Ardian picks up stakes in Kelso VIII tender offer

The fund of funds was willing to buy up to $1bn worth of stakes in the New York buyout firm's eighth fund.

Ardian, a fund of funds manager, has acquired about $250 million worth of stakes in Kelso & Co‘s eighth fund in a tender offer process run by Park Hill, Secondaries Investor has learned.

New York buyout firm Kelso initiated a tender offer last July for its $5.1 billion Kelso Investment Associates VIII fund, according to two sources familiar with the deal. Ardian was willing to acquire up to $1 billion worth of stakes in Kelso VIII, although the deal closed on less than this.

Ardian, which was the sole buyer in the process, paid par to net asset value (NAV) for the stakes, although it was not clear to which valuation date.

The tender offer was aimed at providing liquidity to limited partners in Kelso VIII who did not want to re-up in the firm’s latest fund, Kelso Investment Associates IX, according to an LP in Kelso VIII.

Kelso VIII is a buyout fund that closed in April 2008 after 12 months of fundraising, according to PEI’s Research & Analytics. The fund had a net internal rate of return (IRR) of 10.5 percent and a return multiple of 1.39x as of 31 March 2015, according to a performance document from The Regents of the University of California, an investor in the fund.

Kelso VIII holds over two thirds of the New York firm’s current portfolio, with 15 assets including dry bulk shipping company Delphin Shipping, Canadian lumber manufacturer EACOM Timber, and oil and gas production company Venari Resources, according to its website.

Kelso was the 22nd most sought-after large US buyout manager in the second quarter of last year, according to a ranking by Setter Capital.

Ardian has committed to Kelso IX, although there was no staple involved in the tender offer, according to one of the sources. Kelso has already raised $2 billion out of the $2.5 billion it is seeking for Kelso IX, according to PEI data.

Ardian paid the fees incurred by Park Hill for advisory firm’s work on the tender offer, Secondaries Investor understands.

Ardian and Kelso declined to comment. Park Hill, which rebranded to PJT Partners last October, also declined to comment.