The secondary market continues to widen its appeal in Europe, and direct portfolio deals continue to increase their share within the secondary market. The latest European direct secondary deal was announced last week between London-based buyer Vision Capital and Legal & General Ventures (LGV). Vision agreed to buy a portfolio of seven companies from LGV with a commitment of $155 million (E120 million).
Neither side would disclose the price Vision agreed to pay for the assets and the $155 million includes funding for follow-on commitments. In past transactions, Vision Capital has reserved a “meaningful minority” of cash for follow-on commitments of approximately one quarter of the total capital committed. If one quarter of the capital raised for this deal is being held for follow-on investments, then Vision has agreed to pay approximately $116 million for the LGV portfolio.
Vision will acquire majority stakes in Trident Components Group, a London-based provider of high pressure die-cast light metal components; fuel product company Coal Products Ltd. and TM Group, the Essex, England-based retail store chain. The portfolio also contains minority interests in Aluset, Interdean, direct marketing firm IPT and Unipoly.
“There are a number of smaller investments that don’t take up a lot of time but don’t hold a lot of value for us,” says Steven Phillips, an associate director with Legal & General Ventures. “This was a relatively quick and easy way to exit the tail of the portfolio in one deal.”
LGV held a separate auction for Trident Components and Vision Capital won the auction and was in serious negotiations for the remaining assets. The two sales were combined into one, which is not uncommon, according to Julian Mash, CEO of Vision Capital.
Vision Capital arranged for financing the buy with commitments from Goldman Sachs Asset Management, Landmark Partners, Paul Capital Partners, and for the first time Pantheon Ventures. Like its London counterparts Nova Capital Management and Swiss colleagues Cipio Partners, Vision finances its deals using capital raised from larger secondary players and other larger buyers.
This is the third time that the firm has worked with Goldman Sachs, Landmark, and Paul Capital on financing a secondary transaction. Other backers that Vision has received backing from include AIG Retirement Services, the Broad Foundation and Unigestion. Vision has purchased the portfolios of the CS Structured Credit Fund and Morgan Grenfell Private Equity.
Vision Capital was founded in 1997 and has approximately $500 million under management.