TDR mulls strip sale on multiple vehicles

The buyout firm and owner of UK supermarket chain Asda has mandated Rede Partners to explore a process on its third and fourth flagship funds.

TDR Capital, the UK’s ninth-largest private equity firm according to affiliate title Private Equity International‘s PEI 300 ranking of the biggest PE fundraisers, has been considering running a strip sale on the back of having run one four years ago.

The London-headquartered buyout firm mandated Rede Partners to explore a process on its third and fourth flagship funds, according to two sources familiar with the matter.

Buyers would gain exposure to a tranche of assets across the €3.5 billion TDR Capital IV and the €2.1 billion TDR Capital III funds.

Secondaries Investor understands the process has not formally launched and may not go ahead.

Spokespeople for TDR and Rede declined to comment.

TDR is no stranger to the secondaries market, having tapped it at least three times. In 2016, TDR ran a stapled deal process that provided €835 million in expansion capital to its 2007-vintage buyout fund.

In 2018, it ran a single-asset deal on Stonegate Pubs, the sole remaining asset in its €2.2 billion 2013-vintage TDR Capital II fund, into a continuation vehicle backed by Landmark Partners, now part of Ares Management, and Goldman Sachs Asset Management. Rede also advised on that transaction.

Its 2019 strip sale involved Landmark acquiring exposure to a slice of assets from TDR Capital III via a separate vehicle, as Secondaries Investor reported at the time.

The firm closed its latest flagship fund, TDR Capital V, in March on €4.3 billion, ahead of its €4 billion target, according to PEI data. The manager raised more than €7 billion in the latest PEI 300 ranking and placed 107th globally by fundraising over a five-year period.

TDR made headlines in 2021 when it acquired the UK’s third-largest supermarket chain Asda in a £6.8 billion ($8.3 billion; €7.9 billion) deal.

Its TDR Capital III fund delivered a 1.26x distributed to paid-in multiple and a 29.4 percent internal rate of return as of 31 December, according to data from the Oregon State Treasury, an LP in the fund. Fund IV had a 0.33x DPI and an 18.6 percent IRR as of the same date.

Asset strip sales accounted for 1 percent of GP-led volume in the first half of this year, according to research from Campbell Lutyens, which noted that such transactions generally carry higher execution risk at times when discounts to net asset value prevail.