PAI investors halve fund V

LPs have voted to slash the fund to €2.7bn following the departure of the firm’s chief executive in September.

PAI Partners will see its latest fund – PAI Europe V – reduced in size by 50 percent to €2.7 billion, after months of speculation and discussions with limited partners. LPs approved the reduction with an 81 percent majority vote.

The partners of PAI are delighted to have found consensus with our investors.

Lionel Zinsou and Michel Paris

Staff at the Paris-based firm will be satisfied with the outcome, as certain LPs within the group had been pushing for a far more dramatic fund reduction. In October the Canadian Pension Plan Investment Board (CPPIB) asked fellow investors in the fund to reject the offer of a 50 percent reduction as inadequate, according to a report on Reuters.

As well as the downsizing, LPs also voted in favour of reinstating the fund’s investment programme, which had been suspended for duration of the negotiations.

Discussions regarding the fund’s future were prompted by September’s surprise departure of Dominique Mégret, a 35-year veteran of the firm and chief executive since 2006. Mégret had been at the helm for the fundraising of Fund V, which was closed in May 2008.

After months of lobbying by Lionel Zinsou, the man who replaced Mégret at the firm’s helm, and his senior colleague Michel Paris, a large majority of LPs voted in favour of the 50 percent reduction, the firm said in a statement today.

“The partners of PAI are delighted to have found consensus with our investors and we thank them for renewing their trust in the team,” said Zinsou and Paris.

The newly shrunk fund will be similar in size to that of its predecessor and as such the “overall scale and nature” of PAI’s business will not be affected, the firm said.

The decision comes at the end of a pivotal week for some of the European buyout market’s most recognisable names. LPs in London-based Candover’s 2008 fund this morning backed a proposal to terminate the €3 billion vehicle, which had suffered the withdrawal of its largest LP Candover Investments.

Apax Partners, meanwhile, has drawn an offer from sovereign wealth fund China Investment Corporation to acquire a minority stake in the management comany and invest up to €800 million in its current fund.