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HarbourVest backs Court Square stapled deal – exclusive

The transaction involves the US mid-market firm's $3.2bn Court Square Capital Partners III fund.

Court Square Partners has used a secondaries process to help raise its latest flagship buyout fund, Secondaries Investor has learned.

The US mid-market firm gave limited partners in the 2012-vintage Court Square Capital Partners III the opportunity to sell their stakes to HarbourVest Partners, which also made a stapled commitment to Fund IV, according to two sources familiar with the deal.

The ratio of secondary to primary capital was 2:1, Secondaries Investor understands. It is not clear what proportion of LPs chose to exit or whether the deal was intermediated.

Court Square Capital Partners III raised $3.2 billion, against a target of $3 billion, by final close in 2013. Investors include Alaska Permanent Fund, Canada Pension Plan Investment Board and Minnesota State Board of Investment, according to PEI data.

Remaining assets in the fund include big data analytics firm Research Now, broadband provider Conterra and engineering company Pike, according to its website. The fund delivered a net internal rate of return of 16.45 percent and net multiple of 1.39x as of the end of March, according to documents prepared by MSBI.

Court Square Capital Partners IV came to market last year. It has raised $2.1 billion so far out of an undisclosed target, according to PEI data.

Court Square was founded in the early 2000s by former members of Citigroup Venture Capital Equity Partners. It has $5 billion in assets under management and focuses on the business services, healthcare, industrial, technology and telecommunications sectors.

Tender offers accounted for 36 percent of GP-led processes by volume in the first half of this year, with asset sales accounting for 64 percent, according to advisor Evercore. Thirty percent of LPs took liquidity in these tender offers, down from 39 percent in 2018.

Court Square declined to comment. HarbourVest did not respond to a request for comment.