ACON Investments, a Washington, D.C. firm, created a new fund to house seven portfolio companies from its 2013 pool, giving the firm more time to manage the investments, sources told Buyouts.
ACON completed the fund restructuring process earlier this month, sources said. ICG was the sole buyer on the deal. Total net asset value of remaining investments was almost $600 million, sources said.
Limited partners in ACON Equity Partners III, which closed on about $751 million in 2013, had the option to sell their stakes at a price pegged to a reference date of Dec. 31, 2018, one of the sources said. It’s not clear what pricing on the deal looked like.
Existing LPs also could choose to roll their interests into the newly created special purpose vehicle. They were able to stick with the GP at essentially the same terms they had in Fund III, with the exception being the term of the new fund, which runs five years, the source said.
Evercore worked as secondary adviser on the transaction.
The transaction also will include capital for follow-on investments in two of the companies, one of the sources said.
Around half of the Fund III investor base chose to roll their interests into the new fund, the source said. ICG will be the largest investor in the continuation fund, the source said.
ACON Investments was launched in 1996 by Managing Partners Bernard Aronson, Kenneth Brotman and Jonathan Ginns. It managed about $5.5 billion as of Mar. 31, 2019, according to ACON’s Form ADV.
Fund III was producing a 7.24 percent internal rate of return since inception as of Mar. 31, 2019, according to performance information from California State Teachers’ Retirement System.
The firm raised its most recent pool, ACON Equity Partners IV, with $1.07 billion in 2017. Fund IV was generating a negative 16.86 percent IRR since inception as of Mar. 31, 2019, according to CalSTRS information.
For ICG, the ACON deal represents the second investment from its new fund, which is in the market targeting $1.6 billion. The initial investment involved ICG backing the spinout of the private equity team from Standard Chartered in a £790 million deal.
GP-led deals like fund restructurings represented about 38 percent of total deal volume in the first half of 2019, according to Evercore. Estimated total first-half deal volume came in around $44 billion, up 38 percent from the same time last year, Evercore found.
Action Item: Check out ACON’s Form ADV here: https://bit.ly/2QxA5BV