Coller leads €2.5bn secondaries deal for Nordic Capital VII

Coller Capital acted as lead investor in the transaction, which was fully underwritten by Coller's seventh fund and Goldman Sachs Asset Management's Vintage Funds. The auction process resulted in a €2.5bn transaction and represented an 11% premium to the latest quarterly valuation, as of 30 September 2017.

Nordic Capital Fund VII held a final close on €4.3bn in November 2008. Its original term expired in December 2017, and the fund's investors received a notification on 5 February that they had 20 days to decide whether to sell shares in Nordic Capital Fund VII or join the vehicle that will hold the remaining assets.

The plan to restructure the fund came out of contemplating the value of the seventh fund's nine unlisted private holdings, which still held significant value potential and needed more time to be fully realised, Nordic Capital managing partner Kristoffer Melinder told Unquote.

A continuation vehicle was a realistic way to achieve this and offer an attractive proposition to existing LPs, which were given the option to realise the value of the companies over five years or get liquidity at a 11% price premium, he added.

The unlisted portfolio companies held in CV1 have a combined enterprise value of €4.4bn and include Binding Site, Sunrise Medical, Acino, Bladt Industries, Britax, Ellos Group, Itiviti/Ullink, Master Marine and Sport Nordic Group.

Coller and Goldman Sachs put in a significant amount of work early on in the process, Melinder said, adding that both teams are very familiar with the portfolio companies and sit on the advisory board.

While 80% of existing investors in Nordic Capital VII supported the transaction, the majority elected to sell, and less than 50% of LPs rolled over into the new vehicle.

Campbell Lutyens acted as financial adviser to Nordic Capital VII, while Kirkland & Ellis and Carey Olsen served as legal counsel.

GP-led transaction
The restructuring of Nordic Capital's seventh fund is one of the largest GP-led secondary transactions inked in Europe. These types of deals have been accounting for a growing portion of secondaries activity.

Situations around the 2007 and 2008 vintage years in particular have been cropping up, a source previously told Unquote. The funds are sitting on large portfolio companies that still have upside potential, having been acquired when assets were particularly expensive. These companies take a longer time to exit on average, while later vintage years are typically more normalised.

Apax Partners was said to be looking to start the process on a five-year continuation vehicle in a deal involving its 2007-vintage Apax Europe VII fund, as was Spanish private equity firm ProA Capital for its 2007-vintage Iberian Buyout Fund I.

Elsewhere, Investindustrial launched its second build-up fund to stretch the life cycle of its Fund IV portfolio last year. Similarly, Lexington and BC Partners agreed a $1bn stapled secondary deal in August 2017. The figure included both secondary acquisitions in BC Partners' €6.7bn ninth fund and new commitments to the GP's 10th fund. [Editor's note: BC Partners is the majority owner of Acuris, the parent company of Unquote].

Thriving market
GP-led transactions are likely to account for a sizeable portion of this year's secondaries deal volume, which is expected to continue thriving after a strong 2017.

According to the 2018 secondary market overview report by Campbell Lutyens, billion-dollar transactions are back, and secondaries deal volume in 2017 was boosted by 10 transactions closed at or above $1bn, compared to only six deals in 2016.

The report cites robust market conditions that have brought large sellers to market seeking to take profits and de-risk.

Campbell Lutyens partner Gerald Cooper told Unquote: "The secondaries market has become quite sophisticated and the boundaries of what qualifies as a secondary continue to evolve. We're seeing a lot of creative transactions involving a broader range of sectors, more concentrated portfolios and greater levels of structuring,"

"We're seeing both sector specialisation and product specialisation. There are several groups that have recently raised meaningful sums of capital to focus on infra, energy and other real assets," he added. "We have also seen an increase in the amount of capital committed to niche strategies such as tail-end funds and GP-led opportunities."

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• Topics
• Secondaries
• Nordics
• Fundraising
• Nordic Capital
• BC Partners
• Apax Partners
• Coller Capital
• Goldman Sachs