Lexington, BC Partners agree $1bn stapled secondary deal

Kenny Wastell
16 August 2017

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Lexington Partners has agreed a $1bn stapled secondary deal for commitments in funds managed by BC Partners.

According to a source close to the situation, the figure includes 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"].

In July, unquote" reported that Lexington was looking to acquire up to €1.2bn of existing commitments in BC European Capital IX (BC IX) while also committing up to €600m to BC European Capital X (BC X), which is currently being raised. Two sources at the time told unquote" that BC X had raised €6bn prior to the Lexington transaction.

However, it is understood that some LPs declined the offer to sell their commitments in BC IX, resulting in the lower overall deal size. At the time of publication, the source had not commented on the primary/secondary split of the $1bn total, though the previously reported terms indicate the secondary portion accounts for around two thirds of the deal size.

BC X was launched in early 2016 with a €7bn target and had secured approximately €6bn in commitments prior to the transaction.

BC IX closed on its €6.5bn hard-cap in February 2012. LPs in the vehicle include California State Teachers Retirement System, Canada Pension Plan Investment Board, Iowa Public Employees Retirement System and Korea Investment Corporation, among a host of international institutional investors. Click here for a complete profile of BC IX

Campbell Lutyens acted as adviser to BC Partners on the secondary transaction, while Simpson Thacher & Bartlett provided legal advice. Macfarlanes acted as legal adviser to Lexington.

Stapled secondary deals have become a much talked-about feature of the market. A significant milestone was reached in April, when Ardian invested a total of $2.5bn in a transaction with Mubadala Capital, the financial investment arm of Mubadala Development Company, via a secondaries deal (including a mix of direct stakes and LP interests) and a $750m primary commitment to a new fund. The transaction was regarded at the time as one of the largest staples ever attached to a secondary deal.

BC had not replied to unquote" requests for comment at the time of publication.

People
Lexington Partners – Pål Ristvedt (partner); Marshall Parke (international managing partner).