Segulah pulls Fund IV restructuring

The Swedish mid-market firm has cancelled the secondaries process on its 2007-vintage fund due to several potential liquidity events, including an offer by a strategic buyer for one of the assets.

Segulah, a Swedish mid-market private equity firm, has cancelled the restructuring process on its 2007-vintage buyout vehicle after a strategic buyer made an offer for one of the fund’s prized assets, Secondaries Investor has learned.

The Stockholm-headquartered mid-market firm stopped the process on its SKr 5.2 billion ($580 million; €543 million) Segulah IV fund in the first quarter after receiving first-round bids from secondaries buyers, according to three sources familiar with the process.

“We have a number of potential attractive liquidity events that were not on the radar when we set the secondaries process in motion,” managing partner Sebastian Ehrnrooth confirmed. “We realised, talking to existing investors, that their interest in the restructuring deal was small and that it would require significant premiums to satisfy them.”

The firm expects the liquidity events involving Fund IV to occur this year, Ehrnrooth said, adding that the firm has not ruled out reconsidering restarting a restructuring process on the vehicle at some point.

Fund IV will reach its 10-year mark in August next year, and the firm may use the fund’s extension options of up to two years to maximise value, he said.

The firm’s 2014-vintage Skr 2.4 billion Fund V is halfway deployed and there are no plans to raise Fund VI yet, Ehrnrooth said.

Secondaries Investor reported in February that Segulah launched the process to restructure Fund IV in January and hired investment bank Lazard. The process involved just under €350 million of net asset value in the eight asset-fund, according to two sources familiar with the deal. The plan was to move the assets into a new vehicle with new terms, the two sources said.

Despite cancelling the restructuring, Ehrnrooth said he had no regrets about launching the secondaries process.

“It was our first contact with this type of transaction and it was a valuable learning experience,” he said. “We would have regretted continuing this process further and being forced to abandon it because of lack of supply. Given that we terminated the process at the stage we did, it was still a meaningful process and events shaped the circumstances in a way we had not foreseen.”

Private Equity News first reported that Segulah had paused the restructuring process on Fund IV.

GP-led processes including fund restructurings, recapitalisations, spin-outs and tender offers, accounted for around 25 percent of deal volume last year, according to a January report by Greenhill Cogent.

Lazard did not return a request for comment by press time.