Pomona buys stakes in pair of Bridgepoint funds

Pomona Capital has bought stakes in two funds managed by pan-European private equity firm Bridgepoint Capital, UK regulatory filings disclosed.

The two funds are Bridgepoint Europe III, a 2005-vintage fund that raised €2.5 billion, and Bridgepoint Europe IV, which launched in 2008 and closed on €4.8 billion, according to PEI’s Research and Analytics division.

The funds acquired mid-market businesses with enterprise values of between €200 million and €1 billion.

Fund III is in realisation mode, having made 14 investments between December 2005 and April 2008. It was generating an investment multiple of 1.2x and a net internal rate of return of 2.5 percent, as of 30 September according to documents from The California Public Employees’ Retirement System (CalPERS), a limited partner in the fund.

Fund IV closed its first investment in February 2009, and made its last and 24^th investment in January, when it paid €300 million for French financial software company eFront.

In February, Fund IV sold its investment in Infront Sports & Media, an international sports marketing company. The company was sold to Chinese conglomerate Dalian Wanda for €1.05 billion, which generated a 2.5x return for Bridgepoint, according to a statement.

Still, Bridgepoint had asked LPs in Fund VI for an extension in July-2013. The fund was due to expire in November 2013 but Bridgepoint had only deployed 70 percent of its capital at the time. Bridgepoint had realised it would not need to fund as many add-on acquisitions as initially planned,  Secondaries Investor‘s sister title Private Equity International reported. The firm therefore decided to increase the proportion of the fund allocated to primary investments from 85 percent to to between 90 and 95 percent. As a result the fund was expected to make four to five additional primary investments.

Fund IV was generating an investment multiple of 1.3x and a net IRR of 10.41 percent as of last September, according to PSERS documents.

Bridgepoint closed its subsequent and fifth fund in the family on its €4 billion hard-cap at the end of last month, PEI data disclosed.

The firm declined to comment.

Pomona purchased the stakes from The Church Pension Fund, which administers the defined benefit pension plan for the clergy of the Episcopal Church. It is an affiliate of New York-based The Church Pension Group, which declined to comment.

Pomona funded the transaction using its latest secondaries fund, which closed on $1.75 billion in April 2014. Pomona Capital VIII has been used to purchase interests in high-quality private equity funds and to acquire portfolios of private equity companies. The fund had deployed about $437.5 million as of last May.

“Our approach resonates with investors who recognise the long-term attractiveness of private equity but are concerned about risk,” Pomona chief executive officer Michael Granoff previously said.

Pomona did not return a request for comment on the latest secondaries deal.