Motion Equity restructuring cost $430m

New details have emerged on HarbourVest’s ‘rescue’ of Motion’s €1.25bn Fund II, one of the first major restructurings of a tail-end fund in Europe.

HarbourVest Partners invested $430 million to seal the recent Motion Equity Partners restructuring, Secondaries Investor has learned.

Approximately $400 million of that amount went towards purchasing LP interests in the firm’s Fund II, with the balance allowing Motion’s management team to make further or follow-on investments, according to two sources close to the deal.

LPs in Motion’s Fund II, a €1.25 billion vehicle raised in 2005, had the option of either selling their stakes or staying in the restructured vehicle for the next four years. Approximately half of Motion’s LPs sold their stakes, leaving around 20 investors in the fund. HarbourVest then provided capital enough for two to three new deals, sister title Private Equity International previously reported.

The auction process HarbourVest won took six months: there were twenty initial letters of interest, which led to 10 parties performing due diligence and three official bids. It was unclear at press time who the unsuccessful bidders were.

Rede Partners advised on the transaction. Both Rede and HarbourVest declined to comment; Motion didn’t respond to a request for comment at press time.

The Motion deal represents one of the first major European restructuring of an end-of-life fund.

In April 2012 Cognetas rebranded itself as Motion Equity Partners in a bid to shake off negative publicity following the departure of the firm’s managing partner and founder, Nigel McConnell. McConnell left Cognetas in 2011 due to “strategic differences”, as reported by PEI at the time.

Subsequently, Motion closed its office in Frankfurt, reduced its office in London and shifted its investment focus to French and Italian markets.

The firm’s second vehicle is fully deployed and has only managed to exit one business from this portfolio. It sold Ixetic, a producer of high-performance pumps for the automotive sector in October 2012, netting the firm a 2.2x return.

With a lack of returns, Motion was not in a position to raise a new fund. While the fund is still in wind-down mode, the backing from HarbourVest has given Motion some extra time to realise the remaining assets, without being perceived as distressed sellers. In addition, the Motion team has been re-incentivised. It is understood there was a carry reset on the fund as part of the restructuring back in 2011. There is a bit of carry for the team and HarbourVest will top this up slightly.

The Motion deal follows some well-known restructurings that took place in the US last year, including that of Willis Stein & Company and Behrman Partners. In the case of the Willis Stein fund, a majority of existing LPs were bought out with financing provided by Landmark Partners, Vision Capital and Pinebridge Investments, as well as Willis Stein management. With Behrman Capital’s fund, the five remaining portfolio companies in the firm’s third fund, a $1.2 billion 2000-vintage, were rolled into a new, $1 billion vehicle funded by CPPIB, Goldman Sachs and other investors.


Yolanda Bobeldijk contributed to this report