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Waterland moves United Petfood out of 2015 fund and into continuation pool

Single-asset deals are tapping into the desire among GPs and LPs to hold certain, treasured assets longer than allowed for under traditional private equity structures.

Waterland Private Equity completed a deal to move its portfolio company United Petfood out of its sixth fund and into a continuation pool to continue growing the company, sources told Buyouts.

The United Petfood single-asset deal is among a slew of such deals driving activity in the secondaries market. Such transactions are tapping into the desire among GPs and LPs to hold certain, treasured assets longer than allowed for under traditional private equity structures.

Intermediate Capital Group was a significant investor in the process, which included other large external backers, one of the sources said. Waterland acquired the company in 2015 using its €1.55 billion Fund VI (which closed on €1.25 billion along with a €300 million overflow fund).

Evercore worked as secondaries adviser on the transaction. The total value of the deal is unclear; ICG was said to have made an equity commitment of between $500 million and $600 million, one of the sources said.

Waterland invested in the company in 2016. United Petfood, founded in 1994, makes dog and cat food, biscuits and snacks.

Fund VI limited partners had the option to cash out of their exposure to the company, roll their stakes into the continuation fund, or do a little of both, one of the sources said. LPs were able to cash out of their stakes at a premium to net asset value, the source said.

Waterland closed its eighth fund at its €2.5 billion hard cap in December. Fund VI was generating a 20.5 percent IRR and a 1.58x total value to paid-in multiple as of June 30, 2020, according to Florida State Board of Administration.

Single-asset processes are increasingly becoming vital drivers of secondaries market volume. Another big single-asset deal is Creative Artists Agency, backed by TPG. That deal went live last year, and then was paused during the medical crisis. It came back earlier this year.

Clearlake Capital Group created three individual single-asset fund vehicles to hold three companies out of older funds: Ivanti; Precisely; and Wheel Pros.

Overall, total deal volume in 2020 was estimated around $60 billion, versus a record high of $80 billion in 2019, according to Evercore’s full-year volume report. GP-led deals represented about 53 percent of the total deal volume last year (or around $32 billion), Evercore estimated.