GP Investments, Latin America’s largest private equity fund, which was a former subsidiary of Baring Private Equity International, an affiliate of Barings Bank, agreed to pay $33m for a 26.7% stake in listed Switzerland-based private equity firm Apen, as it seeks to expand in emerging markets.
The acquisition will make GP the largest shareholder in Apen.
In addition to capital invested by GP Investments, US-based secondaries private equity specialist Newbury Partners (13.4% stake), and New York private equity and multi-asset fund manager Fortress Investment Group (13.4% stake) will provide approximately $247m from an asset acquisition, new equity and debt to Apen.
This money will be used to pay back Apen’s existing obligations as well as to capitalise the company for new investments and strategy, according to GP Investments.
Apen’s post-transaction balance sheet will have total assets of $421m and total debt and obligations of $189m (representing a reduction of $109m in debt). Debt and obligations to equity ratio will drop from 1.8x to 0.8x. This transaction is accretive to Apen’s adjusted net asset value, increasing it from $167m to $233m (or from $42.5 to $43.4 per share).
The shares were acquired off the SIX Swiss Exchange for a price of SFr21.8 per share, which represents a 48% discount to post-transaction net asset value. The remaining 46.5% of Apen will be held by the investment firm’s existing shareholders with the exception of AIG, who will no longer be a shareholder in the company.
Fersen Lambranho, co-chief executive of GP, said: “We are very enthusiastic about the opportunity to have a presence in a new segment and develop a global platform, further diversifying our activities in market segments with outstanding growth perspectives. This initiative also adds $421m to the total assets managed by GP, in the form of permanent capital.”
David Salim, Apen chief executive, added: “We are one of the first listed private equity investment companies worldwide focusing its investment strategy on emerging markets. Considering the economic growth and need for capital in these regions we see a big potential for attractive private equity investment opportunities.”
Apen invests in private equity funds and co-investments in Europe and the US. Its portfolio of private equity fund investments represents 84% of total assets. However, following the acquisition, Apen will change the focus to co-investments and secondary private equity transactions in emerging markets, aiming to reach a more balanced portfolio between co-investments and private equity funds.
GP will own a subsidiary management company, which has been hired by Apen´s board to manage current portfolio and new investments to be made by Apen. The current management team will be transferred to the new management company owned by GP and will be led by David Salim.
This allows GP Investments to enter into new segments of alternative investment markets including co-investments, fund of funds and secondary private equity transactions. Additionally, it provides further diversification through its BRZ Investimentos unit.
GP Investments has been actively investing in Latin America since 1993. GP Investments has raised over $5bn with a record of 52 completed deals across 15 different sectors.