LNK Partners’ first fund will have deployed roughly 40 percent of its capital upon closure of the firm’s recently agreed $250 million (€170 million) recapitalisation of Au Bon Pain.
Led by David Landau, the former head of Apax Partners’ US retail/consumer group, LNK closed its debut fund in May 2006 on $400 million. In December 2006 it did its first deal, investing $61 million in equestrian clothier Ariat International.
The amount of time that has passed between its first and second acquisitions is fairly typical for the firm, managing director Jeff Perlman told PEO.
“We have a little bit of a different approach where we’re only looking to invest in a handful of deals. By having fewer deals it allows us to put the full resources of the firm to support management teams,” Perlman said. “We pride ourselves in our value-add to the management teams we support.”
Having fewer portfolio companies in a fund might be seen as a gamble, but Perlman noted: “We’re comfortable making bigger bets than traditional private equity firms.”
LNK will likely accrue five to eight portfolio companies in Fund I, doing roughly one deal per year, he said.
“We would absolutely consider doing more than a deal a year, we just have a very high threshold for the quality of investments we’re willing to do,” Perlman added.
With regards to the Au Bon Pain deal, which is expected to close in the first quarter, LNK will invest “more than $100 million of equity” to gain a majority stake in the café chain, the firm said in a statement. Exiting its position in the company is a consortium, led by PNC Mezzanine Capital and including AlpInvest Partners, which structured and arranged financining for the company’s 2005 management buyout.
Perlman declined to give any specifics as to debt components in the deal structure, but noted: “We’ve capitalised it conservatively in order for the company to grow significantly in the future.”
Boston-based Au Bon Pain, which had sales last year of nearly $300 million, is best known on the US’ East Coast. It currently has 226 locations, including company owned locations and franchise cafes, in the US and abroad.