Coller backs $1bn GP-led restructuring with Investcorp – exclusive

Coller Capital has backed a GP-led restructuring process with Investcorp as the Gulf-based investor eyes a more institutionalised investor base.

Bahrain-listed Investcorp moved six assets, which it had acquired through various deal-by-deal transactions since 2012, into a new vehicle named Investcorp European Buyout Fund 2019 that it will continue to manage.

The vehicle comprises around $650 million of secondaries capital and around $300 million of fresh capital for follow-on investments, new investments and co-investments, Investcorp’s co-chief executive Hazem Ben-Gacem told Secondaries Investor.

“This is about the transfer of ownership of certain assets from a certain group of investors who feel ready to liquidate, and we’re gaining an outstanding new institutional investor and one who will become Investcorp’s single largest client and investor,” Ben-Gacem said.

Coller is using its Coller Investment Partners VII fund to back the transaction. The deal has been signed and is expected to close before the end of March.

The six assets and the year they were acquired are:

• Dainese, an Italian motorcycle gear maker (2015)
• Georg Jensen, a Danish luxury brand (2012)
• POC, a Swedish ski and cycling helmet maker (2015)
• Agromillora, a Spanish propagator of permanent crops (2016)
• Abax, a Norwegian fleet tracking software business (2017)
• Kee Safety, a UK provider of fall protection products (2017)

Dainese and Georg Jensen comprise a “meaningful portion” of the portfolio, Ben-Gacem added.

The liquidity option was only offered to investors in Dainese, Georg Jensen and POC as Agromillora, Abax and Kee Safety are still young assets, Ben-Gacem said. For these last three companies, only Investcorp’s own stakes held on its balance sheet were transferred into the new fund.

Investcorp transferred 100 percent of the carried interest generated from the deal into the continuation vehicle and individuals on its team will also add incremental capital to the new fund.

In addition to Investcorp European Buyout Fund 2019, the firm has raised a roughly $600 million co-investment pocket comprising capital from Investcorp and its investors, which will be used to invest alongside the fund.

No sellside advisor was hired to work on the deal, Ben-Gacem added.

Investcorp had been investing on a deal-by-deal basis in private equity since its 2007-vintage previous blind-pool fund, as well as its Gulf and Turkey-focused vehicle, which closed in 2008.

Adjusting the base

The firm has a high proportion of ultra-high-net-worth individuals in its investor base and wants to move to a more institutionalised base.

“We have taken a conscious effort to evolve Investcorp’s alternative asset business model into the institutional space,” Ben-Gacem said. “That will have to come through being able to offer our very solidly performing alternative assets to an institutional investor base, which historically has not been the case.”

He added: “As we started to think about that journey of how to evolve towards an institutional following, it appeared early that first and foremost a fund vehicle will be the natural step to attract that capital.”

Ben-Gacem declined to comment on details of how many investors chose to take up the liquidity offer.

Francois Aguerre, partner and co-head of origination at Coller, said the firm was attracted to Investcorp’s management of its assets, in addition to the companies themselves.

“When we looked at the portfolio what we saw was not necessarily one or two companies which we loved versus everything else,” Aguerre said. “What we saw was a very solid performing portfolio. That gave us a lot of comfort that [Investcorp’s] experience and track record would enable them to deliver again on a portfolio of this kind.”

The new fund already has deals in the pipeline, Ben Gacem added.

The transaction comes a week after Investcorp announced it had closed a $185 million deal with HarbourVest Partners involving assets held in its technology-focused 2007-vintage ITP Fund III. The two remaining assets were moved out of ITP III into a continuation fund backed by HarbourVest, with the Boston-headquartered firm also making a stapled primary commitment to Investcorp’s successor ITP Fund IV, which closed above target on $400 million in December.

Independent sponsors holding assets outside of a traditional fund structure have used the secondaries market before to institutionalise their investor base in anticipation of a future blind-pool fundraise. In May, Glendower Capital led a consortium that backed a $530 million deal in which six assets managed by US deal-by-deal firm Argonne Capital were moved into a new vehicle.

For Argonne, raising a blind-pool would be a “very logical next step” now that the firm has established several high-quality institutional relationships through the transaction, Argonne managing director Bill Weimar told Secondaries Investor at the time.

Coller is seeking $9 billion for Coller Investment Partners VIII, its latest dedicated secondaries fund, according to Secondaries Investor data.

Investcorp is seeking to bring its total assets under management to $50 billion. The timeframe for this is over the “medium term,” according to a spokesman.