Exclusive: PAI nears €2.5bn second close after travel exit

The firm which is attempting to raise €3bn has netted a return of more than 3x on the sale of duty free retailer Nuance Group.

Paris-based PAI Partners is gearing up for a €2.5 billion second close after securing another exit from its Fund V, PEI has learnt.

The firm, which is looking to raise €3 billion for its PAI Europe VI, is expected to hold the second close by the summer, according to a source close to the matter.

The firm has “strong fundraising momentum with good commitments from new investors”, the source added.

PAI declined to comment on fundraising.

PAI’s Fund VI held a €1.4 billion first close in January. Existing investors were increasing their allocation by 30 percent on average, PEI reported at the time.

News of PAI’s fundraise comes after the firm agreed to sell its stake in the Nuance Group, a duty free travel retailer, to Dufry, a rival global travel retailer for CHF 1.55 billion (€1.27 billion, $1.73 billion), according to a statement.

The transaction, which is subject to customary anti-trust approvals, will yield PAI a return of more than 3x, according to a source familiar with the matter. PAI declined to comment beyond the statement.

Nuance operates 350 outlets in 19 countries globally. It also provides in-flight services and operates a wholesale and distribution business. With approximately 5,400 employees serving over 31 million travelling customers, it generated revenues of approximately CHF 2.1 billion in 2013 (€1.72 billion, $2.34 billion).

PAI, which bought a 50 percent stake in February 2011, has helped the company to grow internationally, the firm said. It has improved its operating performance and strengthened its strategic positioning in through add-on acquisitions.

“During the period of our ownership, we have worked to further consolidate its strong positioning and enhance its appeal for industrial buyers or an IPO,” Raffaele Vitale, a partner at PAI, said in the statement.

The divestment marks the second realisation from PAI Europe V fund, a €2.7 billion 2008-vintage, following the partial exit of IT services firm Atos late last year. Following the exit of Nuance, PAI has now returned 36 percent of that fund with an average return of more 2.5x, the source added.

PAI has already put some of the capital from its successor vehicle to work; in April, PAI agreed to acquire a majority stake in Euro Media Group (EMG), a production business based in France, for just under €200 million.

In the same month, PAI and The Carlyle Group entered into exclusive talks with French-based Schneider Electric to acquire its business unit Custom Sensors & Technologies. The pair will pay about $900 million for a majority stake in the business, PEI reported at the time.