Apax scoops 93x on King sale

Apax invested $29m in 2005 into the digital game company that is being sold for an enterprise value of $5bn.

Apax Partners will receive about $2.5 billion from the sale of its 45 percent stake in New York-listed King Digital Entertainment, bringing its total proceeds from that investment to about €2.7 billion.

Apax Europe VI invested €29 million into the digital game company in 2005 and has already received proceeds of €418 million from the company, a source familiar with the matter said.

Upon completion of the sale of its remaining 141 million shares, the investment will generate a gross money on invested capital (MOIC) of 93x and an internal rate of return (IRR) of 55 percent.

Including the King sale, Apax funds would have realised $15.9 billion since January 2014 with an average MOIC of 3.8x and an internal rate of return of 27 percent, the source said.

US-based Activision Blizzard, an interactive entertainment company, is acquiring all of the shares in King for an equity value of $5.9 billion, equivalent to $18 a share, according to a statement. The transaction is subject to approval by 75 percent of shareholders.

Upon completion of the sale, expected in the first quarter of 2016, Apax Europe VI would have distributed €7.1 billion to investors at a distributions to paid-in multiple of about 1.7x. The fund has a number of investments left in it, the source said.

Apax Europe VI is a 2005-vintage vehicle that closed on €4.3 billion, according to PEI Research & Analytics. Investors in the fund include Adveq, California State Teachers’ Retirement System, Canada Pension Plan Investment Board, and the Greater Manchester Pension Fund.

The firm is preparing to raise its ninth European buyout fund and will seek to raise €7.5 billion, according to reports.

Among other Apax realisations this year, the firm partially exited its stake in UK-based data protection and IT security company Sophos Group in June that netted the firm €255 million and generated a return of more than 2.5x, as reported previously by Private Equity International. That followed the sale of its stake in UK retailer New Look in a transaction that valued the company at £1.9 billion ($2.9 billion; €2.7 billion) and generated a 4.4x return for Apax.