Listed groups seek consolidation

Acquisitions by Eurazeo and HarbourVest are signs of long-awaited consolidation. Eurazeo's deal gives it access to the SME market, according to Virginie Morgon.

Listed French buyout group Eurazeo has agreed to acquire NYSE Euronext-listed investment group OFI Private Equity, whilst secondaries specialist HarbourVest Partners has submitted an offer for the entire share capital of Absolute Private Equity.

Consolidation in the listed sub-sector of the asset class had been widely expected in the wake of the economic crisis, but until the announcement of today's deals there has been little evidence of it, mainly due to groups being unwilling to sell at a significant discount.

The OFI acquisition is valued at €132 million, according to Eurazeo. The deal represents a 27 percent discount to OFI’s net asset value as of March 31 this year, Eurazeo said, and a 14 percent premium to its share price at last Thursday's close.

OFI will be renamed Eurazeo PME (Petites et Moyennes Entreprises – SMEs) once the acquisition is completed. The new subsidiary will operate alongside Eurazeo Croissance, the group’s growth capital-focused subsidiary established last year, and its core private equity investment unit.

The OFI management team, led by executive board chairman Olivier Millet, will transfer to Eurazeo PME where they will operate autonomously. The deal is expected to close by the end of July this year, Eurazeo said. 

We are getting a group firmly anchored in a segment of the market we’re not represented in

Virginie Morgon

Virginie Morgon, director of investments and executive board member at Eurazeo, said during a conference call this morning the acquisition of OFI would enable it to consolidate a new income stream and tap into the SME market, one which it had not been significantly exposed to before. “We will contribute to OFI’s investment process our network [of contacts], while from them we are getting a group firmly anchored in a segment of the market we’re not represented in, as well as a certain maturity as far as CSR [corporate and social responsibility] too,” she said.

Patrick Sayer, chairman of Eurazeo, added: “Beyond this strategic and financial opportunity, OFI Private Equity, whose investment philosophy is similar to that of Eurazeo’s, has a portfolio of quality assets with companies that are leaders in their sectors, led by skilled management teams.”

Secondaries specialist HarbourVest Partners meanwhile has sealed a deal of its own, agreeing to acquire Switzerland-listed fund of funds group Absolute Private Equity. HarbourVest’s secondary funds and its closed-end investment company HarbourVest Global Private Equity have launched a $17.25 per share tender offer for APE, valuing the group at $752 million. HarbourVest said APE’s board supports the offer and intends to recommend it to shareholders. APE has made no new commtiments since 2008, and a source close to the group indicated this was unlikely to change once acquired by HarbourVest, which will look to offload the assets.

Thomas Amstutz, chairman of APE, said in a statement: “HarbourVest is an ideal partner, with its large experience in managing private equity partnership portfolios. This transaction offers shareholders an opportunity to exit their investment for cash at an attractive price, whilst it enables others to remain invested alongside an experienced partner.”

John Toomey, managing director at HarbourVest Partners, said: “HarbourVest’s secondary team is focused on finding unique transactions where it can provide solutions for private equity asset owners. We are pleased to be working on a cooperative basis with the board of Absolute. This is an attractive opportunity for HarbourVest-managed secondary funds and HVPE to acquire a significant stake in a portfolio of high-quality, global private equity assets.”