Secondary groups from two large private equity firms financed a secondary buy that established a new fund and financed that fund’s purchase of a buyout fund and its portfolio companies.
One involved partner calls it a first-of-its-kind transaction.
The two secondary groups from London-based AlpInvest Partners and Boston’s HarbourVest Partners invested $56 million in Paragon Partners’ Paragon Partners Secondary LP.
Paragon Partners used the investment to buy the first fund of private equity firm Afinum as well as the three portfolio companies in the buyout fund. Paragon also has some of the $56 million investment leftover from AlpInvest and HarbourVest over for potential follow-on deals and add-on acquisitions.
“It’s the first time that someone bought an entire fund, including the assets, not just in Germany, but I think globally,” says Wouter Moerel, a principal with AlpInvest, which has been increasing its reach in the European secondary market.
This also marks the first time that Paragon has worked with either AlpInvest or HarbourVest on a deal. Munich, Germany-based Paragon was founded in 2004 by three veterans of the European private equity scene: Edin Hadzic, Kirschan Von Moeller and Stefan Winterling. The firm has been putting deal financing together on a deal-by-deal basis and completed two deals prior to this one with financing from family offices and other institutional groups, including NRW Bank.
Paragon Partners targets the secondary direct mid-cap buyout market. It purchases controlling stakes in companies from private equity or strategic investors through secondary transactions. The firm prefers companies based in the German-speaking countries of Europe.