BC Partners seeks staple for Fund X – exclusive

LPs in the buyout firm's 2011-vintage €6.7bn ninth fund will be offered bids for their stakes in the summer, Secondaries Investor has learned.

BC Partners, one of Europe's largest private equity managers, wants to use a stapled deal on its ninth flagship buyout fund to help hit the €7 billion target of its latest vehicle, sister site Secondaries Investor has learned.

The London-headquartered firm has notified limited partners in its BC European Capital IX fund that it intends to run a tender offer process for investors in the 2011-vintage vehicle who wish to sell their stakes, according to three sources familiar with the matter.

LPs will be given bids and pricing details during the summer, according to the sources.

It is understood that Campbell Lutyens has been hired to advise on the process and candidate buyers have been identified.

“Some of their peers have been racing to big numbers,” an LP in BC IX told Secondaries Investor. “They have now got to a decent initial number and this is just to top them up.”

BC Partners launched BC European Capital X, its 10th flagship fund, in January last year and had raised almost €6 billion as of May, according to a source familiar with the fundraise. The fund has a €7 billion target and a €7.5 billion hard-cap, according to an investment report for the fund prepared by Portfolio Advisors for Los Angeles City Employees' Retirement System.

Investors who have committed to BC X include Tennessee Consolidated Retirement System, Korea Investment Corporation and Teachers' Retirement System of Louisiana, according to PEI data.

BC IX closed on €6.7 billion in February 2012 after 17 months of fundraising. The fund is at least 95 percent called, according to two of the sources.

LPs in BC IX include California State Teachers' Retirement System, Canada Pension Plan Investment Board and Washington State Investment Board. The fund delivered a 1.5x net multiple on invested capital and a 17 percent net internal rate of return as of 31 March, according to a source familiar with the vehicle.

Two of the sources said BC Partners wanted to identify LPs with large positions in BC IX who have not re-upped in BC X as potential sellers.

It is understood there will be no change to fund terms for LPs in BC IX who decide not to part with their stakes.

Stapled deals made headlines this year, such as Paris-headquartered Ardian's $2.5 billion transaction with Abu Dhabi's Mubadala Capital, the largest ever such deal.

A quarter of respondents to a survey published in January by intermediary Setter Capital said they felt a “materially higher number” of general partners sought staples last year compared with a year earlier. Almost three quarters of respondents said they felt the same number of GPs had sought stapled deals during the same period.

BC Partners and Campbell Lutyens declined to comment.