AlpInvest backs $1.2bn Thompson Street deal involving multiple funds

The Carlyle Group unit has led a process in the latest example of a sponsor using continuation fund technology for the first time.

Thompson Street Capital Partners, a St Louis-headquartered mid-market buyout shop, has closed a first-time continuation vehicle that involves multiple underlying flagship funds.

AlpInvest Partners led the $1.2 billion transaction which involved a company lifted from both of Thompson Street’s fourth and fifth programmes, according to a statement shared with Secondaries Investor. The $1.2 billion represents the combined enterprise value of the deal.

There have been numerous first time continuation fund transactions this year, including firms such as The Jordan Company in August and Kohlberg & Company, Arclight Capital Partners and General Atlantic in July.

The continuation vehicle acquired BCM One, a technical services provider, from the 2018-vintage, $1.15 billion Thompson Street Capital Partners V and Revenue Management Solutions, a healthcare revenue software provider, from the 2015-vintage, $640 million Thompson Street Capital Partners IV.

The new vehicle, which includes both TSCP Fund IV and Fund V limited and general partners, has additional capital to support the growth of the two companies, according to the statement. Management from both portfolio companies have made equity contributions to the vehicle.

The identity of the other backers in the deal were not disclosed.

Each asset was the strongest in its respective fund, according to the statement. Bob Dunn, managing partner at Thompson Street, called the assets “two of the best-performing portfolio companies in TSCP’s 20-year history”.

BCM One delivers managed services to support unified communications, network management and optimisation, and other technical services to more than 20,000 customers and channel partners.

RMS provides more than 1,000 healthcare providers, revenue cycle management and other healthcare entities with automation solutions for more than $220 billion of cash payment reconciliations, correspondence management and other workflows.

“We are seeing [continuation funds] every week,” Neal Costello, managing director at AlpInvest responsible for its European operations, told Secondaries Investor in August. “The flavour of the month has turned into the flavour of the quarter, which is now the flavour of the year and I think we’re going to continue to see more of them,” he then predicted.

He added: “I think that’s a good thing because it’s creating healthy conversations. If it’s not that one company that works, maybe there’s a creative solution that we can put around a couple of companies.”

AlpInvest’s other recent single-asset or concentrated GP-led deals include IQ-EQ, as Secondaries Investor reported in June. The firm is expanding in secondaries and plans to launch a dedicated preferred fund in 2022, as Secondaries Investor reported.

Evercore served as financial adviser to Thompson Street in the transaction with Kirkland & Ellis serving as legal counsel. Ropes & Gray LLP acted as legal counsel for AlpInvest.