Crestview Partners, a private equity firm founded by two former Goldman Sachs senior executives, is running a stapled secondaries process that could become one of the largest such deals of all time.
The firm is offering limited partners in its 2008-vintage Crestview Partners II fund and its 2013-vintage Crestview Partners III fund the opportunity to cash out to buyers, according to two sources familiar with the process.
The two funds held an estimated $4.6 billion in unrealised value as of 31 March, according to a document outlining details of the process.
The deal would involve a stapled commitment to Crestview Partners IV, the document noted. Fund IV launched in May last year and had raised $1.89 billion as of May 2019, according to PEI data. It has a $3.5 billion target, according to one of the sources.
It is understood that firms including Blackstone Strategic Partners are bidding on the deal.
Crestview is working with advisor M2O on the process, the sources said. Its secondaries team is led by Mike Custar, a former global head of secondaries at Credit Suisse Private Fund Group, who joined in 2017. The firm is headquartered in the city of White Plains in New York state.
The process was launched in early July with non-binding bids due by 29 July, the document noted. Final binding bids are due on 20 August and the process is expected to close by the end of September.
Fund II delivered a 2.7x gross return on investment as of 31 March, according to the document. It holds three unlisted assets: content producer Industrial Media; exploration and production company Silver Creek Oil and Gas; and Endurance Lift Holdings, a maker of parts and supplies for the oil and gas industry.
According to the document, Fund III delivered a 1.5x gross return as of the same date and holds at least 12 unlisted companies, including automated manufacturing provider JR Automation, wheels manufacturer Accuride and specialty insurance provider Fidelis Insurance.
Crestview was founded in 2004 by Tom Murphy and Barry Volpert. According to Crestview’s website, Murphy stepped down in 2003 from Goldman Sachs, where he was co-founder and head of the financial sponsors group. Volpert, who also left the investment bank in 2003, had been co-founder and co-chief operating officer of its global private equity business and had founded its mezzanine fund business.
Investors in Crestview IV so far include New York State Common Retirement Fund with $200 million, Teacher Retirement System of Texas with $100 million and Los Angeles Water & Power Employees Retirement Plan with $75 million, according to PEI data.
Ratios of secondaries to stapled primary capital rose to around 4:1 last year, from 3.4:1 a year earlier, according to Campbell Lutyens’ 2019 Secondary Market Overview.
Crestview and Strategic Partners declined to comment. M2O did not return requests for comment.