The buyout community was less than electrified by the news that Apax Partners had held a final close of US$7.5 billion for its Apax VIII buyout fund, a vehicle originally launched two years ago with a target of $11.9 billion. All the same, Apax in its press release declared this a successful result.
"We believe the strength of commitments received reflects confidence in our ability to add real value and is a clear endorsement of Apax's global growth investing model," said Martin Halusa, CEO of Apax Partners. “With a track record spanning three decades and several economic cycles, and a well-resourced and experienced team, we believe Apax VIII is well positioned to be successful and we are excited by the opportunities we see ahead."
This followed hard on the announcement that European buyout fund rival Cinven had closed its Fifth European Buyout Fund over its original €5 billion (US$6.53 billion) target at €5.3 billion. This is just one reflection of an increasingly tight, but also highly discriminating, buyout fundraising market, especially in Europe, where limited partners (LPs) appear both more knowledgeable and far more demanding in what they expect of general partners (GPs).
Performance is clearly one of the major requirements. Cinven boasted in its press release on the fund close that the London Stock Exchange IPO of its portfolio company Partnership Assurance Group plc had recently delivered “a total return of more than 8x” to investors.
Perhaps Cinven’s differentiation is also reflected in the tight focus emphasised in its statements. "Having raised €5.3 billion, which is ahead of our target, we believe Fund 5 is right-sized for the investment opportunities we currently see across Europe,” said Alexandra Hess, partner of Cinven Partners. “We remain focused on investing in European-centric companies with strong growth potential that we can accelerate either globally or in their domestic markets.”
"The success of Partnership underscores Cinven's Financial Services team's expertise in successfully investing in what is a complex and regulated sector, added Hugh Langmuir, Cinven managing partner. “As a result, we are well positioned to target further investment opportunities.” Although Apax also emphasises its tight sectorial focus, there is less immediate evidence on hand to underline this. Cinven, meanwhile, points to the establishment of a dedicated financial services team in 2006.
The outcome for Apax also reflects the diminished appetite among European institutions. Apax cited only 25% of commitments from European LPs to its new fund, versus 43% from US investors. Europe, it seems, has still to recover its enthusiasm for the asset class.