Apax France hits €1bn hard-cap on Fund IX – Exclusive

The Paris-based buyout house was initially targeting €750m for its ninth buyout fund, which has already made three investments.

Paris-based buyout firm Apax Partners MidMarket – formerly known as Apax Partners France – has held a final close on its ninth flagship fund on €1 billion. 

The firm began marketing Apax France IX in September 2015 with an initial target of €750 million and a hard-cap of €950 million. The firm held a first close on the fund on €610 million in March 2016, as reported by PEI .

Eddie Misrahi, president and chief executive officer of Apax Partners MidMarket, told PEI that the fund was oversubscribed. “We had to say no to a few LPs and to reduce some others,” he said.

“The final close was in a way delayed by uncertainty around the Brexit, and then uncertainty around the US election, so some factors which the LPs could not control.”

Rede Partners was the placement agent for the fundraise.

Returning investors from Fund VIII account for 84 percent in euro terms and 69 percent by number, and a number of historical investors also returned for Fund IX. There are around 20 new investors in the fund. The capital was primarily raised from pension funds, funds of funds, insurers and family offices.

“We had particular interest from family offices, which is a significant change compared to previous funds. We were initially contacted by a couple of them so we decided to dig further.”

Twenty percent of the capital raised came from North America, 31 percent from Europe and 49 percent from France, in general a similar mix to the previous fund.

“The only slight decline is from North America, where being French-focused did not have strong appeal,” Misrahi said.

Apax Partners MidMarket made a 2 percent GP commitment to the vehicle.

In February Paris-listed private equity company Altamir, which acts as a feeder vehicle for funds managed by both Apax Partners MidMarket and Apax Partners, said it had agreed to invest between €220 million and €300 million in Apax France IX.

Misrahi said the main draw for investors to the fund was the firm's performance.

“Of course they look at the team stability, they look at the terms, but the fundamental question for them is are we going to deliver? It's a bit past performance, but it's also do we have the capabilities to extract value creation in our portfolio?”

Misrahi said the firm's previous fund, a 2011-vintage €700 million vehicle, is a top-quartile fund against a benchmark of non-US buyout funds, with a distribution-to-paid-in of 40 percent.

Apax France IX will be looking to make between nine and 12 investments. It will be managed by a team of 22 professionals and invested primarily in France, Benelux and Switzerland.

The fund is already 23 percent invested in three companies. In March the firm agreed to acquire network performance software solutions business InfoVista from US-based private equity house Thoma Bravo. This was followed by the acquisition of French outdoor accommodation group Sandaya from Pragma Capital in May. In June it acquired Marlink, Airbus Group's commercial satellite communication business.

Apax France IX investors have also co-invested €190 million in these three transactions.

Misrahi said there is a strong pipeline of potential investments for the fund, which invests across four sectors: TMT, retail and consumer goods, healthcare, and services.

“It's quite busy at this time, we're working on a fair number of deal opportunities,” he said. 

Misrahi said that compared to the UK and the Nordic region, the price of assets in France is more reasonable, adding Fund VIII made 10 investments with an average EBITDA entry multiple of 8x.

Misrahi said the firm is not concerned about any potential effects of the upcoming presidential elections in France.

“The candidates that are likely to be elected are candidates that are more pro-business than France has been for many years. My personal feeling is that it will go in the right direction for business in general, and therefore for the development of private equity,” he said.

“There's a very strong recognition that more long-term money needs to go towards mid-sized companies. Since we don't have pension funds in France, this is something that is in the programmes for most candidates.”