PAI Partners mulls €4bn fund launch by year-end

Greg Gille
26 July 2017

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Buyout stalwart PAI Partners is aiming to return to market with a тЌ4bn vehicle by the end of 2017, unquoteт understands.

A person familiar with the situation confirmed that the GP is looking to launch its new fund with a €4bn target in Q4, as first reported by Private Equity News.

PAI declined to comment on fundraising.

This would mark a quick return to the fundraising trail for the GP, following a busy 24 months in the wake of its previous close – PAI officially closed PAI Europe VI on €3.3bn in March 2015. The fund's hard-cap of €3bn, which was reached back in January of that year, was raised to meet demand from investors, the GP said at the time. The fund held a €1.4bn first close in January 2014 and had already made seven deals by the time of the final close.

According to unquote" data estimates, the vehicle was around two thirds invested as of April 2017. The GP notably deployed it for the buyout of Spanish fashion retailer Grupo Cortefiel earlier this week, thought to be worth in the region of €1bn. It also invested in the acquisition of EliTech Group in May 2017, as well as the €825m buyout of French budget accommodation operator B&B Hotels and the €830m purchase of Swedish medical technology company Atos Medical last year.

PAI Europe VI has already started divesting part of its portfolio as well: in June, the GP agreed the sale of French private nursing homes operator DomusVi after a three-year holding period.

Click here for a full profile of PAI Europe VI, including a comprehensive list of LPs and investments, on unquote" data

The firm has also divested assets from its fifth fund in recent weeks, including airfield ground lighting specialist ADB Safegate, sold to Carlyle. According to Reuters, the sale valued ADB at €900m, representing more than 10x its expected 2017 EBITDA of €70-80m. PAI also agreed to sell French pharma group Cerba Healthcare to Partners Group and Canadian pension fund Public Sector Pensions Investments; though the deal value was not confirmed by the GP, several sources reported a €1.8-1.9bn valuation for Cerba, representing 12x the company's EBITDA. In May, Advent International entered into exclusivity over the acquisition of industrial supplier IPH from PAI.

PAI raised €5.4bn for PAI Europe V in 2008, but internal controversy sparked by the arrival of Lionel Zinsou resulted in the departure of key partners Bertrand Meunier and Dominique Mégret. This triggered a key-man clause on the 2008 fund, which was ultimately halved to €2.7bn. In the end, extra concessions on fees and corporate governance swayed two-thirds of investors to support the restructuring and to restart the shrunken fund. PAI has been on the mend since then and took advantage of improved conditions in 2011 to kickstart a hefty divestment effort.

Between the fund V restructuring and the PAI Europe VI close, the GP made 10 exits and returned around €7bn to its investors, with an average 3.5x return on investment. Notable exits included Yoplait (10x), Compagnie Européenne de Prévoyance (16x), United Biscuits (3.7x), Nuance Group (3x) and Atos (>2x).