund on substantially the same terms they’ve had, known as the “status quo” option. The only change would be on the term of the continuation fund.

Leonard Green rolled 100 percent of its carried interest in the assets into the continuation fund, Buyouts previously reported.

Leonard Green was formed in 1989 and is focused primarily on service industries in the consumer, business and healthcare, and retail sectors. The firm closed its most recent flagship pool, Fund IX, last year on around $14.7 billion, Bloomberg reported at the time.

Overall, AlpInvest’s secondaries platform deployed around $8 billion this year, with $7 billion from the flagship fund and $1 billion from portfolio finance. Activity was across 25 unique investments – 19 from the secondaries fund and six from portfolio, Hall said.

“It’s been a very strong deployment investment environment for us and for the overall market really driven by the enormous amount of sell-side volume,” Hall said about activity in 2023. “We’ll potentially see a full year of busy activity. That’s both in LP sales, portfolio finance opportunities as well as GP-centered investments.”

Leonard Green’s deal is among a slew of GP-led processes that have found their way to final closings despite tougher market conditions and pickier buyers. GP-led transactions represented around 30 percent to 35 percent of overall volume, with LP portfolio sales driving market activity, according to half-year surveys.