Providence eyes $1.35bn stapled deal after LP response – exclusive

LPs decided on Friday to sell between $800m and $900m worth of stakes in what could be one of the largest such deals ever.

Providence Equity Partners‘ stapled tender offer deal on its 2011-vintage fund could be as big as $1.35 billion, which would make it one of the largest of this type of private equity secondaries deal.

Around 15 percent of limited partners by value in the firm’s 2011-vintage Providence Equity Partners VII fund said on Friday they would sell their stakes to a consortium led by Canada Pension Plan Investment Board, according to two sources familiar with the matter.

This represents between $800 million and $900 million in net asset value as of 31 March.

CPPIB, HarbourVest Partners and StepStone, had agreed to a 2:1 secondaries to primary ratio, meaning the group is set to commit as much as $450 million to Providence’s latest fund, Providence Equity Partners VIII.

The deal is expected to close in the third quarter.

Buyers who completed GP-led stapled transactions last year averaged a 3.4:1 secondaries to primary ratio, according to Campbell Lutyens’ 2018 Secondary Market Overview Report.

It is understood that Fund VIII, which launched in April last year, had raised more than $4 billion of its $5 billion target as of mid-July.

Secondaries Investor reported on 16 July that LPs in the $5 billion Fund VII had until 20 July to decide if they wanted to sell their stakes to the three buyers. It is understood Park Hill is advising on the process.

If the deal closes, the total transaction size will be larger than BC Partners’ $1 billion stapled tender offer last year which comprised around $700 million in NAV of secondaries stakes and around $300 million of commitments to the firm’s BC European Capital X vehicle.

Ardian’s $2.5 billion staple with Abu Dhabi’s Mubadala Capital last year, which was not an LP tender offer, comprised $1.75 billion worth of LP stakes in buyout and growth funds as well as direct investments, and a $750 million to a new private equity fund.

CPPIB, HarbourVest and StepStone declined to comment. Providence and Park Hill did not return requests for comment by press time.