Partners Group has emerged as the buyer in a stapled deal involving Swedish manager EQT‘s 2011-vintage flagship buyout fund and its latest Asia-focused fund that will increase its exposure to both vehicles, Secondaries Investor has learned.
The Zug-headquartered investment firm has offered to acquire limited partners’ stakes in the €4.8 billion EQT VI while committing to EQT Mid Market Asia III, according to three sources familiar with the deal. Partners’ offer represents a premium to net asset value based on a 30 June valuation date, one of the sources said.
The size of the deal was unclear.
Mid Market Asia III is close to reaching its $800 million hard-cap, according to a fourth source. The fund was registered in 2015 as EQT Mid Market Asia, according to a filing with the UK’s Companies House.
Stockholm-headquartered EQT launched the process to give LPs the option of cashing out of EQT VI after receiving demand from secondaries buyers for stakes in that fund, according to one of the sources. The firm did not hire an advisor to work on the process, the three sources said.
Partners was selected as the sole potential buyer through a competitive bid process. LPs in EQT who decide to part with their stakes will receive a 19.5 percent net internal rate of return and a 1.8x net money multiple, according to one of the sources.
It is understood that Partners, which is using its 2015-vintage Partners Group Secondary 2015 fund to invest in the deal, is an existing investor in EQT VI and had committed to Mid Market Asia III prior to the stapled process.
EQT VI delivered a 1.7x net multiple on invested capital and a 17.3 percent net IRR as of 30 June, according to one of the sources. The fund held its final close in October 2011 after nine months of fundraising, above its €4.25 billion target, according to PEI data.
Investors in the fund include State of Wisconsin Investment Board, University of California Regents Endowment Fund and University of Michigan.
Mid Market Asia III follows on from EQT’s 2013-vintage $1.1 billion Mid Market fund, which also focuses Asia as well as the US and Europe, and its 2006-vintage $535 million Greater China II Fund, according to EQT’s website.
BearTooth Advisors is working as placement agent on Mid Market Asia III, according to one of the sources.
Stapled deals have made headlines this year, with prominent examples including BC Partners’ $1 billion process with Lexington Partners and Ardian’s $2.5 billion deal with Abu Dhabi’s Mubadala Capital. More than one-quarter of respondents to a January survey by Setter Capital said they felt a “materially higher” number of general partners sought such deals last year compared with 2015.
EQT, Partners Group and BearTooth declined to comment.