Vestar explores restructuring of 2005-vintage fund – exclusive

Vestar Capital Partners V holds around $900m in net asset value across four assets, two of which are publicly listed.

Vestar Capital Partners is running a restructuring process on its largest-ever fund as it seeks more time to find exits for the vehicle’s assets, Secondaries Investor has learned.

The New York-headquartered mid-market firm is working with advisor Evercore on a process involving its $3.65 billion 2005-vintage Vestar Capital Partners V, according to three sources familiar with the deal.

Fund V has around $900 million in net asset value and holds four assets, two of the sources said. It is understood that two of the assets – Civitas Solutions, a services provider for individuals with intellectual disabilities and at-risk youth, and Triton International, the world’s largest owner-lessor of marine intermodal cargo containers – are publicly listed and account for around 65 percent of the portfolio’s value.

Vestar began exploring options for Fund V because it needs more time to maximise the value of the portfolio, one of the sources said. The proposal involves moving the four assets held in Fund V into a continuation vehicle with new terms, paid by the buyer, which is likely to have a five-year maximum life, the source said.

Limited partners have the option to sell their stakes or roll over into the new vehicle, two of the sources said. Existing investors will be offered a status quo option, one of the sources added.

It is understood the deal will be priced off a September valuation date and that LPs will give responses to the proposal in the first quarter.

Fund V delivered a 4.3 percent internal rate of return as of 31 March, according to an investment performance document from the California State Teachers’ Retirement System. It is unclear whether the figure is net or gross of fees.

The fund attracted commitments from investors including Alaska Permanent Fund, Amundi Group and the Andrew W Mellon Foundation, according to PEI data.

Vestar has hit the fundraising market twice since Fund V, including its 2011-vintage Vestar Capital Partners VI which closed on target on $814 million, according to PEI data. Its latest fund, Vestar Capital Partners VII, held an interim close on $724.3 million out of a $1 billion target in December, according to filings with the Securities and Exchange Commission.

GP-led restructurings accounted for 24 percent of the $54 billion in deal volume last year, up slightly from 23 percent in 2016, according to Evercore’s 2017 Secondary Market Survey Results, published on Friday.

Vestar and Evercore declined to comment.