Nordic Capital restructuring attracts bids – exclusive

Primary and secondaries market players are keeping a keen eye on the process involving the firm's €4.3bn 2008-vintage fund.

Nordic Capital‘s proposed restructuring of its 2008-vintage fund has attracted bids in a process keenly watched by primary and secondaries market participants alike.

Buyers submitted first round bids last week in the process involving the Scandinavian buyout firm’s €4.3 billion Nordic Capital VII fund, according to two sources familiar with the transaction.

Nordic began exploring options for a GP-led process in September and was working with advisor Campbell Lutyens, Secondaries Investor reported. The transaction would involve moving the remaining 10 unlisted assets, which have a net asset value of around €2 billion, into a multi-year continuation vehicle which could have a five-year term, sources said at the time.

Fund VII holds 14 assets, four of which have been publicly listed, according to Nordic’s website.

The deal progressing to first round bids is significant – several high-profile primary managers have used the secondaries market this year to run processes on their existing funds, and GP-leds are expected to comprise a significant proportion of deal this year’s deal volume. Market participants are predicting a record year of at least $42 billion and as much as $50 billion.

Apax Partners’ cancellation of its proposal to run a GP-led process on its 2007-vintage €11.2 billion Apax Europe VII fund may have put a pause on the momentum for GP-leds, and primary managers are watching the Nordic deal with keen interest, the London-based head of secondaries at a global investment firm told Secondaries Investor.

“These conversations [around GP-led processes] are becoming very commonplace,” the head said. “Whether these lead to substantial growth next year, for the brand name managers, depends on public perception of these deals. That will be driven by some of the high profile ones and how they turn out.”

Primary managers are also keeping an eye on high-profile GP-led deals.

“It’s clearly part of the landscape that didn’t exist three years ago,” said the managing partner of a London-based mid-market buyout firm that is fundraising. GPs are increasingly being asked by potential investors about whether they might consider running a process on an existing fund, such as through a stapled deal, the managing partner said.

“It’s a question we’re always being asked. Everyone raising a fund of funds wants co-investments and secondaries because that’s how you mitigate the J-curve.”

Nordic Capital and Campbell Lutyens declined to comment.