DB confirms E1.5bn private equity sale

DB Capital’s Ted Virtue and Graham Clempson have finalised the largest ever purchase of a secondary private equity portfolio.

After many months of negotiations dating back to last summer, Ted Virtue and Graham Clempson, chairman and European head respectively of DB Capital Partners have completed the management buyout of the late stage private equity portfolio of Deutsche Bank via their new vehicle, MidOcean Partners.

They have agreed to pay just over E1.5bn for the business, which consists of 80 investments in large and medium-sized enterprises in Europe and the United States. In Europe, the portfolio includes Center Parcs, United Biscuits, Lecta and Jefferson Smurfit. In the United States, principal investments include Jostens, Prestige Brands, Noveon and Jenny Craig.

Josef Ackermann, chairman of Deutsche Bank’s group executive committee, described the sale as “an important step in reducing the bank’s exposure to private equity.”

As previously reported on PEO, NIB Capital leads the group of ten investors backing the buyout. NIB Capital Private Equity will invest a total of E312m in the transaction out of the syndicate's total investment of E1.2bn. Deutsche Bank will retain an interest of 20 per cent in the portfolio.

The remaining nine contributors to MidOcean Partners are drawn from both sides of the Atlantic and comprise Canadian investors Ontario Teachers’ Merchant Bank (Ontario Teachers’ Pension Plan) and CPP Investment Board, HarbourVest Partners, Paul Capital Partners, Bregal, Coller Capital, Northwestern Mutual, The Yucaipa Companies and Presidential Life.

NIB is providing E360m for the transaction, which includes E48m in working capital for the portfolio. The size of the contributions from the consortium’s other participants has yet to be disclosed. 

'This is a typical example of a transaction in which we can use our position as a large integrated private equity player,' said Volkert Doeksen, CEO of NIB Capital Private Equity. ‘We ensured some time ago that the mandate of our shareholders ABP and PGGM would give us the room to undertake such transactions.”

Axel Wieandt, in addition to his role as head of corporate development, will take over from Ted Virtue as Deutsche Bank’s global head of corporate investments. Following the MBO, the Corporate Investments unit will consist of the bank’s remaining private equity and venture capital assets, estimated to be worth around E1.5bn, its industrial holdings, third-party private equity funds and principal-owned real estate assets.