Easter sees double secondaries deals

John Bakie
26 April 2011

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The Easter weekend has seen major developments in the secondaries market, with both HarbourVest and Eurazeo attempting to expand their presence through acquisitions. John Bakie reports

Eurazeo confirmed this morning that it has reached an agreement to buy OFI Private Equity Capital in a share swap, acquiring a substantial portfolio of SMEs and an experienced management team. The deal values OFI at €132m.

The news of Eurazeo's expansion comes as HarbourVest makes a public offer to buy Switzerland-based Absolute Private Equity, in a deal worth over $750m. The acquisition is to be made with capital from HarbourVest's $2.9bn secondary fund, Dover Street VII LP.

Eurazeo, normally active in deals at the upper end of the market, has today gained substantial exposure to deals in the small and mid-cap segment by acquiring OFI. Rather than create its own team to focus on this area of the market, Eurazeo has opted to buy in the expertise of an existing team and its portfolio of companies.

Patrick Sayer, CEO of Eurazeo, says: "The SME segment in which OFI Private Equity is active is very attractive for Eurazeo in terms of transaction potential and recurrent capital gains."

OFI will continue to act as an autonomous subsidiary, allowing the management team to fully concentrate on searching for new SME investments while monitoring existing ones. The firm also plans to leverage Eurazeo's experience and network to open up new investment opportunities. Existing shareholders in OFI will swap their shares for new Eurazeo shares as part of the deal.

By contrast, HarbourVest has completed a more traditional secondaries transaction, offering investors in Absolute's fund-of-funds the chance to exit their investment for cash.

HarbourVest says it has been working closely with Absolute's board, which has recommended its shareholders to accept the offer, valuing the firm at $752m with 100% acceptance.

John Toomey, managing director of HarbourVest Partners, says the acquisition of Absolute gives the firm exposure to a portfolio of high-quality global private equity assets.