News & Analysis

Fenway restructuring makes it over the line – exclusive

Tail-end specialist Hollyport Capital backed the deal involving the buyout firm's 1998-vintage fund, including a discount of as much as 70% on the GP clawback.

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Fenway Partners has successfully restructured its 1998-vintage fund after two previous attempts failed to close.

Investors in the $1 billion Fenway Partners Capital Fund II were given the option to sell their stakes to tail-end specialist Hollyport Capital and accept a carry clawback settlement, roll over into a continuation vehicle and accept the cash settlement, or do nothing and forego the settlement, according to an investor source with knowledge of the deal.

The total value of the deal is unclear. Pricing was at a “significant discount” to the fund’s $53 million net asset value, Secondaries Investor understands. The clawback cash settlement was at the higher end of the 50-70 percent-discount range.

It is understood that given the advanced age of the fund, a majority of remaining limited partners were secondaries firms.

No advisor was used, according to the source.

PE Hub first reported that Hollyport was looking at the deal.

Last July, Secondaries Investor revealed that Fenway had pulled restructurings on its 1998- and 2006-vintage funds because investors were unhappy about pricing.

Prospective buyer Prudential Capital Group had offered to buy the stakes from LPs in Fund II at a 60 percent discount to NAV as of 31 December 2016 and a 20 percent discount on the clawback, Secondaries Investor reported.

The firm originally attempted to restructure the two funds in 2015. Moelis & Co. was the advisor on both occasions.

Fenway’s exposure to American football helmet-maker Riddell Sports, via a stake in sports equipment company BRG Sports, was a significant impediment to previous restructuring attempts, Secondaries Investor reported last year. Riddell is facing class action lawsuits that allege it failed to protect American football players from the effects of concussions. The company is defending the claims.

Fenway Capital Partners, the debut fund, had returned a multiple of 1.24x and net internal rate of return of 4.9 percent as of 31 December, according to performance data published by Oregon Public Employees Retirement Fund.

The deal was backed by Hollyport Secondary Opportunities VI, which closed on $500 million in October.

Hollyport declined to comment. Fenway did not return a request for comment.