Apax in $1.8bn tertiary buyout

The firm’s $600m equity cheque for North American marketing agency Advantage Sales & Marketing will push Apax’s €11.2bn Fund VII to just over the 60% deployed mark.

Apax Partners will become the third private equity sponsor for Advantage Sales & Marketing (ASM), having agreed this week to purchase the North American sales and marketing agency from JW Childs Associates and BAML Capital Partners (BAMLCP), the captive private equity group of Bank of America Merrill Lynch.

JW Childs and Merrill Lynch Global Private Equity, BAMLCP’s predecessor, had purchased the company in 2006 from Allied Capital for an enterprise value of just over $1 billion, giving publicly traded Allied a profit of roughly $430 million on its equity investment.

It is unclear how much JW Childs and BAMLCP stand to profit from the latest sale of ASM, which market sources have said is worth $1.8 billion. Two-thirds of that amount will be in the form of debt arranged by Credit Suisse and UBS, according to a source familiar with the matter. The company’s senior management will remain in place and retain a minority stake of undisclosed size. Apax declined to comment on financial details of the transaction.

Should the deal close as expected before year’s end, it would push Apax’s Fund VII, a 2007 vintage that raised €11.2 billion, just over the 60 percent deployed mark. Depending on pace of deployment, the firm is likely to start raising Fund VIII toward the end of 2011.

Irvine, California-headquartered ASM has booked revenues of roughly $ 1 billion this year, according to a statement. The 23-year-old company has 66 offices in the US and Canada and employees more than 30,000 associates. The company provides customised sales, marketing and merchandising services for more than 1,200 manufacturers, suppliers and producers of consumer packaged goods.

“ASM has established an impressive track record of generating value for its clients and customers through its operational excellence in both sales and marketing,” John Megrue, chief executive officer of Apax Partners US, said in a statement. Megrue also co-leads Apax’s global retail- and consumer-focused investment team, which considers the ASM transaction a consolidation opportunity, according to a spokesman.

Other investments in Apax’s retail and consumer portfolio have included US clothing chain rue21 and clothing brand Tommy Hilfiger. The firm’s various funds have invested nearly $6 billion globally in the sectors.