Accel-KKR, one of the US’s better-known tech investors, has backed what is understood to be its first continuation fund deal on the buyside.
The Menlo Park-headquartered firm, better known for its buyout and growth investments in tech and software, is the lead investor in a GP-led process involving German private equity and venture capital firm LEA Partners, according to three sources familiar with the matter.
The transaction, which is expected to close next month, involves moving two companies out of Karlsruhe-headquartered LEA’s Fund I, into a separate vehicle, the sources said. The total transaction is worth around €650 million, which includes follow-on capital, Secondaries Investor understands.
LEA wanted to run the process to raise additional capital to continue to grow the two businesses, Secondaries Investor understands.
Accel-KKR used capital from its balance sheet and other pooled vehicles to back the deal, according to a separate source familiar with the transaction.
Evercore was the adviser on the process, according to the sources.
StepStone and Rothschild’s Five Arrows unit are co-underwriters in the deal, according to two of the sources. Unigestion, an existing investor with LEA, is also backing the process, Secondaries Investor understands.
The transaction has been well-received by existing LPs and is heavily oversubscribed, according to one of the sources.
Accel-KKR, which ranked 54th in affiliate title Private Equity International‘s PEI 300 ranking of the biggest fundraisers in private equity, is no stranger to the GP-led secondaries market having run at least two such processes on its assets. In 2022, the firm ran a continuation fund process on its own assets, with seven portfolio companies moved into a separate vehicle in a $1.8 billion deal.
The firm also closed a $1.38 billion continuation fund in 2019, moving four assets into a separate fund backed by Goldman Sachs Asset Management, GIC and Adams Street Partners, as affiliate title Buyouts reported.
Traditional buyout and growth firms do not typically back GP-led deals. Some, such as Astorg and Audax Group, have launched units to back transactions where managers want to hold on to treasure assets, as Secondaries Investor has reported.
Such firms backing secondaries deals open up a new source of capital to back GP-leds, sources have told Secondaries Investor.
“New entrants are coming in and the landscape is evolving,” said a senior secondaries market source. “If you get people like Accel-KKR coming in and buying these companies, suddenly the pool of buyers becomes much larger.”
Accel-KKR, StepStone and Evercore declined to comment. LEA Partners, Rothschild and Unigestion did not return requests for comment.