Compass May Sell Off Remaining Portfolio

When two of the founders of London’s Compass Partners left this past January, there had been some speculation that the firm might liquidate its entire portfolio. However, that is not the case, according to a firm spokesman, although the group will consider selling off a portion of its current portfolio ahead of a planned fundraise for its second fund, which is expected to begin next year.

“‘Liquidating’ implies that they’re looking for a quick sale of [portfolio] companies,” the spokesman said. “That’s not the case.” The spokesman added that while Compass is “preparing to raise cash from its portfolio companies,” the firm is still actively managing its portfolio.

Compass declined to disclose if it has sought the services of an advisor for its potential portfolio sales. The company said it hoped to recap one of its companies and grow two more via add-on acquisitions, but declined to specify which of its four remaining investments these plans applied to.

Its current portfolio consists of: Drake Beam Morin, a Philadelphia-based human resources services provider; Eco, an Italian manufacturer of heat exchangers and other components for air conditioning systems; Elixia, a Berlin-based European fitness club operator; and Fläkt Woods, a Swiss fan designer and manufacturer.

Compass did not elaborate on its future fundraising activities, though it confirmed that its current plans have the group launching its second fund next year. The firm’s first fund, Compass Partners European Equity Fund, closed in 1997 with approximately $911 million (€717 million). Roughly 75% of the committed capital from the first fund has been returned to investors, with recent sales of vending machine outfit N&W Global Vending and electronic drive manufacturer SSD Drives, among the firm’s recent liquidity events.

Compass also declined to answer questions regarding whether or not it would seek to replace its departed founding partners, John Clark and Paul Soldatos, who left late last year with little explanation.

Stephen Waters

, a separate co-founder, and Partners Franklin Rudd and Allen Yurko, currently sit in charge of the firm. Waters has taken up the role of CEO and continues to run Compass Advisors, the firm’s affiliated advisory business.

If Compass does enter the secondary market with one or more of its companies, it would be doing so at an opportune time. The secondary market is flush with cash and very competitive among buyers, as firms have raised a record amount of dedicated secondary funds.

Compass was founded in 1997 and invests in companies in the manufacturing, consumer product, business services and industrial product sectors. It is headquartered in London with offices in Frankfurt, Germany and New York. —M.S.