US secondary buyer Paul Capital has completed Spain’s first secondary portfolio acquisition, paying an initial price 'in excess of E24m' for a portfolio of eight investments from Spanish house Inversiones Ibersuizas.
The sale of the portfolio, which comprises minority interests in businesses ranging from automotive companies to food producers, provides Ibersuizas with capital to make further acquisitions in the Spanish market, with the firm planning to close several deals before the end of the current year.
The transaction forms part of a larger agreement between the two firms that will see them co-operate in future secondary transactions in the Spanish market. Paul Capital says it intends to make further acquisitions at a time when private equity firms are struggling to make successful exits. The firm sees Europe as being an increasingly relevant market and already has a similar alliance agreement in France with Axa Private Equity.
Paul Capital is currently in the process of investing a $800m fund which it raised in 2001, which seeks venture capital, leveraged buyout and mezzanine partnership interests in operating companies. To date the firm has acquired interests in approximately 100 funds with underlying investments in over 1,000 individual companies.
The secondary market is continuing to flourish as both private equity firms and limited partners look to achieve liquidity at a time when alternative means are few and far between. Other investors also see secondary funds as especially compelling given the discounts achievable by these funds when buying others' portfolios. UK-based Coller Capital this week closed a $2.5bn fund that will specifically target secondary investments, having originally targeted a $1bn close. Investors in the new Coller fund included CalPERS, State of Michigan, General Motors, Canadian Pension Plan, Barclays Pension Fund and Barings.
Despite a growing interest in the sector, only the largest secondary transactions are made public. The most recently publicised portfolio acquisition was Pantheon Ventures’ purchase of a majority stake in Quantum Ventures, a corporate venturing division of Quantum Corp comprising 18 technology investments.