Apax Partners LLP, the British private equity firm that purchased U.S. wound-care company Kinetic Concepts Inc. last month, has amassed about half of the 9 billion euros ($11.7 billion) it is seeking for its latest fund, three people with knowledge of the plans said.
The firm, headed by Martin Halusa, has told investors it plans to announce a so-called first close as soon as next month, allowing it to start spending the money, said the people, who declined to be identified because the plans are private. Washington State Investment Board yesterday approved a $300 million commitment to the pool, almost twice the amount it committed to Apax’s previous fund, according to Liz Mendizabal, a spokeswoman for the pension plan.
The Washington state pension plan’s board recommended the investment “in part, on the firm’s strong and experienced team, long-term track record, focused investment strategy, proactive deal sourcing and global presence,” according to minutes of the meeting sent by Mendizabal.
Apax, started three decades ago as a venture capital firm, joins competitors including BC Partners Ltd., Sweden’s EQT Partners AB and Cinven Ltd. in trying to raise money as investors cut back commitments to European leveraged buyouts. One in five investors, or limited partners, intends to reduce its holdings in European funds because of the sovereign-debt crisis, according to a Dec. 12 survey by Coller Capital Ltd.
Apax hasn’t been immune to the European debt crisis, with investments including British discount retailer New Look Group Ltd. suffering from the economic slump. The clothing retailer, which postponed an initial public offering last year, posted a 40 percent drop in profit in the year through March.
Apax VII, the firm’s previous pool raised in 2007, had generated an 8.1 percent net internal rate of return as at the end of June, according to WSIB’s website. A spokesman for London-based Apax declined to comment on fundraising.
Private-equity firms, which are seeking to raise $711 billion globally, raised 46 percent less in the third quarter than in the previous quarter as the European debt crisis deepened, according to London-based research firm Preqin Ltd. Meanwhile, the value of takeovers announced by private equity firms dropped 40 percent to $85 billion from the previous quarter, according to data compiled by Bloomberg.
Apax has over the past two years sold a 10 percent stake in the firm to sovereign-wealth funds China Investment Corp., Australia’s Future Fund and Government of Singapore Investment Corp.
The firm will charge investors 1.5 percent of the size of the fund in management fees. It will also keep 20 percent of the profit after generating a minimum annual return of 8 percent, according to documents used to market the pool to investors. Apax employees will invest 400 million euros in the latest fund, called Apax VIII, the documents show.
Buyout firms such as Apax typically use loans secured on the targets they acquire to finance more than half of the purchase price and cash from their own funds for the rest. The firms seek to improve performance at the companies they acquire or expand them before selling them within about five years.
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