Elliott Management, which has been quietly making its name as an investor in continuation fund deals, is leading a process to extend Speyside Equity’s hold over Opta Group, sources told affiliate title Buyouts.
The market for GP-led deals like single asset continuation funds continues to remain muted amid a gap between buyer and seller expectations. While LP portfolio sales are garnering more attention, mid-market continuation fund deals have been making it to final close.
Capital is available for such deals, though the universe of buyers has not expanded very quickly beyond the established players. Elliott Management is a newer entrant and has built up a reputation for taking on deals as sole investor.
Opta Group is a provider of speciality chemicals used in steel, construction, wastewater and glass industries across North America. Speyside first invested in 2016 through its first fund, which closed on $130 million in 2016. The company in 2021 added-on Metcan Industrial.
Total deal value could be around $500 million, one of the sources said. Jefferies is working as secondaries adviser on the deal. No one from Speyside responded to a comment request this week. The firm filed a Form D fundraising document related to a continuation fund this week, without details about how much has been raised.
As in most single-asset deals, LPs in the older fund have the option to cash out of their interests in the asset, or roll into the continuation fund. It is not clear if LPs have the ability to roll on the same terms they have in the older fund, known as a status quo option.
Speyside was formed in 2004. It is led by Kevin Daugherty, Eric Wiklendt and Nicholas Lardo, according to the Form D fundraising document and Speyside’s website.
GP-led deals remained sluggish in the first half, tallying around $18 billion of volume out of an estimated total of $50 billion, according to a survey by PJT Park Hill. LP portfolio sales continue to drive volume as institutions look for ways to generate liquidity amid sluggish distribution activity and overallocation issues.
For GP-leds, the deals being completed are the highest quality assets. “Buyers remained focused on deals with a compelling and clear transaction rationale given ongoing challenged capital markets,” PJT Park Hill said in the survey report.
However, the firm sees a “sizeable forward pipeline of GP-led opportunities expected to be launched over the next quarter”.
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