Unpicking the Mubadala stapled deal

The $2.5 billion stapled deal Ardian and Abu Dhabi’s Mubadala Capital announced in April was the largest stapled transaction to date, and documents seen by Secondaries Investor give greater insight into the ins and outs of the deal.

The transaction saw the firm invest $1.75 billion in a portfolio of 14 secondaries stakes and 14 direct stakes belonging to the Abu Dhabi state-owned investment manager, and commit $750 million to a new $1.5 billion private equity fund that Mubadala will use to invest in directs, co-investments and fund commitments.

Ardian ended up acquiring two-thirds of the 14 funds and 14 directs for a price that represented a roughly 20 percent discount to net asset value, the documents say.

The 14 secondaries stakes held $554.2 million in net asset value as of 31 March 2016, while the portfolio of direct stakes was split between 11 that were one year or older, and three that were primary commitments made after the record date. These contained $985.2 million and $57.6 million in NAV, respectively.

The secondaries portfolio in which Ardian invested included stakes in Raine Partners I, a 2010-vintage growth/venture capital containing $105.6 million in NAV, and four Carlyle funds: Carlyle Partners VI (2012-vintage), Carlyle Partners V (2007), Carlyle Global Fin. Services Partners (2008) and Carlyle Asia Partners III (2008), which together had NAV of $242 million.

The direct stakes cover a number of industries, from music publishing to cage fighting, with top two assets EMI and Restaurant Brands International accounting for 35 percent of the direct portfolio’s NAV. A more detailed breakdown of the stakes acquired is listed below.

By vintage, the whole secondaries portfolio is 84 percent focused on North America (by NAV), with Asia accounting for a significant 13 percent. Europe accounts for only 2 percent, South America for 1 percent.

By vintage, 26 percent of the assets acquired were of 2014-vintage and 26 percent of 2013-vintage. Nine percent of the assets by NAV are older than 12 years, and six percent of 2016-vintage.

The deal as a whole was funded with a 50 percent interest-free deferred purchase price to be repaid on 31 December 2017, with third-party leverage accounting for the remaining 50 percent. With the deferment taken into account, the multiple would represent 1.4x cost.

“Ardian’s ability to underwrite 100% of the deal, and syndicate up to 50% of the transaction to our blue chip LP base was key to win this deal,” the document noted.