Swiss Exchange-listed APEN, which recently changed its name from AIG Private Equity, is Europe’s latest listed funds-of-funds casualty.
The business has ceased all new investment commitments, other than funding capital calls from existing funds and follow-on investments in current direct investments.
It is likely that the remaining holdings will be sold on the secondary market. Total assets under management currently amount to approximately $529.3 million in 60 private equity funds and 18 direct investments.
“We had liquidity issues because of an over-commitment strategy and lack of distributions,” says Conradin Schneider, vice president of investor relations of APEN, explaining what led to the ultimate winding down of the business. “Our whole strategy is now driven by value creation.”
APEN was set up in 1999 by AIG Private Bank Ltd. (a subsidiary of AIG Inc. at the time) to invest in and manage a diversified portfolio of private equity funds and privately held operating companies. The business listed on the SIX Swiss Exchange in October 1999.
Over the last nine months, APEN has reduced its outstanding unfunded commitments from about $670 million to $350 million through the complete or partial sale of a number of its international portfolio funds. The business intends to further reduce these unfunded commitments over the next 12 months through further sales.
We had liquidity issues because of an over-commitment strategy and lack of distributions. Our whole strategy is now driven by value creation.
In July, APEN signed contracts with various buyers for the sale of holdings in some of its international funds, which include Advent International VI, Ares III, Affinity Asia Pacific Fund III, Apollo VII, Carlyle V, Charlesbank Equity Partners VI, FountainVest China Growth Capital Fund, Mid Europa III, Olympus Growth V, Sovereign Capital II, Terra Firma Investments III, and Towerbrook Capital Partners III.
In total, these divestitures freed the company of about $150 million of unfunded commitments.
Among some of the more prominent international third party fund holdings that remain in APEN’s current portfolio are Carlyle Europe Partners II and III; Carlyle Japan Partners II, CVC Capital Partners Asia Pacific II and III, CVC European Equity Partners, Cognetas, EQT V, Lexington Capital Partners IV and VI, and Sovereign Capital II.
As part of a further restructuring of its business, APEN on Oct. 27 secured total financing of $225 million from Fortress Credit Corp., an affiliate of Fortress Investment Group and a Swiss bank. The transaction will provide the business with additional funds to finance future capital calls, repay its existing credit facility and reshape the portfolio to reduce undrawn fund commitments.
APEN’s Swiss competitor, shaPE Capital AG, is another listed fund of funds that has also recently announced the implementation of a realization strategy designed to return the value of its portfolio to shareholders with the eventual plan to delist the company over the next 10 years to 12 years. —Angela Sormani