Ardian closes fifth co-investment fund on $2.5bn

The fund was launched in Q1 2017 and held a first close on €447.5m in Q4 2017, according to Unquote Data.

Ardian disclosed that seeing the positive response of investors, it decided to considerably surpass the fund's target of $1.2bn while on the fundraising trail. The GP has not commented on the fund's hard-cap. 

The fund's predecessor, Ardian Co-investment IV, closed on €1.1bn in 2015. 

Alexandre Motte, head of Ardian Co-Investment, said: "Several investors were new to co-investment as an asset class and committed to the fund, being attracted by the lower risk and diversified exposure of the strategy, as well as its lower fees and carry. This was particularly the case for some insurance companies, pension funds, and family offices."

The vehicle is made of two compartments, one dedicated to European investments and the other to US transactions; the former is in euro and the latter in dollars.  

Investors
The fund attracted 194 investors, which is around three times the number of investors in Ardian's previous co-investment fund. Of the LPs that had previously committed to other Ardian funds, 53 backed the co-investment strategy for the first time, while 92 LPs are first-time backers of Ardian altogether.

Investors in the fund include pension funds, insurance companies, high-net-worth individuals, endowments, foundations and financial institutions based in Europe, North America and Asia.

French backers, from representing half of the total investor base of the fourth co-investment fund, now amount to around a third. On the other hand, the number of non-European LPs, mostly based in North America, South America and Asia, has significantly grown and these now represent a fourth of all investors.

Attracting non-European LPs was a priority for the GP, Motte told Unquote: "In order to have a more international investor base, we targeted countries with large pension funds, and for example Chilean and South Korean pension funds are now invested in the vehicle."

Investments
Ardian Co-investment V will acquire minority stakes in businesses, while typically a private equity GP will be the asset's main shareholder. Ardian's Motte said: "Sourcing takes place mostly via the relationships created via the fund-of-funds activity of Ardian; when a GP that Ardian is invested in requires a co-investment partner, it is then introduced to Ardian's co-investment team. Most deals of the co-investment team are sourced this way, though in some cases the co-investment team identifies an interesting target and then teams up with a majority shareholder or forms a consortium."

The fund has a diverse investment strategy: a third of the vehicle will be used to back companies with valuations of at least €2bn, a third for companies with EV of €500-2bn, and the remaining third for businesses valued at less than €500m. Targeted sectors will include healthcare, industrials, business services and consumer goods. In terms of geography, 45% of investments are expected to take place in Europe, 45% in North America and the remaining 10% elsewhere globally, likely in Asia.

The investment period of the fund will be five years. Investments via Ardian Co-investment V are expected to generate a multiple of 2x, for an IRR of 17%. 

The fund is already around 30% invested in 20 businesses, including France-based Alvest, a manufacturer operating in the aviation industry; and US-based Zayo, a provider of fibre infrastructure.

People
Ardian – Benoît Verbrugghe (member of the Executive Committee); Alexandre Motte (head of Ardian co-investment).

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• Topics
• Funds
• France
• Buyout
• France
• Co-investments
• Ardian (formerly Axa PE)