Anatomy of an A-team spin-out

The spin-out of ABN AMRO's private equity unit to form Capital A shows buyers are willing to accept less by way of secondaries assets if they really like the team.

In case you missed it, a small group of firms led by AlpInvest Partners and LGT Capital Partners emerged as the buyers in the stapled spin-out of ABN AMRO’s PE unit in a deal worth around €250 million, as Secondaries Investor reported on Tuesday.

Here are a few elements about the Lazard-backed deal that stood out.

– The stapled ratio of 1.5 to 1 was not the norm. Buyers underwrote stapled transactions last year at an average 3.1 secondaries to 1 primary, according to data from Campbell Lutyens. The year before it was 4.1 to 1. With such a healthy primary component, it is no surprise to see the deal won by buyers with established primaries programmes.

– ABN AMRO is a cornerstone investor in Capital A’s – the PE unit’s new name – new fund as well as having a minority investment in the existing portfolio. It’s unclear how much ABN committed to the new vehicle or how big the fund will be. The other LPs in the new fund are Rothschild’s Five Arrows Secondary Opportunities and family office powerhouse Bregal Investments.

– We hear the deal was extremely competitive and several buyers were gutted they didn’t get a piece of the action. On top of that, the team itself is highly regarded. “Everybody loves the Netherlands,” a source familiar with the transaction told Secondaries Investor. The Dutch economy is booming. GDP growth in the Netherlands is expected to be around 3 percent this year, putting the UK’s 1.3 percent and France’s 1.7 percent to shame. With unemployment in the eurozone’s fifth largest economy at a 10-year low and the country experiencing its fourth consecutive year of above average growth, it’s no wonder secondaries buyers were lining up to back the spin-out of the Netherlands’ third-largest bank’s private equity team.

– Capital A’s motivations for spinning out aren’t clear, but the ABN statement announcing the deal notes the bank wanted to put its PE team at arm’s length to keep its “strategic focus on traditional banking relationships.” The Dutch bank has spawned many spin outs in its past. In 2007 life sciences firm Forbion Capital Partners spun out, forming a €200 million fund backed by the parent’s balance sheet and Coller Capital, while the following year a consortium led by Goldman Sachs Asset Management backed the spinout of ABN’s then private equity team to form AAC Capital Partners. That same year the bank’s France-based private equity team spun out to form Abenex Capital in Lazard-advised process.

Including Capital A, Secondaries Investor has tracked at least six secondaries-backed spin-outs this year, including Spring Bridge Partners’ summer deal with Wafra Partners, and at least three Asian deals involving ICG. As we wrote in March, there are still plenty of teams wondering what they could achieve if they opened the door to the cage and stepped outside.

How many spin-outs are you aware of this year? Let us know: or @adamtuyenle