London-headquartered mega-firm Apax Partners will consider doing more all-equity deals and co-investments alongside trade players as it seeks to adapt to a world in which credit remains scarce.
In the firm’s recently released annual report, chief executive officer Martin Halusa painted a picture of how buyout houses, which had previously benefited from abundantly available leverage, will execute deals in apost-credit crisis environment.
“In this environment, where banks have scaled back their lending, the percentage of our own equity that our funds use to back companies will increase. Indeed, many investments will be equity only,” said Halusa. “We will see more situations where our funds invest alongside established corporate players.”
Apax typically invests in companies with enterprise values of between €1 billion and €5 billion. The aggregate equity-to-debt ratio of the firm’s portfolio companies is 31:69.
Apax’s post-credit crunch investments already represent this shift of strategy. Last year it acquired publishing company Emap alongside Guardian Media Group, the UK-based newspaper group, in a 50-50 split deal.
The buyout group has also made two all-equity investments since mid-2007: the minority stake taken in mobile communications group Weather Investments last year and the investment in publicly-listed Indian hospital group Apollo in 2007.