PAI exceeds hard-cap, closes Fund VI on €3.3bn

Greg Gille
13 March 2015

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French private equity house PAI Partners has officially closed its latest vehicle, PAI Europe VI, on €3.3bn.

The fund's hard-cap of €3bn, which was reached back in January, was raised to meet demand from investors, the GP said. The final close includes a GP contribution, although PAI declined to comment on the amount. King & Wood Mallesons provided legal advice as part of the fundraising process.

The fund held a €1.4bn first close in January 2014 and has already made seven deals.

The firm began fundraising in the spring of 2013 after an intense pre-marketing effort. PAI had raised €5.4bn for the fund's predecessor in 2008, but internal controversy sparked by the arrival of Lionel Zinsou resulted in the departure of key partners Bertrand Meunier and Dominique Mégret.

This triggered a key-man clause on the 2008 fund, which was ultimately halved to €2.7bn. In the end, extra concessions on fees and corporate governance swayed two-thirds of investors to support the restructuring and to restart the shrunken fund.

PAI has been on the mend since then and took advantage of improved conditions in 2011 to kickstart a hefty divestment effort. The GP has since made 10 exits – it is believed to have returned around €7bn to its investors, with an average 3.5x return on investment. Specifically, PAI Europe V is understood to have returned about 50% of its capital to investors at an average of 2.4x cost.

Recent exits include Yoplait (10x), Compagnie Européenne de Prévoyance (16x), United Biscuits (3.7x), Nuance Group (3x) and Atos (>2x).

Investors
PAI benefited from the support of LPs in previous funds, with existing institutional investors increasing their allocation by an average of 30% compared to PAI Europe V.

The vehicle's LP base includes public and private pension funds, sovereign wealth funds, insurance companies and high-net-worth individuals. The majority (60%) of commitments came from Europe, 20% from North America, 15% from Asia and 5% from the Middle East and Latin America. Overall, the fund attracted 150 LPs.

Investments
The GP aims to take controlling stakes in LBOs across Europe, with a specific focus on the mid- to large-cap markets. PAI is particularly focused on transactions in excess of €300m, investing equity tickets in the €100–300m range.

In April 2014, the vehicle made its maiden investment by acquiring a majority stake in Euro Media Group, a French provider of TV and film facilities and services, for around €200m. Two months later, it backed an MBO for VPS Holdings, the European division of TDR Capital portfolio company VPS Acquisitions; it also took a majority stake in DomusVi, a French operator of nursing homes and related services.

PAI most recently acquired AS Adventure Group, a Belgian retailer of outdoor clothing and equipment, in a secondary management buyout from Lion Capital for €400m.

People
Michel Paris is partner and chief investment officer at PAI. The current head of the firm, Lionel Zinsou, is set to step down this year as Paris takes over. Zinsou is tipped to join the firm's supervisory board before he retires in 2017.

Advisers
King & Wood Mallesons, Michael Halford, Nathalie Duguay (Legal).