Fund of funds manager HarbourVest Partners has signed a deal to purchase a stake in Spanish private equity firm Portobello Capital‘s Portobello Capital II from existing limited partners. As a part of the transaction, Portobello would transfer assets in the fund to a new structure with new terms, according to a source familiar with the matter.
The source called the transaction a GP-led whole fund liquidity transaction and explained that Madrid-based Portobello, which will continue to manage the fund, took advantage of the opportunity because it allowed them to exercise their fiduciary duty of returning capital to investors.
Some existing limited partners chose to roll over into the new fund with new terms, while HarbourVest offered liquidity to the others, the source said. It wasn’t clear how much HarbourVest paid for the transaction. The deal was signed in recent weeks, the source said.
There are seven companies held by Portobello Capital II, all Europe-based, including seafood product maker Angulas Aguinaga, women’s fashion retailer Festa, and insurance services firm Multiasistencia, according to Portobello’s website.
“Portobello is a strong GP who has already raised a new fund, so this wasn’t a stapled deal,” the source said. Last year, the firm held a final close on Portobello Capital III at its €375 million target. Investors include AlpInvest Partners and European Investment Bank, according to PEI’s Research and Analytics division.
Portobello buys mostly controlling stakes in companies and invests between €10 million and €100 million, according to its website.
GP-led restructurings such as the Portobello Capital II deal are commonly used to extend the life of a fund that may still have some viable portfolio companies.
“The past three years have seen enormous growth in the number of GP-led restructurings,” Jeff Hammer, managing director at investment bank Houlihan Lokey‘s illiquid financial assets practice told Secondaries Investor. “What started out as a trickle of one-off, highly-negotiated deals has become a regular flow of transactions using increasingly standardised techniques.”
HarbourVest and Portobello were not immediately available for comment.
HarbourVest has offices in Asia, Europe, Latin America and the US and has completed over $11 billion in secondary purchases, according to its website. The firm’s clients include pension funds, endowments, foundations, and financial institutions.