CPPIB and JW Childs complete $596m secondary deal

CPPIB offered JW Childs investors the option of cashing out their stakes in Fund III or re-investing in a newly-created vehicle. 

The Canada Pension Plan Investment Board has completed its secondary investment related to the restructuring of JW Childs’ third fund, according to a statement. 

CPPIB invested $477 million to roll investments from JW Child’s Fund III into a new vehicle called Winter Street Opportunities Fund. In addition, CPPIB will commit $119 million to JW Childs’ Fund IV, which launched recently with a $450 million target, according to documents filed with the US Securities and Exchange Commission. CPPIB led the restructuring deal, which included “two or three” selling LPs in Fund III and is worth a total of $1.3 billion, according to multiple sources with knowledge of the situation.  

LPs in JW Childs' Fund III were given the option of cashing out their positions or rolling their existing stakes in Fund III into the Winter Street fund under the same terms and conditions as CPPIB. It is understood that most LPs chose to cash out their positions in the fund. 

“We are excited to complete another significant and innovative transaction in the secondary private equity market,” Andre Bourbonnais, CPPIB’s senior vice president of private investments, said in a statement. “We believe these transactions are a positive evolution in the private equity industry. 

CPPIB’s secondary team is led by vice president Yann Robard, who previously worked at secondaries firm Paul Capital. 

JW Childs launched the fundraising process for its Fund IV earlier this month. Park Hill Group and Beirut, Lebanon-based Milestones Capital will receive sales compensation from Fund IV, according to SEC documents.  

JW Childs initially launched Fund IV with a $2.5 billion target in 2006 but later canceled the offering, according to media reports. After the cancelled fundraising, JW Childs lost key management team members, including co-founder Steven Segal in 2006 and president Dana Schmaltz and partner Ted Yun in 2007.  

JW Childs’ Fund III launched in 2002 and raised $1.75 billion. Limited partners in the fund include the Boston City Retirement System, Toronto-based fund of funds manager RBC Capital Partners and the Kenyon College endowment according to Private Equity International’s Research and Analytics division.