HarbourVest leads Eos Partners fund restructuring

The restructuring of older Eos Partners funds is wrapping up with HarbourVest Partners as lead investor on the process, two people with knowledge of the deal told Buyouts.

It’s not clear exactly which fund or funds are involved and the size of the deals. Eos Partners raised its most recent pool, Eos Capital Partners IV, in 2007, closing on $600 million. It closed Fund III on $252.5 million in 2004. So the deal likely involves Fund IV and possibly Fund III if any assets remain.

Fund III had a gross asset value of about $202 million, and Fund IV had a gross asset value of $532.4 million, according to the firm’s Form ADV filed Sept. 6, 2017.

The deal also includes a slug of fresh capital the manager can use for new investments, one of the sources said. Eos is working with Evercore as intermediary on the transaction.

Steven Friedman, managing partner, did not return a request for comment.

The Eos restructuring is almost done and is expected to wrap up this year. It is one of several GP-led processes that are expected to close this month and help secondary deal volume keep pace with last year’s strong performance.

Fund IV was producing a 10.5 percent net internal rate of return and a 1.5x multiple as of March 31, 2017, information from California Public Employees’ Retirement System shows. Fund III was generating an 8 percent net IRR and a 1.6x multiple as of that date, CalPERS said.

The Eos transaction is a pure restructuring, enabling existing limited partners to sell their stakes or roll with the GP into a new vehicle on similar terms.

In such deals the new investors, in this case HarbourVest, fund a resetting of carried interest on the new vehicle to help give the GP incentive. Eos’s management team is staying in place, one of the sources said.

Friedman and Brian Young formed Eos in 1994. The two formerly worked at Odyssey Partners. Eos’s PE group focuses on the lower middle market, on business services, consumer, healthcare, technology services, distribution, specialty manufacturing and energy.

Eos has other business lines as well, including credit opportunities and equity strategies with a focus on event-driven or special situations, turnarounds, post-bankruptcies and recapitalizations.

Action Item: Check out Eos’s Form ADV here: http://bit.ly/2CHL2X1

The U.S. Coast Guard Barque Eagle sits in the fog before leading the Grand Parade of Sail to kick off Sail Boston in Boston Harbor on June 17, 2017. REUTERS/Brian Snyder