GLOBAL – CIC provides Apax with liquidity boost

Kimberly
07 December 2009

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Sovereign wealth fund China Investment Corporation (CIC), may invest up to EUR 800m in Apax' EUR 11.2bn fund. The move is not intended to boost the vehicle's size, which last year became Europe's largest private equity fund. Instead it is believed to replace the money currently committed by the firms 200-plus LPs, some of which may struggle to meet capital calls in 2010.

If the deal goes through, CIC would likely purchase a stake of 2.3% in Apax's management company. The stake brings to 10% the amount owned by various SWFs, Apax having sold 7.7% of its management company to the Government of Singapore Investment Company's private equity arm and Australia's Future Fund in February this year. The sole purpose of the money will be to created a permanent capital vehicle to invest in future Apax funds, not to be diverted to retiring shareholders, as has been the case with other buyout houses in recent years.

Apax Fund VII closed on EUR 11.2bn in 2008 against a target of EUR 8.5bn and first close on EUR 6bn in March 2007. The vehicle intends to invest in 20-30 companies, the majority of which are expected to have an enterprise value of between €1bn and €5bn. Its predecessor raised EUR 4.3bn in 2005.