For the past few weeks, Secondaries Investor has been looking back through its archives and those of affiliate title Buyouts at the evolution of the continuation fund deal. The result is The 20 largest continuation funds mapped, which acts as a useful analogue for the evolution of the market from a distressed play to a favoured option for some of the strongest managers.

The earliest deal to feature closed in 2014. It involved US mid-market buyout shop JW Childs, later renamed Prospect Hill, which had to pull fundraising on its 2006-vintage fourth fund targeting $2.5 billion. The firm subsequently lost several key personnel, including co-founder Steven Segal. The restructuring of 2002-vintage Fund III gave limited partners an exit, brought Canada Pension Plan Investment Board on board and set a platform for JW Childs to raise its first – much smaller – vehicle in more than a decade.

The most recent continuation fund on the list to close was the fourth of Clearlake Capital’s Icon funds, single-asset vehicles housing top-performing assets that the manager wants to hold on to for longer. The deal involved DigiCert, a provider of internet security and certification services, being rolled into a $2 billion fund anchored by a $1 billion cheque from Intermediate Capital Group. The contrast with the 2014 transaction, in terms of the rationale for the deal and the circumstances of the GP, is stark.

The three largest deals are all noteworthy for different reasons. The restructuring of Hellman & Friedman’s 2009-vintage fund resulted in the creation of a $5 billion continuation vehicle. Secondaries capital made up a fairly small proportion, however, as large numbers of LPs rolled and Hellman increased its own exposure by making a substantial cross-fund investment from its $16 billion Fund IX.

The second-place deal saw Global Infrastructure Partners sell down a 50.01 percent stake in the UK’s London Gatwick Airport to VINCI Airports for £2.9 billion ($4.2 billion; €3.5 billion) and roll the remainder into a continuation vehicle. As well as being the largest single-asset deal to date, Secondaries Investor understands it was an early example of an M&A process being used to set the terms of a continuation fund deal.

3i’s €2.5 billion single-asset process, centred around Dutch discount retailer Action, was remarkable for being a bumper deal with no intermediary. Hellman & Friedman simultaneously acquired the stake of 3i co-investor Partners Group at the same valuation as the secondaries buyers in the deal, which is indicative of the ongoing merging of secondaries and co-investment.

How many of these deals will prove winners in the long run? What will this list look like in five years’ time? Can the technology continue to develop at this furious pace? Stay tuned.

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