ATP Private Equity Partners is looking to make further co-investments on the back of plans to take a 12% stake in the €700m Nordic Capital-led buyout of Falck, the Danish health and safety company.
The private equity arm of Danish pension fund manager ATP is co-investing in a company that was created when Group 4 Falck demerged earlier in the year.
The firm has also just recruited three new members, taking its team to 15, with plans for another two hires in the next couple of months. “Direct investing or co investments are part of out strategy. About 90% of our investment is fund-based, but where we can add value or in cases where we know the company, we may co invest in European companies together with funds where we have an already existing relationship,” said Torben Vangstrup, a partner in the firm.
ATP made a €20m co-investment in 2003, when Cinven backed the buyout of Gala, the UK casino firm. It currently has €1.3bn invested in more than 40 private equity partnerships and typically invests around €500m a year.
Prior to the formation of the firm, ATP had only invested in private equity opportunistically. In 1999 it drew up an ambitious plan to commit 10%, around €3.4bn, of its assets to private equity by 2007.
Co-investing is on the rise among institutional investors generally because it is net of management and carried interest fees, which means returns are higher. Risk is also higher because there is no diversification, however.
Vangstrup says that ATP will maintain the current size of its annual investment programme. It has previously invested in Nordic Capital IV and V; its own fund, ATP PEP I, is around 75% invested.
Nordic Capital and ATP are bidding to acquire Falck through acquisition vehicle Cidron and to delist the company. The tender offer expires on December 17, and has been recommended by the board. Falck’s largest shareholder, Skagen 2004 Trust, has committed to accept behalf of its 23.6% holding.
The offer price represents a 45% premium to the average share price on July 20, which was the first day of listing after the demerger. Shares have been rising since then in anticipation of an offer, but the offer is still at a 17.1% premium to Falck’s DKr51.25 closing price on November 18.
ATP’s new hires are Kaspar Knudsen, who joins from Danisco Ventures, Soeren Broendum Anderson, who joins from Procuritas Partners and Matthew Baker, previously with law firm Slaughter and May. Vangstrup says a further two hires will be announced in the next couple of months and that the firm is generally looking at recruitment prospects for the next six to 12 months.