BC Partners to close Fund X with aid of staple

The vehicle is closing on up to €6.7bn target on the back of a stapled deal with Lexington Partners over the summer.

BC Partners is gearing up to close its 10th flagship buyout fund on between €6.5 billion and €6.7 billion, six weeks after it agreed a stapled deal with Lexington Partners, sister publication Private Equity International has learned.

The London-headquartered buyout firm told its investors at a meeting this morning that BC European Capital X, which has been in market since early 2016 and had an initial target of €7 billion, will close “shortly”, according to a source familiar with the matter.

BC Partners declined to comment.

The expected fund size is the same as its predecessor, which closed on €6.7 billion in 2012. Lexington acquired stakes from 22 limited partners in BCEC IX in a $1 billion stapled deal this summer, as reported by Secondaries Investor.

Of Lexington’s $1 billion investment, around $700 million was used to acquire stakes in Fund IX, while around $300 million was committed to BCEC X. The price paid for Fund IX stakes represented a 14 percent premium to 31 March net asset value.

Fund IX was delivering a net internal rate of return of 18 percent and a net multiple on invested capital of 1.6x at 30 June, according to the source. There are 17 investments remaining in the Fund IX portfolio.

Fund X held a first close on more than €4 billion in September 2016 and has since made six investments. These include bridal wear company Pronovias, managed hosting provider PlusServer and dental services provider DentalPro.

Fund X is following the same strategy as Fund IX, investing across Europe and selectively in the US. Up to a third of the fund can be invested in the US. The fund will also offer co-investment opportunities to its LPs; BCEC IX has deployed €3.6 billion in LP co-sponsorship and co-investment, according to the source.

Investors in Fund X include the California State Teachers’ Retirement System, Tennessee Consolidated Retirement System, Teachers’ Retirement System of Louisiana, three Colombian pension plans (Fondo de Pensiones Obigatorias Protección Mayor Riesgo, Fondo de Cesantia Protección and Fondo de Pensiones Obigatorias Protección Moderado), the American National Red Cross and the Retirement System of The American National Red Cross.