HarbourVest emerges as lead on JMI’s multi-asset continuation fund deal

HarbourVest Partners has taken the lead in a multi-asset continuation fund process run by JMI Equity, sources told affiliate title Buyouts.

The deal is among a slew of GP-led transactions proceeding through the slower market this year that are expected to close around year-end. The market for GP-led deals has dipped in terms of activity, overshadowed by large LP portfolio sales, but certain deals, especially those with what buyers consider high-quality assets, are finding their way to final close.

The market had about $50 billion of total activity, with GP-led deals representing about 35 percent in the first half, according to PJT Park Hill’s volume report.

JMI has been working with Evercore on the process, sources said. The total deal could be valued at around $700 million. It is not clear exactly what assets are involved, or from which funds, though sources said the assets are held in multiple JMI funds. A JMI spokesperson declined to provide details.

The rationale for the deal is to provide a liquidity option for existing limited partners in the older funds, a source said. Generally, multi-asset GP-led deals give existing LPs the chance to cash out of their interests in the assets, or roll or reinvest into the continuation fund for more time with the assets.

In this case, it is not clear if existing LPs have the option to roll on substantially the same terms they had in the older funds. Multi-asset GP-led deals are considered tougher structures for which to offer existing LPs so-called status quo options, compared with single-asset deals.

Generally, around 90 percent of existing LPs in GP-led deals are choosing to take liquidity, a secondary adviser source recently told Buyouts in an unrelated interview.

Pricing on JMI’s deal is strong, hovering around the mid-90 percent of net asset value range, sources said. Strong pricing is often a reflection of the quality of the assets, the GP, and could also indicate some form of structure on the deal such as payment deferrals. It is not clear if that is the case on JMI’s deal.

JMI closed its 11th growth fund earlier this year on $2.4 billion, beating its $2 billion target. The fundraising brought the firm’s total capital commitments to more than $8 billion since inception.

JMI was founded in 1992 by Harry Gruner and Charles Noell, formerly tech specialists with investment bank Alex Brown, in partnership with John Moores, founder and ex-CEO of BMC Software. Gruner continues to lead the firm alongside co-managing general partner Peter Arrowsmith, who joined in 1996 and was promoted last year, Buyouts previously reported.

JMI focuses on lower-mid-market businesses in software and tech-enabled service sectors in North America and Europe. Subsectors include the cloud, digital health, education, energy, financial services, government and non-profit, HR, IT and infrastructure, sales and marketing, security and workforce management.