Alpine Investors is running a process for more time and capital to continue growing its home and commercial services platform Apex Service Partners in a deal that will take on the challenge of building an investor syndicate in the market dislocation, sources told affiliate title Buyouts.
The deal is part of the new crop of GP-led secondaries transactions starting to hit the market this year. Such deals, and especially those of scale, are getting looks but not necessarily finding their way to close. Secondaries buyers, such as general PE firms, have become selective in choosing their deals and some processes are not catching much interest.
The inventory starting to flow into the market, including those processes that have gone live and those that remain in exploratory phase, are expected to drive volumes beyond the around $103 billion estimated for 2022. PJT Park Hill said in its fourth quarter secondaries market update that volume could hit $150 billion this year.
A spokesperson for Alpine declined to comment. Evercore is understood to be working as secondaries adviser on the deal.
Alpine created Apex in 2019 with its acquisition of Frank Gay Services, a plumbing, HVAC, electrical and mechanical services company. The firm combined Frank Gay with existing portfolio company Best Home Services to create its home and commercial services platform Apex.
The transaction would allow limited partners in Alpine’s seventh fund the opportunity to cash out of their interests in Apex, or re-invest into the continuation fund being created to hold Apex. Continuation funds generally come with new fees and carried interest, as well as a new term, usually between three to five years.
This gives the sponsor more breathing room to continue growing the asset. Single-asset deals also bring on a lead investor or investors to help buy the asset out of the old fund and provide a pool of fresh capital for further investment.
Apex is said to have just hit the market this year, so the process is still early. It’s not clear if a buyer or buyer group has been identified.
The Apex deal will likely require an investor syndicate behind the lead investor because of its size. Generally, no one buyer is able to take on that big of a deal because of concentration limits in funds, which prevent a firm from spending too much of a fund’s capital on one asset.
Syndication, though, is harder than ever, sources have told Buyouts. Cobbling together an investor group in today’s market can be a tough chore as many buyers are being ultra selective in their deal targets considering that fundraising has become challenging.
At the end of 2022, the market had 15 $1 billion-plus GP-led deals still in syndication, PJT Park Hill said in its fourth-quarter update. “More deals are incorporating large non-traditional secondary investors and structures to reduce syndication amounts. There is growing demand for transactions under $500 million,” according to the update.
“We’ve seen deals where multiple leads were established and then there’s real difficulty syndicating the rest,” a buyer told Buyouts late last year. “The appetite has just not been there in this market.”
A GP-led deal that has been moving through the market since last year is KSL Capital’s single-asset process for Alterra, a ski resort platform. Government of Singapore Investment Corp is lead investor on the Alterra process.