Palladium Equity runs continuation fund deal on three assets

Palladium Equity is running a process to extend its hold over three assets from an older fund, as it gears up for a potential fundraising next year, sources told affiliate title Buyouts.

The GP-led, multi-asset continuation fund deal is among several that are running through the end of the year. GP-led deals represented around 35 percent of the overall total activity in the first half of the year, according to Jefferies’ half-year activity survey.

Palladium is working with Raymond James as adviser on the process. The deal includes three assets: Sky Zone, Del Real Foods and Jordan’s Skinny Mixes. Total net asset value across the assets is about $450 million, one of the sources said.

BlackRock’s secondaries group is lead investor on the deal, which is expected to close by year-end, sources said. A Palladium spokesperson declined to provide details.

Palladium holds the assets in Fund IV, which the firm closed on $1.14 billion in 2014. Fund IV limited partners had the option to cash out of their interests in the assets, roll into the continuation fund or do nothing, staying in the fund at the same terms they have had, sources said.

In this case, the majority of LPs chose to stay in Fund IV, taking the pure “status quo” option, one of the sources said.

Palladium, formed in 1997, closed its most recent pool, Fund V, on $1.56 billion in 2019. The firm has been in conversations with certain LPs about bringing Fund VI to market, likely next year, sources said. It’s not clear if the firm has settled on a target, or the timing of a future fundraising.

The firm targets investments in companies with revenues of about $25 million-$500 million in the consumer/food, business and financial services, healthcare and industrials sectors, according to Palladium’s Form ADV.

The firm, which managed about $3.2 billion as of 31 December 2022, focuses on partnering with founders and companies benefiting from the growth of the US Hispanic population, the Form ADV said.

Other GP-led processes that continue to move through the market include a transaction run by K1 Investment Management, which wants to move three assets out of an older fund and into a continuation pool, Buyouts previously reported.

GenNx360 Capital is running a process to extend its hold over Precision Aviation Group in a deal led by Neuberger Berman, while Leonard Green is running a four-asset continuation fund deal led by AlpInvest Partners.