At more than €5.5bn, BC Partners’ latest fund gives the firm the firepower to complete acquisitions worth over €6bn, without having to call on other private equity firms to back it up. At current market prices, this translates to the firm being able to write single-handedly a cheque to buy Kingfisher, the number 45 company on the UK’s FTSE 100.
This is good news for institutional investors in the asset class, some of which have raised concerns about the damaging impact of consortium deals on the diversification of their private equity portfolios. It also gives BC a significant leg-up on less well-funded competitors because it can lay claim to the largest deals without having to share its secrets and run portfolio companies by committee.
The fund adds €20bn of dry-powder for investment in European buyouts, factoring in an average level of debt. It also came just one day after Blackstone launched its US$11bn vehicle, a large portion of which is destined for investment in Europe. Other firms known to be rounding off multi-billion fundraising efforts this year include Apax Partners, Bridgepoint, Montagu, Cinven, Clayton Dubilier & Rice and Candover.
BC Partners was widely tipped to have one of the easier times on the fundraising trail because of its stellar performance record, but the sheer scale of demand illustrates huge appetite for private equity after several tough years, when investors were digesting their dotcom losses. The fund was raised in less than five months and was heavily oversubscribed.
“As with most of the funds in the market at the moment, the dialogue with investors starts about a year before the formal launch. Most of the money was soft-circled before the PPM went out, which explains why the vast majority came in at first close,” said Jonathan de Lance-Holmes, the fund formation partner at Linklaters, who led the legal team for BC Partners.
Some sources have put the final close at around €5.8bn. With so many investors eager to gain access, it is legitimate to ask why the group did not go out for a larger figure, especially with US competitors all gunning for funds in the region of €10bn. “There is still pressure from the bigger investors limiting the size of funds in Europe; this is not a question of formal cap but rather what the LPs see as appropriate.,” said Lance-Holmes.
The quick turnaround was also facilitated by increases in commitments from investors in BC Partner’s previous seven funds. This accounts for 90% of total capital. LPs likely to have committed to the fund include, California State Teachers’ Retirement System (CalSTRS), Harbourvest, Partners Group, Alpinvest, atp, Pantheon, Wellcome Trust and Horsley Bridge Partners.
The firm has offices in Geneva, Hamburg, London, Milan and Paris, and is rumoured to be opening an office in Spain, where it is in the final round of bidding for telecom company Auna.
It has also just appointed Nikos Stathopoulos and Giampiero Mazza to its London team. Stathopoulos joins from Apax and Mazza from Englefield.
They will work as part of BC’s 40-strong European team.