Apax fund closes under hard cap

Apax Partners closed its latest buyout fund at €4.3bn, a lower sum than its previous effort despite record fundraising conditions.

Apax Europe VI closed €300m over the firm’s €4bn target, but at less than the €4.5bn hard cap. Apax has already invested about €1bn of the fund, having recently acquired UK media content company HIT Entertainment and Greek mobile phone operator TIM. “Our primary objective with this fund is to deliver a truly exceptional return to our investors, who have supported the firm over many years,” said Martin Halusa, chief executive of Apax.

The buyout firm closed its fifth fund in March 2001 at €4.4bn. Although that is an exceptionally large close for a European fund in historical terms, it is less than some European rivals. BC Partners raised €5.8bn after five months, while CVC is soon to close a €6bn fund.

Limited partners hailed the result as a success, nevertheless. “This is a good result. The fund reached its first close at €3bn quite rapidly,” said a European fund-of-funds investor. “Apax was opportunistic when it first shifted to large buyouts, but we are now satisfied with its expertise in this area and the new chief executive has gained acceptance.”

When Apax launched the fundraising last July, some investors criticised what they saw as an inconsistent performance and a “hubristic” approach.

Apax reportedly asked investors to fax back their commitments immediately or face missing out on a place in the fund.

The scenario was further complicated by the retirement of the firm’s founder and executive Sir Ronald Cohen, which raised questions about succession.

The firm eventually altered the terms and conditions of Fund VI, putting in place a performance hurdle of 8% before it could take its 20% carry. Apax has also moved away from early-stage ventures.

Apax is not alone in making concessions, however. KKR’s latest effort has included a hurdle rate, while BC Partners and US-based Francisco Partners have also made concessions, investors said. “This is about transparency. We want to know that returns are flowing back to the fund, not lining the pockets of the GPs,” the fund-of-funds manager said.

Apax is still undergoing change, with the integration of a US business and proposed expansion in Asia. Apax Partners has raised about US$20bn globally.

On the deal front, Apax is linked currently to a potential £6.5bn approach for UK TV channel, ITV. The offer would be in association with US media giant Time Warner. Greg Dyke, former director general of the BBC, became a special adviser to Apax last year, after being forced out of the BBC in the wake of the Hutton enquiry. Goldman Sachs is advising Apax.