HarbourVest Partners is among a group of lead investors on Roark Capital’s multi-asset secondaries process that will move several portfolio investments into a new vehicle for more time to manage them, sources told affiliate title Buyouts.
Roark is one of the larger processes this year and appears to be making it through the market despite pricing uncertainty. Some large transactions are hitting delays as pricing is shifting in the changing markets, and building large enough syndicates for mega-deals has become challenging, sources have said.
One way to move a deal through the economic turmoil is to find lead investors, who can then help drive momentum to get a big secondary to the finish line. HarbourVest is said to be a lead, along with AlpInvest Partners and two other investors. Spokespeople for HarbourVest and Roark declined to comment, while no one from AlpInvest responded to a comment request this week.
Roark brought the deal to market earlier this year, working with Evercore as adviser, Buyouts previously reported. The deal was expected to total up to $3 billion including new capital and existing LP roll-over, sources said at the time.
The process could be heading for a close in September, two of the sources told Buyouts.
The deal involved moving assets out of Roark’s first and second funds, including Inspire Brands, which holds a portfolio of popular restaurants such as Arby’s, Buffalo Wild Wings and Sonic. Roark formed Inspire Brands in 2018, which has been acquiring popular restaurant brands, including Dunkin’, which it bought in 2020 for $11.3 billion.
It is unclear clear whether LPs in Roark’s process have the option to roll on the same terms they had in the older funds, known as a status quo option. Usually when a secondaries process involves multiple older funds, the GP does not offer a status quo option.
Large deals have been getting delayed as firms and advisers work to syndicate them out to investors who may be tapped out, or be extremely picky in what they focus on. Another large deal said to be getting done is KKR’s process to move Internet Brands out of an older fund and into a continuation vehicle. Goldman Sachs is a lead investor on that deal, Buyouts previously reported.
Some deals are facing price renegotiations, especially for those with valuations set by a preceding minority stake sale that closed before the market began to sink.
Banneker Partners’ $400 million single-asset secondary for ed-tech company LINQ, the valuation for which was set by a minority stake sale in the fourth quarter, was renegotiated downward, Secondaries Investor reported earlier this month. Glendower Capital is lined up as lead investor on the process, which is being facilitated by PJT Park Hill.
Secondaries Investor is aware of at least one other deal that was priced off a liquidity event in Q4, and which is now being renegotiated in line with declining public stocks and the acceptance that it will be a difficult year for liquidity events.