Apax Partners Raises E4.4 Billion Fifth Fund –

LONDON – Apax Partners & Co. Ventures Ltd. held a E4.4 billion ($3.73 billion) final close in early March on its latest vehicle, Apax Europe V, said Clive Sherling, a director at the firm. The fund held an initial close on E4 billion, the vehicle’s original target amount, in February, Sherling added. Apax launched the vehicle in October, he noted.

The vehicle will invest in information technology, biotech/health-care, telecom, financial services, specialty retailing and media companies, Sherling said. No specific amount of capital is allocated to any of these industry sectors, he added. “We never pre-allocate money to a particular investment area. This allows us the flexibility to move our money to where it should go, depending on which industry has the better price,” he explained.

The fund should ultimately back approximately 100 to 120 companies at all stages of development from early-stage financings through leveraged buyouts, Sherling said. Approximately 30% of the vehicle will go toward early-stage companies, 50% to late-stage/buyout plays with the remainder in expansion-stage companies, he added. “We believe the real skill in private equity is not the financing skill – which means deciding what stage to invest in – but in looking at an industry and deciding on which companies are going to be the winners in that space,” Sherling noted. The vehicle’s average investment size will be approximately E35 million, although the actual investments will range in size because a late-stage deal will call for more capital than an early-round funding, he said.

Apax will invest the fund primarily in Western Europe, he noted. While looking for deals, the firm will work closely with its sister firm, New York-based Patricof & Co. Ventures Inc. While Apax and Patricof manage their funds separately, operationally the two firms treat themselves as one company, Sherling said. “Basically the firm is run through our various industry teams, which each focus on one of our areas of investment,” he noted. Apax and Patricof will co-invest together on occasion and help each other’s portfolio companies move into new European or American markets, he said.

Fund raising for the vehicle went well for a number of reasons, Sherling said. “Our strategy has been accepted as one that is appropriate for the times,” he commented. Europe is also popular with American investors now, because the private equity market in the U.S. is out of kilter, he added. The new vehicle’s limited partners are a diverse mix of investors, Sherling said, noting 50% of the LPs come from the U.S., 45% from Europe and the remainder from the Far East and the Middle East. He declined to identify any of the LPs, beyond saying their ranks include state pension funds, corporate investors and a number of high-net-worth individuals and families.

Sherling described the new fund’s fees as being at industry standard levels. Fund V should begin investing in the next month or two, he added. The firm’s previous vehicle, 1999’s E1.8 billion Apax Europe IV is nearly fully committed to approximately 65 companies, he said.