Madison Dearborn Partners intends to buy itself more time to manage portfolio company and insurance broker/consultancy NFP Corp as part of a single-asset secondaries process moving through the market, three sources told sister title Buyouts.
Madison Dearborn is among numerous high-profile GPs using the secondaries market to extend their hold periods over certain assets that still have room to grow. Continuation fund deals give GPs more time to manage assets, as well as additional capital to help them grow.
Other GPs with recent processes include Clearlake Capital Group, Revelstoke Capital Partners and Thomas H Lee Partners.
The process is understood to be moving toward final close. It is not clear if the offer is in front of existing limited partners for approval. As part of the deal, LPs in the older fund, which appears to be the firm’s sixth fund, can choose to cash out of their stakes in NFP or roll their interests into a continuation pool, sources said.
A buyer syndicate is being assembled for the deal. One investor in the pool is Neuberger Berman, sources said. It is unclear who is leading the investor group. The total deal value is likely to come in below $1 billion, sources said, a figure that depends on how many LPs choose to sell or roll.
Lazard is understood to be working as secondaries advisor on the process. A spokesman for Madison Dearborn declined to comment.
Madison Dearborn acquired NFP Corp (National Financial Partners) in 2013 in a deal valued at about $1.3 billion. In December, the company said it added on Montreal-based Ogilvy Insurance, which provides property and casualty insurance, as well as group benefits and pensions, life insurance and investments.
The firm closed its sixth fund on $4.1 billion in 2010. Fund VI was generating a 2.1x multiple and a 23.4 percent net internal rate of return as of 30 June 2020, according to performance information from the Washington State Investment Board.
Madison Dearborn ran one of the first headline-grabbing single-asset processes in 2018. The firm moved portfolio company Asurion out of its 2006, fifth fund, and into a continuation pool. Asurion is an insurance provider for devices like cell phones.
The Asurion investment was interesting in that Fund V LPs who chose to cash out had the ability to reinvest in Asurion. The firm also gave LPs in Fund VII the ability to invest in the company as part of the deal, Buyouts reported at the time.
Single-asset deals accounted for 30 percent of GP-led transactions in the first half of last year, up from 20 percent in 2019, according to an H1 2020 volume report from Evercore. GP-led deals were about 39 percent of an estimated $18 billion total deal volume in the period, Evercore found.
– This report first appeared on sister title Buyouts.