Madison Dearborn intends to buy itself more time to manage portfolio company NFP Corp, an insurance broker and consultancy, as part of a single-asset secondaries process currently moving through the market, three sources told Buyouts.
Madison Dearborn is among numerous high-profile GPs using the secondaries market to extend their hold periods over certain assets that still have room to grow. Continuation fund deals give GPs more time to manage assets, as well as additional capital to help them grow.
Other GPs with recent processes include Clearlake Capital Group, Revelstoke Capital Partners and Thomas H Lee Partners.
The process is moving toward final close, though it’s not clear if the offer is in front of existing limited partners for approval. As part of the deal, LPs in the older fund, which appears to be the firm’s sixth fund, can choose to cash out of their stakes in NFP or roll their interests into a continuation pool, sources said.
A buyer syndicate is being assembled for the deal. One investor in the pool is Neuberger Berman, sources said. It’s not clear who is leading the investor group. Total deal value is likely to come in below $1 billion, sources said, though that depends on how many LPs choose to sell or roll.
Lazard is working as secondaries advisor on the process. A spokesman for Madison Dearborn declined to comment.
Madison Dearborn acquired NFP Corp (National Financial Partners) in 2013 in a deal valued at about $1.3 billion. In December, the company announced it added on Montreal-based Ogilvy Insurance, which provides property and casualty insurance, as well as group benefits and pensions, life insurance and investments.
The firm closed its sixth fund on $4.1 billion in 2010. Fund VI was generating a 2.1x multiple and a 23.4 percent net internal rate of return as of June 30, 2020, according to performance information from the Washington State Investment Board.
Madison Dearborn ran one of the first headline-grabbing single-asset processes in 2018. The firm moved portfolio company Asurion out of its 2006, fifth fund, and into a continuation pool. Asurion is an insurance provider for devices like cell phones.
The Asurion investment was interesting in that Fund V LPs who chose to cash out had the ability to reinvest in Asurion. The firm also gave LPs in Fund VII the ability to invest in the company as part of the deal, Buyouts reported at the time.
Single-asset deals accounted for 30 percent of GP-led transactions in the first half, up from 20 percent in 2019, according to a 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.