Fenway restructuring cancelled due low pricing

LPs were unhappy with the 'heavy discount to NAV' being offered for stakes in the 1998- and 2006-vintage funds.

Fenway Partners has pulled an offer in which Prudential Capital Group intended to buy limited partners' stakes in its 1998- and 2006-vintage funds because investors were unhappy with the pricing, Private Equity International 's sister publication Secondaries Investor has learned.

In mid-June, New York-based Fenway cancelled an LP vote on Prudential's proposal to acquire their stakes in a transaction advised by Moelis, according to two sources familiar with the deal.

Another source said Fenway is still in talks with Prudential regarding a new process.

Chicago-based Prudential, which is the private placement investment arm of insurance giant Prudential Financial, had offered to buy LPs' stakes in the $1 billion Fenway Partners Capital Fund II at a 60 percent discount to net asset value as of 31 December and a 20 percent discount on the clawback owed to LPs in the fund, as Secondaries Investor previously reported in May.

In the $702 million Fenway Partners Capital Fund III, LPs could sell their stakes at a 35 percent discount to the same valuation date.

“A lot of LPs were not satisfied with the proposal because of the heavy discount to NAV that accompanied it,” an LP in one of the funds said.

Fund II delivered a 1.25x multiple and a 5 percent internal rate of return as of 30 September, according to a performance document from the Oregon Public Employees' Retirement Fund. Fund III delivered a 1.14x multiple and a 2.3 percent internal rate of return as of 31 December, according to an LP in the vehicle. 

This is the second restructuring attempt for the two Fenway funds. In 2015 London-based Nova Capital Management emerged as one of the four final bidders in the process also run by Moelis. Fenway, Prudential and Moelis declined to comment.