Apax launches Fund IX with $7.5bn target – Exclusive

The firm, which has returned $16.6bn to its investors since January 2014, will offer LPs the choice to opt into a deal-by-deal style waterfall in a portion of the new vehicle.

Apax Partners has officially launched its ninth flagship buyout fund, Private Equity International has learned.

According to investor sources Apax IX is targeting $7.5 billion in LP commitments. Approximately $2 billion of that committed capital will be allocated to the deal-by-deal structure and LPs will be offered that option on a first-come, first-served basis, as reported by PEI.

Apax will offer LPs in Fund IX the choice to be paid out through a deal-by-deal style waterfall instead of the usual European-style fund model in a bid to better compensate and retrain junior level talent, a source familiar with the matter told PEI in December. It is understood that the carry earned through the deal-by-deal portion of the fund will not be available to Apax’s equity partners.

Apax declined to comment on fundraising.

The firm has returned a total of $16.6 billion to its investors since January 2014, according to sources familiar with the matter.

In December Apax sold Rhiag-Inter Auto Parts Italia to LKQ Corporation in a deal valuing the business at €1.04 billion. Rhiag is a business-to-business distributor of aftermarket spare parts for passenger cars and commercial vehicles.

The sale was the first full realisation from Apax VIII, a 2011-vintage fund which closed on $7.5 billion in June 2013. The transaction delivered proceeds of €540 million to the Apax funds, representing a gross money on invested capital (MOIC) of 3.3x and an expected gross internal rate of return of more than 60 percent for Apax VIII in euro terms and its predecessor Apax Europe VII, and a 2.5x gross MOIC and a gross IRR of more than 45 percent for Apax VIII in dollar terms.

It is understood that during the fundraising for Fund VIII investors had the option to choose whether to commit to the fund in euros or dollars.

Apax’s exits in 2014 and 2015 have delivered a combined gross MOIC of 3.8x and a gross IRR of 28 percent in euro terms. These include the sale of New York-listed King Digital Entertainment last November which netted a gross MOIC of 93x and an IRR of 55 percent, as reported by PEI.

In May the firm sold a 90 percent stake held with Permira in UK fashion retailer New Look in a deal valuing the company at £1.9 billion and generating a 4.4x return for Apax. That followed its announcement in April that the sale of IT consulting group iGate, which included Apax’s 29 percent stake, would return $1.2 billion to the firm and generate a return of 4x.