CVC sells majority stake in AlixPartners

AlixPartners founder Jay Alix, Canadian pension funds CDPQ and PSP Investments, and Middle Eastern investment firm Investcorp are acquiring CVC’s ownership stake valuing AlixPartners at more than $2.5bn.

Advisory firm AlixPartners’ founder Jay Alix and three co-investors are acquiring a significant minority stake in the firm from CVC Capital Partners for an undisclosed sum.

The transaction, which values New York-based AlixPartners at more than $2.5 billion, will result in a new ownership structure of the firm that now includes Quebec pension and insurance fund system Caisse de dépôt et placement du Québec (CDPQ), Canadian pension investment manager Public Sector Pension Investment Board (PSP Investments) and Bahrain-based investment firm Investcorp Group, according to a statement from AlixPartners issued on Monday.

As a result of the transaction, combined with Jay Alix's existing interest in the firm, the four-party group will own a majority stake in AlixPartners.

AlixPartners is an advisory firm that provides services such as financial advising, turnaround and restructuring. Specifically in private equity, AlixPartners helps private equity firms assess and recruit executives for their portfolio companies as part of its mission to help general partner clients create value and enhance portfolio performance.

“PSP Investments was presented with a great opportunity to partner with AlixPartners’ founder Jay Alix and moved quickly to seize this opportunity,” PSP Investments senior vice president and global head of private investments Guthrie Stewart told Private Equity International. “With expertise in both enhancing operational efficiencies and leading turnarounds, AlixPartners has a resilient business model as its services are sought after through different cycles in the economy.”

Investcorp echoed that sentiment, with Dave Tayeh, the firm's managing director and head of corporate investment in North America, saying AlixPartners is “well-positioned to thrive in all business cycles” and fits within Investcorp's criteria of investing in companies that have multiple avenues for growth.

According to an AlixPartners spokeswoman, Jay Alix, CDPQ, PSP Investments and Investcorp will collectively own a majority stake in the firm, while the rest of the equity will be maintained by the firm’s managing directors.

Specific terms of the deal were not disclosed.

When asked about the timing of the transaction, the AlixPartners spokeswoman told PEI the firm is on a strong growth trajectory and the long-term investment approach from the three new investors was “very attractive” to the firm.

This isn’t the first time fellow Canadian institutional investors CDPQ and PSP Investments have collaborated. In 2007, along with Canada Pension Plan Investment Board and KKR, they engaged in a take-private transaction involving Canadian communication company BCE.

London-based CVC originally purchased a majority stake for an undisclosed amount in June 2012, when it bought ownership interest in AlixPartners from San Francisco-based private equity firm Hellman & Friedman and Jay Alix.

At that time four years ago, AlixPartners’ 125 managing directors kept a “considerable stake” in the firm, and Jay Alix kept a “substantial minority stake”, according to a 29 June 2012 statement from AlixPartners. It is unclear whether the number of managing directors with ownership interest in the firm had changed since then.

Under CVC’s ownership, AlixPartners expanded its employee headcount from 950 to more than 1,600 and its number of offices from 17 to 25 across four continents. The firm generates $1 billion in revenue, according to Monday’s statement.

CVC will continue to be AlixPartners’ client after the transaction closes, which is expected to occur by the end of the year. A source familiar with the matter said CVC had likely been a client prior to its acquisition in 2012.

CDPQ manages C$254.9 billion ($190.44 billion; €172.54 billion) in assets as of 30 June. PSP Investments manages C$116.8 billion in assets as of 31 March, and Investcorp had $10.8 billion in assets under management as of 30 June.

A CVC spokesman declined to comment. A spokesman for CDPQ was not available to comment.