AlpInvest takes lead role in large Leonard Green multi-asset deal

The rationale for the deal is to provide liquidity to investors in older funds while still holding the assets.

AlpInvest Partners is lead investor on a four-asset continuation fund deal run by Leonard Green & Partners, five sources told Secondaries Investor and Buyouts.

The deal is among several large GP-led processes that have hit the market more recently as activity in secondaries continues to pick up. GP-led activity like continuation funds was relatively muted earlier in the year as buyers explored LP portfolio sales and GPs held back on planned offerings. Such transactions represented about 35 percent of the estimated $50 billion of total secondaries volume in the first half, according to PJT Park Hill’s first-half volume survey.

Since the summer, and especially after Labour Day, more GP-centred processes have hit the market, leading one adviser to describe the situation as “crowded.” Some advisers are counselling GPs to hold back new deals until later in the year to get them ready for 2024.

Leonard Green’s deal could be valued in a range of $1.5 billion to $2 billion, two sources said. Evercore is working as adviser on the process. Other investors are involved in the deal, including Goldman Sachs, sources said.

Spokespeople for Leonard Green, AlpInvest, Goldman and Evercore declined to comment.

The deal involves four assets held across Funds VI and VII. The firm closed Fund VI on $6.25 billion in 2012 and Fund VII on $9.6 billion in 2016.

The largest asset is SRS Distribution, a wholesale distributor of building products, which the firm acquired in 2018. The other assets are ExamWorks, which the firm acquired in 2016; Veritext, which the firm acquired in 2018; and Troon, which the firm bought in 2017.

ExamWorks provides independent medical examinations, peer reviews, bill reviews, Medicare compliance and other services. CVC Capital Partners acquired a stake in the company in 2021. Veritext provides pre-trial deposition services for law firms and corporate clients. Troon, which provides golf and club-related leisure and hospitality services, received an investment from TPG in 2021.

“Effectively, these are some of the highest performing deals at Leonard Green,” said one of the sources with knowledge of the deal.

Limited partners in the older funds have the option to cash out or roll into the continuation fund on substantially the same terms they’ve had, one of the sources said. This is known as a “status quo” option, with the only change for rolling LPs being the extended hold period of the continuation fund.

Leonard Green is rolling 100 percent of its carried interest in the assets into the continuation fund, one of the sources said.

The rationale for the deal is to provide liquidity to investors in older funds while still holding the assets, the source said.

Leonard Green has run secondaries processes in the past. The firm completed a large deal in 2021 in which it moved four companies out of its 2007 fund and into a continuation pool. That deal totaled around $2.5 billion, led by AlpInvest and HarbourVest Partners, Buyouts previously reported.

Leonard Green was formed in 1989 and is focused primarily on service industries in the consumer, business and healthcare, and retail sectors. The firm closed its most recent flagship pool, Fund IX, last year on around $14.7 billion, Bloomberg reported at the time.

Other deals in the market include Excellere Partners running a process to move two assets, AIS Healthcare and LucidHealth, into a continuation fund; and New Mountain’s single-asset process to move its portfolio company Datavant into a continuation fund, Buyouts reported. ICG has emerged as lead buyer on the Datavant deal, Secondaries Investor reported.