Goldman Sachs, Intermediate Capital Group and Landmark Partners led a deal to move software company Ivanti out of older Clearlake Capital funds and into a continuation vehicle, giving the GP more time to grow the company.
While secondaries activity was generally slow through the pandemic, GP-led deals started to come back around mid-summer. At this point, the market for GP-led processes like single-asset deals and fund restructurings is frenetic, sources said.
Much of the activity, like Ivanti, is being facilitated by Evercore’s secondaries advisory team, which appears to be leading the market resurgence, sources have told Buyouts. Credit Suisse also worked as an adviser on the Ivanti transaction, sources said.
The Ivanti deal included a broad investor group and was described by several sources as the quickest-ever GP-led deal to reach completion. From the time it hit the market to close, the deal took about 45 days, one of the sources said.
Total value of the deal tallied around $1.25 billion, with several hundred million dollars in reserve for future add-on activity, sources said. The continuation fund holding Ivanti has a five-year term, with two one-year extensions, one of the sources said.
“What a great reason to do a deal: it’s a great company that’s run out of capital and time in older funds, the GP thinks it’s a great asset, so you put it into a continuation fund for more time to grow it,” said a secondaries buyer.
“This was less about an older fund trying to clean up and more about a Tier 1 asset that needed capital to consolidate a market,” another person with knowledge of the deal said.
Other investors in Ivanti’s secondary included Blackstone Group and AlpInvest Partners, along with smaller investors, sources said.
The speed at which Ivanti reached final close is surprising considering the deal’s complexity. Clearlake held Ivanti in three older pools: Funds II, III and IV. LPs in those funds were given the option to either sell their exposure in Ivanti or roll their interests into the continuation fund.
One thing that helped speed up the deal was that TA Associates made a minority investment in Ivanti shortly before the secondaries process kicked off. TA’s investment provided a valuation for the company (which was more than $2 billion). Traditionally GP-led secondaries deals involve one or more fair-value assessments from third-parties to help set pricing. In this case, another GP – one that is widely respected for its tech investing acumen – helped set the price.
The history of how Clearlake built the company is complex.
In 2015, Clearlake acquired FrontRange Solutions and merged it with existing portfolio company Lumension Security, which it bought in 2014, to form Heat Software. Clearlake in 2017 acquired cybersecurity provider LANDesk Software from Thoma Bravo and merged it with Heat Software. The firm renamed the combined company Ivanti.
Further expanding the business, in 2017 Ivanti added-on RES Software and Concorde Solutions.
Ivanti is one of several single-asset processes in the market or preparing to come to market. Thomas H. Lee Partners is seeking to raise $400 million to $600 million to move HighTower Advisors out of Fund VII and into a continuation vehicle, Buyouts previously reported.
Single-asset deals accounted for 30 percent of GP-led transactions in the first half, up from 20 percent in 2019, according to first-half secondaries volume report from Evercore. GP-led deals were about 39 percent of an estimated $18 billion total deal volume in the first half, Evercore found.