ICG leads restructuring of Monitor Clipper’s second fund

  • Deal creates new vehicle for 4 remaining portfolio companies
  • Portfolio has about $100 mln of remaining net asset value
  • Resolves clawback sitting over Fund II

Monitor Clipper Partners recently completed the restructuring of its second fund, a move that enabled existing limited partners to sell out of their interests in the pool and created a new vehicle to house the remaining assets, sources told Buyouts.

Intermediate Capital Group led the restructuring for Fund II, an $800 million pool raised in 2004. Fund II had about $100 million of remaining net asset value, two of the people said.

Evercore ran the process.

About 80 percent of the existing LP base chose to sell into the deal. The process received overwhelming approval from the LP base, one of the people said.

The selling price is not clear; the reference date to which the price was pegged was Dec. 31, 2016, one of the sources said. As part of the deal, Houlihan Lokey provided a third-party valuation of the four remaining assets.

LPs who chose to roll into the new vehicle with the GP did so without having to pay into new carried interest for the GP, one of the sources said. There was a cost to enable the GP to continue operating, one source said, but it’s unclear whether that was a fixed management fee or some form of operating budget.

The new vehicle has a four-year term, the person said. The transaction also included payment of capital the GP collected before LPs received their agreed-upon profit share, known as a clawback, two of the people said.

ICG in this case dealt with the clawback situation first before launching its offer, one of the people said. Clawbacks can be “a very emotional and sensitive topic that needs to be addressed with the utmost fairness for the LPs,” the person said.

PE HUB exclusively reported that Monitor Clipper explored liquidity options last year. The firm pulled back in order to complete a large exit, sources said. Monitor Clipper sold its stake in healthcare company CMC Biologics in December, along with European Equity Partners and Innoven Partenaires, to AGC Asahi Glass, according to a statement from the company.

After the exit, Monitor Clipper returned to market with a smaller restructuring process, one of the people said.

Boston-based Monitor Clipper closed its third fund on $500 million in 2008. The firm stopped raising its fourth fund in 2015 after raising only about a third of the pool’s $600 million target, Buyouts reported. Monitor Clipper does not plan to raise new funds and is winding down its portfolio, according to the firm’s Form ADV filed earlier this year.

In 2015, the firm formed an affiliated entity called Narrow Gauge Capital to make direct investments in similar companies to those made by Monitor Clipper, the Form ADV said.

Monitor Clipper’s partner group includes Adam Doctoroff, Travis Metz, April Evans, Peter Laino, Stephen Lehman and Mark Thomas, according to the website.

In July, ICG said it had raised $1.1 billion for ICG Strategic Secondaries II Fund, which focuses solely on restructurings.

Direct secondaries like GP restructurings increased 26.1 percent in the first half of this year to $7.7 billion from $6.1 billion in the year-earlier period, intermediary Setter Capital said. Total secondary volume in the first half was $29.1 billion, Setter said.

Action Item: Monitor Clipper’s Form ADV: http://bit.ly/2wbIwZs

Sailboats sit on a dock at the MIT Sailing Pavilion on the Charles River in front of the Boston skyline on a winter day in Cambridge, Massachusetts, on Jan. 8, 2015. Photo courtesy/Brian Snyder