Apax on track with mega fundraising

The veteran European firm is hoping to hold a strong first close on its latest fund in the first quarter of 2007, consolidating its position as Europe’s number one fee-payer and a leading buyout player.

Apax Partners, the European buyout group, is on target for a first quarter first close of its €8.5 billion fund as it completes its shift in strategy away from venture to focus on buyouts.

In the past the firm has invested across the spectrum from venture to mega buyouts in a blended portfolio. The private placement memorandum for Apax Europe VII sent to investors a couple of weeks ago underlines the progress the firm has made in the last year in its transition to a pure buyout strategy based on sector expertise and a global network of offices.

An investor, who had seen the memorandum, said: “They have been warming investors up for a few months. They have had a good, strong, positive year returning around €3 billion to investors with a healthy pace of investment.”

Halusa: strategic shift

Under chief executive Martin Halusa, Apax was the highest European fee-payer to investment banks according to the latest numbers from Dealogic, a data provider. The numbers confirm the firm’s position as a prolific deal-doer, despite lacking the same firepower as some of its European and US rivals. The firm’s 2005 fund closed on €4.3 billion and is almost fully invested.

The investor said Apax’s latest fundraising should correct any imbalance taking the firm toe-to-toe with Permira, which raised an €11 billion fund this year, and CVC Capital Partners, which has gone back to market with a side fund to take its war chest to €10 billion.

Apax’s strategy of investing in global buyouts from the upper end of the mid-market and into the biggest buyouts is a point of difference and should ensure investors find capital in their 2007 allocation for the firm, the investor said. Apax opened an office in India this Autumn and the investor said the firm was making good use of its US team, since it merged with Saunders Karp & Megrue in 2005.

The fundraising will face competition from Warburg Pincus and The Carlyle Group, both in the market at a time when some investors have already raided their 2007 budget to fund their 2006 allocations to firms such as The Blackstone Group, Texas Pacific Group and Kohlberg Kravis Roberts.

KKR is about to close its fund above $16 billion in the next few weeks, while Blackstone has re-opened its $16 billion fund to new commitments to take it to $20 billion.

Apax Partners declined to comment.