CalPERS acquires Bridgepoint stakes from Lexington

Lexington acquired the stakes from CPPIB in July and transferred a portion of them to CalPERS in a recent transaction.

The California Public Employees’ Retirement System (CalPERS) recently acquired stakes in three Bridgepoint buyout funds from Lexington Partners, as part of a syndicated deal that took place three months ago, according to two sources familiar with the transaction.

In July, the Canada Pension Plan Investment Board (CPPIB) sold stakes in Bridgepoint Europe II, Bridgepoint Europe III and Bridgepoint Europe IV to Lexington and Hamilton Lane, according to a UK regulatory filing. London-based buyout firm Bridgepoint also purchased some of the interests. That deal occurred because CPPIB was unable to re-up in Bridgepoint’s latest fund, Bridgepoint Europe V, due to finite places for large limited partners, Secondaries Investor previously reported.

What was not clear at the time was that CalPERS was also part of the syndication. Lexington bought the stakes on its behalf and transferred portions of the stakes to the pension only this autumn. Pricing for the July transaction was undisclosed. It also was not clear what price CalPERS then paid for the Bridgepoint interests, and nor whether Bridgepoint knew CalPERS would ultimately acquire part of the stakes.

Lexington transfered the stakes to CalPERS, which was an existing investor in all three funds, through its Lexington Private Equity 18 vehicle, according to other UK regulatory filings.

The transaction was part of an arrangement where Lexington bought stakes in the three funds from CPPIB, some of which were on behalf of CalPERS, a source familiar with the deal told Secondaries Investor.

Another source close to the transaction said the portfolio of interests was too large for Lexington to hold in the long term, so it offloaded a portion of the stakes to CalPERS.

Lexington, which in April held a final close on $10.1 billion for Lexington Capital Partners VIII, remains an investor in the three Bridgepoint funds, according to the filings. The firm manages over $33 billion in committed capital, according to its website.

Bridgepoint Europe II is a 2002-vintage €2.03 billion fund, according to PEI’s Research and Analytics division. It is the best performing of the three funds, with a net internal rate of return of 29.5 percent and a return multiple of 2.0 x  as of 31 March, according to a fund performance document on CalPERS’s website.

Bridgepoint Europe III is a 2005-vintage fund that closed on €2.5 billion with a net IRR of a 1.5 percent and a 1.1 x return multiple, and Bridgepoint Europe IV closed above target at €4.84 billion in 2008, with an 8.1 percent net IRR and a 1.3 x return multiple as of 31 March.

Companies the firm has backed include sandwich chain Pret A Manger, which Bridgepoint bought in a €500 million deal through Bridgepoint Europe III in 2008, and French jewellery retailer Histoire d’Or and Marc Orian, which it acquired through Bridgepoint Europe IV in a €599 million deal in 2009, according to Bridgepoint’s website. Both companies are still in the firm’s portfolio.

In February, Bridgepoint Europe IV sold its investment in sports marketing company Infront Sports & Media to Chinese conglomerate Dalian Wanda for €1.05 billion, generating a 2.5x return.

Bridgepoint confirmed the deal but declined to comment further. CalPERS and Lexington declined to comment. CPPIB did not return a request for comment by press time.