Olympus GP-led deal fell down over pricing – exclusive

Firms including HarbourVest Partners and Pantheon were looking at the deal which involved the firm's 2007-vintage $750m fund, Secondaries Investor has learned.

Olympus Capital Asia‘s attempt to run a GP-led process on its 2007-vintage fund fell through due to a mismatch in pricing expectations between the manager and potential buyers, Secondaries Investor has learned.

The Hong Kong-headquartered mid-market private equity firm hired Lazard in January to start a price discovery process with a view to offering liquidity to investors in its $750 million Olympus Capital Asia III fund, according to three sources familiar with the matter.

Global firms including HarbourVest Partners and Pantheon looked at the deal before the process was abandoned in April when the parties involved could not agree on pricing, two of the sources said.

“There was a pretty big gap between expectations and reality as far as what the GPs or the LPs thought could be achieved as far as pricing,” one of the sources told Secondaries Investor. “Clearly the market spoke, and what [it] spoke of was quite incongruent with expectations. The gap was not closed.”

Some limited partners in Olympus III wanted liquidity from the almost decade-old fund due to a change in allocations and strategy, though LPs were not given any formal offer related to the process, one of the sources said.

Olympus III, a pan-Asia fund focusing on buyout and growth investments, had a 1.2 x multiple and a 6.3 percent net internal rate of return as of 30 September, according to online private equity fund marketplace provider Palico.

The potential deal would have involved around $200 million in net asset value, according to one of the sources.

Another source said the portfolio was tough to price with a lot of tail-end assets based in mainland China and that prospective buyers would have needed as much as a 30 percent discount to NAV for the deal to be worthwhile, which led to the pricing mismatch.

Investors who have committed to the fund include New York City Police Pension Fund and Wesleyan University, according to PEI data.

Olympus, which was founded in 1997, invests in agribusiness and food, financial and business services, and environmental and clean energy sectors, according to its website. The firm invests between $30 million and $200 million or more in portfolio companies which generally have between $100 million and $2 billion in revenue.

Olympus and Lazard declined to comment. HarbourVest and Pantheon did not return requests for comment.